Nevada’s biggest utility might develop fossil fuels to meet data center demands

Nevada’s largest utility company, NV Energy, has revealed it would need triple the electricity currently required to power Las Vegas just to accommodate proposed data centers in the state. Company officials acknowledge that meeting this demand without using fossil fuels will be nearly impossible, potentially derailing Nevada’s clean energy goals of achieving 50% renewable power by 2030.

“I can’t remember a time in the history of the industry where we’ve seen as much interest in adding load, which is primarily driven by data centers,” said Shawn Elicegui, senior vice president of regulatory and resource planning for NV Energy, which serves 90% of the state.

This predicament isn’t unique to Nevada. Across the United States, utility companies are struggling to balance the surging electricity demands from data centers, particularly those powering artificial intelligence applications, with long-term plans to transition away from fossil fuels toward renewable energy sources.

In North Carolina, another state experiencing rapid data center growth, the largest utility is revising its long-term strategy to delay coal plant retirements and build additional natural gas facilities. State legislators have removed an interim carbon reduction target, raising concerns among environmental advocates about meeting the state’s 2050 zero-carbon goal.

Meanwhile, NextEra Energy, which provides commercial electricity across more than a dozen states, has abandoned its goal of zero emissions by 2045, citing overwhelming “demand for all forms of power generation” in a recent business filing.

The environmental implications of this trend have alarmed conservation groups. “It’s very alarming, and it’s probably the single largest natural resource issue of our time,” said Olivia Tanager, director of the Sierra Club’s Toiyabe chapter in Nevada.

Nevada has become one of the fastest-growing data center markets in the country, attracted by the absence of corporate income tax, affordable land, and generous tax incentives. Dozens of facilities already operate in the state, with more planned. This growth has sparked debate among lawmakers about balancing economic benefits against environmental commitments.

Industry representatives argue that data centers are part of the solution, not just the problem. “The industry was responsible for half of all corporate clean energy procurement in 2024,” noted Dan Diorio, vice president of state policy for the Data Center Coalition.

However, the expansion of renewable energy infrastructure isn’t keeping pace with demand. Nationally, gas turbine orders face significant backlogs, and renewable energy projects require extensive time for approval and development.

Some companies are taking matters into their own hands. South of the Las Vegas Strip, the Switch data center occupies nearly a square mile and runs entirely on renewable energy. Unlike most competitors, Switch is licensed to build its own renewable energy sources at utility-scale capacity.

“We’ve built 1 gigawatt of solar energy and are in the process of building more solar fields,” said Jason Hoffman, Switch’s chief strategy officer. The facility uses NV Energy’s grid only for electricity delivery while sourcing power from third-party suppliers. During summer heat waves, when cooling demands increase, Switch can operate independently from the grid.

By contrast, many utilities and tech companies are turning to gas-fired generation. In Northern Nevada, environmental groups have raised concerns about multiple proposed data centers that would use hundreds of diesel-powered backup generators, potentially worsening air quality.

The issue has sparked community opposition. At a recent seven-hour legislative meeting, Nevada residents voiced concerns about noise pollution from data centers, as well as potential impacts on water supplies and energy costs. Similar opposition has emerged in Boulder City, home to the Hoover Dam.

NV Energy requires data center developers to fund their own infrastructure and energy needs but doesn’t mandate renewable sources. Nevada pioneered a voluntary funding model allowing companies to finance the utility’s clean energy development and count it toward corporate sustainability goals. This approach led to the development of a geothermal plant in Northern Nevada with Google as a partner.

Environmental advocates are pushing to make this model mandatory but worry it still wouldn’t generate sufficient clean energy to meet demand. They also fear NV Energy might expand fossil fuel dependency without guarantees that proposed data centers will materialize.

Elicegui said the utility will require companies to sign binding contracts before building new power generation. “Growth is welcomed,” he stated, but companies must take responsibility for additional power load created on their behalf “whether they show up or not.”

Nevada’s public utilities commission could impose fines or grant exemptions if NV Energy fails to meet state renewable energy standards. The utility is expected to publish a detailed report by month’s end.

Democratic Assemblymember Howard Watts of Las Vegas has taken a firm stance on the issue. “Building more gas plants seems like going in the exact opposite direction of what we need to do as a state,” he said, emphasizing Nevada’s “tremendous solar and geothermal energy potential.”