A new era of energy demand

What are data centers, why are they growing so fast and how do they affect electric cooperatives?

The buzzword nowadays is data centers. We see it on our social media feeds, read it on headlines and hear stories. What exactly are data centers and what is the buzz about them?

Data centers are facilities that house networks of servers providing data storage and processing power, wiring an increasing digitally connected world. Behind everyday tasks such as a Google search, an Amazon purchase, streaming a movie or using artificial intelligence are data centers powering these digital tasks. By nature, data centers require a lot of electricity and are considered large loads.

Serving large loads is not new for electric cooperatives, which have long provided power to agricultural, commercial and industrial members in addition to the base of residential members. What is new is the scale and speed of growth. Across Oklahoma and the nation, electric cooperatives are entering a new era of load growth driven primarily by large loads such as data centers, industrial expansion and the electrification of transportation. As not-for-profit, member-owned utilities, cooperatives carefully manage these loads to protect reliability, affordability and fairness — ensuring existing members do not subsidize new demand and providing equity among all members.

“Everything we do is for the benefit of our membership. Our core values are safety, affordability and reliability. We spend every dollar with a purpose, and it must align with our values to protect our members,” said Shane Burgess, CEO of Central Rural Electric Cooperative (CREC) based in Stillwater, Oklahoma, a distribution co-op serving nearly 25,000 meters across seven rural counties.

“We put every decision against these values; if it’s going to impact our membership in a negative way, we will not pursue it.”

Powering to protect

According to the Energy Information Administration, Oklahoma is No. 6 in the nation of growth in commercial sector electricity consumption. The increase is driven by computing facility growth such as data centers or cryptocurrency loads.

CREC is a member of KAMO Power, a generation and transmission cooperative based in Vinita, Oklahoma. KAMO Power and its member co-ops have experienced a significant increase in inquiries coming from data center developers as well as cryptocurrency loads.

Ted Hilmes, CEO of KAMO Power, explained data center loads are highly capital intensive and require costly feasibility studies as well as the need for investments in generation and transmission infrastructure. These loads must be approached carefully to ensure no risk is passed on to members.

“We work with potential loads to do necessary transmission studies and discuss options for a generation supply that meets their needs and does not place financial risk on the cooperative and our members,” Hilmes said.

Electric cooperatives across Oklahoma have established protocols to protect their members from undue financial risk associated with large loads. These measures include dedicated large-load tariffs, contractual requirements and upfront cost responsibility for developers—such as deposits, feasibility studies and any necessary infrastructure upgrades.

“Large loads pay their way. We are here to ensure there’s no cost-shifting from these new loads to our existing members. We are cautious and deliberate with these loads and work hard to ensure they do not negatively impact our reserves and reliability of transmission and generation,” Hilmes said.

A similar approach is followed by Western Farmers Electric Cooperative, a generation and transmission cooperative based in Anadarko, Oklahoma. CEO Gary Roulet said the cooperative has established a tariff for large-load members that requires developers to cover all costs associated with serving those loads. He noted the co-op is already investing in new generation to meet its own growing demand — which is unrelated to serving large loads — and that accommodating large loads would require substantial, capital-intensive investments in both generation and transmission infrastructure.

“The electric cooperative difference is that we put people over profits. We are not going to place that burden on our members,” Roulet said.

Powering the future

For co-ops in Oklahoma and across the nation, large loads present transformational opportunities and complex challenges. The loads can provide long-term revenue, support grid improvements and spur local economic development through an expanded tax base, ad valorem revenues, job creation and related community growth such as housing and increased economic activity. At the same time, large loads can introduce volatility, place strain on existing infrastructure and natural resources as well as heighten expectations around reliability, interconnection and sustainability. Successfully serving these loads requires thoughtful planning, member-benefitting rate structures, forward-looking power supply and risk management strategies to ensure that the growth of the digital economy strengthens cooperative systems and communities alike.

“We are in a transformational phase in the electric cooperative industry. We have never experienced growth at this pace — it is truly a game changer,” said Kari Hollandsworth, CEO of Golden Spread Electric Cooperative based in Amarillo, Texas, a generation and transmission cooperative serving the Oklahoma panhandle. “We are working closely with our member cooperatives to establish guardrails and prepare responsibly for the future as large loads come online.”

Hollandsworth emphasized that when managed correctly, data center loads can create meaningful benefits for cooperative members. Excess margins generated by these loads, for example, can be reinvested in system resilience projects that strengthen the grid for all members or set aside in reserve funds to protect against future uncertainty.

“Why would we take on risk if it doesn’t benefit our members? That’s not what cooperatives do,” Hollandsworth said.

“We must stay grounded in our core purpose — why cooperatives exist in the first place: to serve underserved rural areas and to foster long-term progress in our communities.”