COMPUTE INFRASTRUCTURE The grid can't keep up with AI; data centers are bringing their own power plants

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A 170 kW edge data center located inside an Alaskan hydroelectric plant is a small example of a much larger shift toward self-powered compute infrastructure. The Cordova Electric Cooperative and San Francisco-based Greensparc have deployed a 170-kilowatt edge data center inside the Humpback Creek hydroelectric facility in Cordova, Alaska, co-locating GPU compute directly with surplus renewable generation on a U.S. Department of Energy-supported microgrid.

The project, announced by the National Laboratory of the Rockies in March, places server racks roughly 20 feet from the hydroelectric generators in a run-of-river plant that serves a remote coastal city of 2,600 residents. It’s a small deployment by any measure, but it reflects a structural shift now playing out across the U.S. data center industry: operators are increasingly siting compute where the power already exists rather than waiting years for grid access that may never arrive.

The U.S. grid interconnection queue has swelled to approximately 2,600 GW of backlog, with median wait times approaching five years and some data center projects facing potential delays of up to 12 years. That bottleneck is pushing the industry toward microgrids, behind-the-meter generation, and co-location with stranded or curtailed renewable energy at every scale, from a single hydro-powered rack in Alaska to gigawatt-class solar-plus-storage builds in the Nevada desert.

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Cordova's microgrid took shape between 2017 and 2023 through a DOE-backed program that brought automated load management, battery energy storage, underground cabling, and phasor measurement to the city's highly seasonal grid. Hydropower provided more than 83% of Cordova's electricity demand in 2025; however, Clay Koplin, CEO of Cordova Electric Cooperative , estimates that 20%–25% of available hydropower goes unused each year.

"We're spilling gigawatt-hours of excess hydropower," Koplin told the NLR. "This data center can put the excess to use."

Greensparc's modular deployment targets exactly that surplus. The company, founded in 2014, describes itself as an edge infrastructure-as-a-service provider that builds AI-ready data centers in communities with stranded or underutilized energy assets. Its systems range from 50 kW rural deployments to 1 MW-plus installations and can be operational within 120 days, a timeline measured in months rather than the years typical of conventional builds. Greensparc partnered with Hewlett-Packard Enterprise on the Cordova hardware and deployed the initial infrastructure in 30 days.

The Humpback Creek site offers a near-ideal power usage effectiveness ratio. Glacial meltwater from the run-of-river system provides year-round cooling for the server racks, and the physical proximity between generation and load eliminates transmission losses. Koplin noted that Greensparc aimed to push PUE as close to 1.0 as possible. For context, the industry average for conventional data centers sits around 1.58, while hyperscale facilities typically achieve roughly 1.2.

The DOE validated the microgrid-data center integration using the NLR's Advanced Research on Integrated Energy Systems (ARIES) platform, which emulates energy systems using real hardware in the loop. Murali Baggu, NLR's program manager for Grid Integration, said ARIES is "well-suited to discovering and validating solutions" for the uninterrupted power demands of data centers.

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A 2,600 GW traffic jam

Cordova's approach makes more sense in the context of the grid access crisis now facing the broader data center industry. The U.S. interconnection queue has roughly doubled since 2021, when it stood at approximately 1,400 GW. As of early 2026, the backlog exceeds 2,600 GW, and nearly 80% of projects entering the queue now withdraw, primarily because of unpredictable multi-year delays and grid upgrade costs that can consume 30%-37% of a project's total budget.

Data centers currently consume roughly 4.4% of total U.S. electricity, a figure projected to reach 11%-15% by 2030 according to Deloitte estimates cited by Woodway Energy. In the PJM Interconnection, which manages the grid across 13 mid-Atlantic and Midwestern states, capacity auction prices surged from approximately $29 per MW-day for the 2024-2025 delivery year to the FERC cap of $329 per MW-day for 2026-2027, driven almost entirely by forecasted data center expansion. In Texas, CenterPoint Energy reported a 700% increase in large load interconnection requests between late 2023 and late 2024, growing from 1 GW to 8 GW.

FERC Order 2023, issued in mid-2023, replaced the legacy serial queue with a cluster-based study process and introduced financial penalties for study delays. But, RMI noted that Order 2023 addresses only generator interconnection queues, not load interconnection, which is the primary source of multi-year delays for data centers. The DOE has formally urged FERC to initiate a separate rulemaking for load interconnection, but the jurisdictional boundary between state and federal authority remains unresolved.

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Bringing power to compute

The queue dysfunction is producing a practical response whereby operators are going where the energy already is. Soluna estimates that 30%-40% of U.S. renewable energy goes unused due to transmission constraints and curtailment. In West Texas, IREN has developed a 7.5 GW facility in Childress that purchases wholesale power during periods of oversupply from curtailed wind farms and reduces consumption when prices spike. In the Nevada desert, FFD Power is building an off-grid solar-plus-storage system in Tonopah for crypto mining operator TeslaWatt, with 7 MW of solar capacity expected online in spring 2026 and power costs as low as $0.029/kWh.

The economics are starting to favor these configurations across a range of generation types. A study by Loughborough University's Centre for Renewable Energy Systems Technology (CREST) found that off-grid hybrid renewable microgrids could deliver both lower costs and lower emissions than conventional grid power over a 35-year operational period in major European data center markets. Natural gas microgrids are also entering the picture, with companies like VoltaGrid deploying modular behind-the-meter systems that achieve up to 80% efficiency through combined heat and power.

An estimated 25%-33% of new data center demand through 2030 is expected to come from on-site generation. By the end of 2024, 62% of data centers were reportedly evaluating on-site power options, with 19% already implementing behind-the-meter solutions.

The National Hydropower Association has highlighted co-location with hydroelectric assets as a particularly strong fit, given hydro's baseload reliability and the aging infrastructure of many U.S. dams that could benefit from the stable revenue streams data center tenants provide.

The Cordova deployment at 170 kW, meanwhile, is a proof of concept. The principle that data infrastructure should follow existing energy rather than the other way around is operating at scales several orders of magnitude larger, and the gap between what the grid can deliver and what the AI buildout demands suggests it will only accelerate.

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