A defunct Kansas City, Kansas, power station astride polluted land has caught the eye of investors eager to develop an energy-hungry data center.
The investors have offered to pay millions of dollars for the environmental remediation of the Kansas City Board of Public Utilities’ defunct Quindaro Power Station — and then some.
The Unified Government of Wyandotte County and Kansas City, Kansas, last month said it was considering selling the site to PowerTransitions for $13.6 million so a new data center could be built that will require 192 megawatts to power.
What the investors want is access to the well-developed electric grid sitting idle at the Quindaro plant that will enable developers to get the data center up and running faster than would otherwise be possible. The plant was shuttered in 2019.
It is all a part of the Kansas City area’s scramble to attract new data centers and cobble together the electric resources that will be required to power them.
Cities around the country and world believe such facilities will make them players in artificial intelligence (AI) and related new technologies of the 21st century. The data center race, though, comes with a significant side effect.
Andrew French, chairman of the Kansas Corporation Commission, said, “The demand for electricity is going through the roof.”
Powering data center projects
All that progress will come at a steep price on the energy front.
Many expect electricity demand to double in the Kansas City region as an array of new data centers open here as our economies are transformed by AI and related technology.
Google is already developing a $1 billion data center at the Hunt Midwest Business Center in Kansas City’s Northland. Meta, parent of Facebook, will spend more than $800 million, also in the Northland, according to published reports.
Potentially eclipsing all comers is a proposed $12.6 billion dollar data center on a 548-acre site near the Kansas Speedway now being considered by the Kansas City, Kansas, Planning Commission.
That project alone would potentially consume 600 megawatts of power, roughly what BPU can muster today for all its nearly 65,000 customers.
State and regional energy officials are watching that project and all other data centers in the wings as they plan to make sure that there is enough electricity and rates will remain affordable.
The changes coming to the grid, one expert said, will be more sweeping than anything that has transpired in many decades.
“This is a huge issue for the electric sector,” said Ashok Gupta, with the Natural Resources Defense Council in Kansas City. “They haven’t seen demand growth like this since air conditioning.”
A shuttered power plant
BPU closed Quindaro in 2019 in the face of growing opposition to the climate impact of burning coal. Its two coal-burning power plants pumped out 1.5 million tons of carbon dioxide and particulate emissions annually, worsening global warming and contributing to the rate of heart and asthma attacks, according to industry reports.
Last month, the Houston-based energy company PowerTransitions said it would repurpose the 85-acre power plant site at 3601 N. 12th St. to put up a data center.
Earlier this month Partners Group, a global investment firm that originated in Switzerland and now manages $150 billion in global assets, announced it will acquire PowerTransitions — that’s how fast deals in this marketplace are happening.
Partners Group, in a release, explained its motivation for snapping up PowerTransitions, which, in turn, explains the value of Quindaro to them in far-off KCK:
“PowerTransitions is benefiting from several thematic tailwinds as aging energy infrastructure in the U.S. is faced with rising power demand from the expansion of data center capacity, the reshoring of manufacturing, and the electrification of the economy,” according to the Power Group.
“The unprecedented growth in demand is expected to require over 130 GW of new power generation capacity in the next five years, which can only be met with a ‘multi technology’ approach. Additionally, permitting and interconnection delays are making it more difficult to develop capacity on greenfield sites, an issue that can be partially addressed through the redevelopment and optimization of legacy and retiring sites to meet growing demand.”
The purchase price of the Quindaro Power Station will fund part of the estimated $20 million expense of cleaning up the site, including demolishing the two power plants and a water treatment plant. PowerTransitions will cover the balance of the costs, according to a published report.
The site will be ready for data center construction around 2027.
Regulatory questions
Meanwhile, Missouri and Kansas state regulatory commissions are working to come up with detailed plans to enable Kansas CIty’s Evergy to produce up to twice as much electricity as it cranks out today. In Kansas, an order is expected by late November.
Gina Penzig, an Evergy spokeswoman, said, “If all the potential new customers came to our area, it would nearly double the demand for electricity.”
“Communities we serve in Missouri and Kansas are seeing significant interest from large businesses ranging across advanced manufacturing, logistics and technology,” Penzig wrote in an email. “We have initiated processes with both commissions to establish pricing structures that recognize the benefit adding large power users can have on the shared power grid and that provides assurance existing customers don’t subsidize new large customers.”
French, chairman of the Kansas Corporation Commission, whose agency is reviewing Evergy’s filing, said that one concern will be establishing “guardrails” protecting all customers if, say, a large data center sets up shop then decides to leave in a few years, or discovers ways to become more efficient and uses less electricity than the utility has built up for them.
The KCC regulates private investor-owned utilities like Evergy but not government-owned ones like BPU.
But French said he has some serious questions about Red Wolf DCD Properties’ plan to build a 1.8 million-square-foot behemoth data center west of the Kansas Speedway.
“It’s still kind of half-baked,” French told The Beacon.
“It would require 600 megawatts and we don’t have it,” he said. “They would rely on the region. That is not how the SPP — the Southwest Power Pool — works. The local utility has to have power plants to serve it.”
The SPP is a regional power transmission organization under the purview of the Federal Energy Regulatory Commission. It oversees the grid in all or part of 14 states, including the Kansas City area.
Seth Blomeley, SPP spokesman, said in an email: “Large loads present the energy industry with unique opportunities and challenges. SPP’s role is to help embrace these opportunities for the region, while ensuring we are establishing appropriate technical requirements, processes and procedures to reliably integrate and operate large loads. Toward that end, we also work to ensure adequate energy supply and transmission to prepare the grid for large load integration.”
In other words, data center developers’ wishes to power their AI factories will have to pass muster with the SPP, in addition to state regulators in Topeka and Jefferson City. As anyone familiar with how the grid oversight works will tell you, the process will be complex and time consuming.
Who pays the data center price?
Also watching developments surrounding data centers are environmental groups battling climate change.
“This is a huge issue for the electric sector,” said Gupta. “There’s lots to deal with. Costs are going to be higher, there is the emissions impact.”
On one hand, data center owners intent on using renewable energy may be attracted to this area because of the abundance of clean wind-generated electricity in the plains of Kansas, he said. Wind now accounts for 46% of Kansas power generation.
But other data center developers that are less concerned with climate change may be attracted to Kansas and Missouri because both states have less onerous restrictions on power plants that emit carbon dioxide than, say, California, New York or Illinois, Gupta said. That could increase the region’s emissions.
Then there will be the impact of growth on electricity rates to consider.
“The question really is can we meet electricity demand without shifting costs? This rate allocation will be a detailed conversation at the utility commissions,” Gupta said.
“There are a lot of opportunities for creative things to happen,” he said. “It’s going to be all hands on deck to figure this out.”
This story was originally published by The Beacon, a fellow member of the KC Media Collective.
