Charleston, WV, Pittsburgh, PA
Pittsburgh Business Times
(by Moore Capito featuring Matt Smith)
With the surge of artificial intelligence, the demand for data centers to support that computing power is growing fast. “One of the challenges is that we as human beings and as businesses require so much more computing power than we ever have,” said A.A. Moore Capito, a shareholder specializing in energy and emerging technologies with the law firm Babst Calland. “That growth has continued consistently over the past 50 years, but at this current moment, we are seeing an exponential increase in demand.”
Yet, with this rapid growth comes significant challenges as businesses compete for power and land. With a wealth of energy resources, affordable land, and proximity to densely populated areas, this region is right in the thick of the trend.
Capito recently joined Allegheny Conference on Community Development Chief Growth Officer Matt Smith in the Pittsburgh Business Times offices for a conversation about the opportunities and challenges for the region, when it comes to data center growth.
Surging demand for power
Data centers are energy giants. They require a massive amount of power to process information, particularly as artificial intelligence capabilities expand. In February, Goldman Sachs Research predicted global power demand from data centers will increase 50 percent by 2027 and up to 165 percent by the end of 2029.
This spike in demand is forcing businesses and industry to rethink how to power their operations. Traditional reliance on the energy grid alone may no longer suffice.
“What I would consider the biggest challenge today is providing the power to sustain the growth that we need,” Capito said.
“A lot of these folks in the tech sector are saying we can’t rely on the grid anymore. We have to find alternative ways to power these very necessary components of our business and life, frankly, in today’s age.”
Because it offers several alternatives to the power issue, the region is positioned to attract data center projects, Smith and Capito said.
“Interestingly, we do a lot of work in our region with nuclear companies that are really at the cutting-edge of small modular reactors (SMRs), micro reactors, some even larger,” said Smith, noting how nuclear and natural gas combined can solve our energy shortage.
In a move that made international headlines, Constellation Energy and Microsoft announced plans last fall to restart a unit of the Three Mile Island nuclear plant to power the tech company’s data center use for 20 years. And Amazon Web Services is reported to be buying a data center campus in Salem Township in Westmoreland County that is collocated with a nuclear power generation plant.
Nuclear is far from the only option. Capito said Pennsylvania, West Virginia and Ohio’s rich natural gas resources have been underleveraged in data center planning so far.
“A lot of these developers see it as a nuclear play, but we know that doesn’t happen fast,” he said, which means they need an energy source to bridge that gap. “It’s got to be natural gas, and that is why we have an incredible opportunity here.”
There are a number of collaborative projects in play that lean on the region’s natural gas resources, Smith said.
In April, for example, Homer City Redevelopment and Kiewit Power Constructors Co. announced plans to turn what had once been the largest coal-burning power plant in Pennsylvania into a natural gas-powered data center campus. The new Homer City Energy Campus will deliver up to 4.5 gigawatts of power to support AI-driven hyperscale data centers.
Similarly, Liberty Energy Inc., Imperial Land Corp. and Range Resources have created a strategic alliance to support the development of a power generation facility within the Fort Cherry Development District in Washington County to serve data centers, industrial facilities and other high-energy-use businesses in Pennsylvania.
Finding ready-to-go sites
To attract AI and data center developers, this region doesn’t just offer abundant energy that can be drawn upon; it also has “ready-to-go” sites where projects can start quickly and operate efficiently, unique higher education assets like Carnegie Mellon University and the University of Pittsburgh, and access to key North American markets.
“It’s like walking into a hotel room,” Capito said. “You want the bed made. You want the towels on the rack, and you want the remote right beside you. You want it ready to go. And that’s the same way that developers want it.”
Our industrial legacy is serving us well in this regard. Southwestern Pennsylvania is already home to ample industrial sites tied to the power grid. These well-connected locations offer developers the infrastructure they need to hit the ground running.
“Because of our rich legacy of manufacturing and industrial strengths in Southwestern Pennsylvania, we have a lot of sites, we have abundant energy resources, and we have a highly skilled workforce,” Smith said. “We also have a lot of those sites specifically tied into the grid. This region will lead the way in ensuring our nation is energy dominant.”
Another example of seizing our region’s opportunity is the recent request by the Allegheny Conference and more than 20 organizations to the U.S. Department of Energy’s Office of Policy for using DOE land for AI infrastructure that would support data center demand and the administration’s goals.
We’re seeing the attractiveness of the region’s assets in recent moves by manufacturers that support the energy industry’s supply chain, Smith and Capito said.
Mitsubishi Electric Power Products Inc., for example, is building an $86 million manufacturing facility and testing lab in Beaver County, where it will make gas-insulated and vacuum circuit breakers, an important component for modernizing electric grids.
And the Switzerland-based power grid technology company Hitachi Energy has announced a $70 million expansion of its three manufacturing facilities in Westmoreland County. It makes high-voltage technologies, including switchgears, circuit breakers, generator circuit breakers and other products needed in power grids. Pennsylvania is supporting the expansion with a $184,000 Pennsylvania First grant and a $145,000 WEDnetPA grant to train employees.
That’s good news for the industry, which will need a steady, reliable supply of parts, Smith said.
“The reason you’re seeing this is that there is a huge power generation demand coming and large-scale investment is needed to meet that demand. Southwestern Pennsylvania is positioned to address that looming demand for power,” he said. “We stand at the center of energy resources and building the component parts that are essential to the grid supply chain.”
Cutting red tape
Business-friendly regulation is also giving this region an edge, Smith and Capito said.
Dealing with the regulatory environments and local, state and federal government to navigate those regulations can be very difficult, said Capito.
The PA Permit Fast Track Program, for example, has streamlined permitting for large economic development and infrastructure projects that require multiple permits from different agencies. And in March, Gov. Josh Shapiro proposed a state energy siting board to reduce red tape even further.
“One of the things that is of the utmost importance, if not the most important, for AI and data centers is speed,” Smith said. “Developers want to get the projects started quickly and want to get the projects done fast.”
Capito said he sees things speeding up at the federal level, too, thanks to President Donald Trump’s desire to invest heavily in AI.
“This is a critical industry,” Capito said. “It is a big national security component, managing the information flow of all of these systems that we have running that control essentially everything that you see and touch and feel every single day.”
Moore Capito is a shareholder at Babst Calland, where he represents clients in all phases of complex corporate, commercial and real estate transactions, and entity, joint venture, and partnership structuring and formation, and general business matters. His practice also focuses on counseling energy clients in various transactional matters of natural gas assets, joint developments, leasing, and operations. Moore also assists companies in navigating the complex legal landscape of emerging technologies, including data center development, ensuring projects are compliant with relevant laws and regulations.
Matt Smith serves as Chief Growth Officer of the Allegheny Conference on Community Development. In this role, Matt leads the Conference’s economic development efforts with a focus on growth of the regional economy through the attraction and retention of business investment and talent. He is also responsible for the organization’s local, state and federal policy and advocacy efforts, which are strategically oriented toward increasing economic competitiveness and accelerating growth opportunities regionwide.
Business Insights is presented by Babst Calland and the Pittsburgh Business Times.
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