It’s no secret that AI data centers are putting a strain on the grid. But Silicon Valley has been relatively isolated from all this, thanks to high land and power prices that have pushed hyperscaler projects elsewhere.
But the tech elite may soon face a power crisis. The Bay Area resort town of Lake Tahoe has less than a year to find a new energy supplier.
Liberty Utilities’ contract with NV Energy expires in May 2027. NV Energy’s power will be redirected elsewhere in Nevada, where data centers are booming.
Liberty Utilities and NV Energy both said the move had been planned for a long time. NV Energy said the data center was not responsible. But it’s hard to see how they don’t play a role. NV Energy alone requested a load of more than 22 gigawatts, which, as the Bloomberg report points out, is more than 40 times the load Lake Tahoe uses at its peak.
If the data centers weren’t operational, it’s easy to see a world in which Liberty Utilities and NV Energy would renew their contracts. But with data center customers willing to pay whatever it takes to get electricity, it was inevitable that Lake Tahoe’s existing customers would be left out in the cold.
The timing couldn’t be worse. These days, the energy market is under pressure from surging demand and is experiencing difficult conditions, with supply worsening further due to the Trump administration’s decision to attack Iran.
Lake Tahoe’s situation is further complicated by the fact that its power lines share more connections with Nevada’s power grid than with California’s. This means the community will have to find another power provider, either within NV Energy’s territory or elsewhere in the West.
Given that NV Energy has already prioritized data centers over mountain towns, Lake Tahoe residents and second homeowners will likely have to look for other local power producers.
That won’t be easy either. In one state, Utah, a county commission recently approved the development of a 40,000-acre data center that could consume up to 9 gigawatts of power when completed. Today the entire state of Utah uses about 4 gigawatts. Demand of that magnitude would almost certainly drive up prices across the region.
The confluence of these factors means Lake Tahoe will likely pay more for electricity next year than it does now. Local residents will be hit hardest, but even Silicon Valley natives who own second homes in the area could feel the pressure.
The injustice of the AI energy crisis is that those who suffer the most have little say in the technology or its rollout. Lake Tahoe’s power predicament shows that change is beginning, but perhaps not enough to make a difference.
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