New Report Touts Pa.’s Data Center Potential

Pennsylvania has a “once-in-a-generation opportunity” to benefit economically by hosting large-scale data centers and supplying the power and manufacturing the equipment that development needs across the PJM regional grid footprint, a new study found.

The report, “Pennsylvania Builds the Cloud: Manufacturing, Energy, and Data Center Development” was recently released by the Pittsburgh Technology Council and the Philadelphia Alliance for Capital and Technologies. The study finds that the state can leverage its existing strengths in manufacturing and energy to become a leader in data center development.

Data center activity will generate about $12 billion in new annual economic output and support nearly 19,400 new jobs by 2036 in manufacturing, energy, services, and other economic sectors, the report indicates. That includes 8,500 skilled construction jobs and nearly 8,300 permanent data center operations jobs if the data centers are built. The report projects that data center capacity will expand from 182 megawatts (MW) of power in 2026 to more than 7,196 MW in 2036, representing 4,000% growth.

To meet that electric demand, a number of large, new power generation projects will have to be added quickly, which will also increase manufacturing capacity for the raw materials and equipment needed for their construction, as well as construction of data centers.

Regional grid operator PJM has been struggling to meet the rapidly rising electric demand and ensure reliability of the grid while also meeting the needs of data centers and is working to speed up its interconnection process. In addition, policy makers are working to develop standards for data center development that will ensure that grid reliability is maintained and that the costs of generation and infrastructure upgrades is paid by the developers, and not residential utility ratepayers.

Pennsylvania has the advantage of being able to leverage the “three-legged stool” associated with data centers: advanced manufacturing, energy generation and distribution, and data center development. This gives the state an advantage over others that may focus on just one area, the report contends.

It notes that the state already leads in manufacturing and energy generation, which is attracting strong interest from data center developers, with a number of hyperscale projects being announced in the past several years.

Pennsylvania is the top energy exporter in the U.S., sending some 85 million megawatt-hours (MWh) of power to other states. Because its generation sources are mostly natural gas and nuclear (91%) the supply of power is lower cost and highly reliable, the report said.

In addition, the state is the leading exporter of data center-related goods and services in the PJM region at $24.3 billion, providing products such as steel and other metal, electrical components and wiring, and natural gas.

If the state can build on these strengths by capitalizing on data center development it can create a cycle of growth that will continue to add industrial and manufacturing capabilities as well as grid modernization, and good-paying jobs, the report concludes.