Silicon Valley’s vacationland needs a new energy provider just as AI is driving prices up

It’s no secret that AI data centers are putting strain on the network. But Silicon Valley is relatively isolated from all this, thanks to high land and energy prices that have pushed hyperscaler projects elsewhere.

However, the tech elite could soon get a taste of the power crisis. The Bay Area’s vacation destination, Lake Tahoe, has less than a year to find a new energy supplier.

Liberty Utilities’ agreement with NV Energy expires in May 2027. NV Energy’s power will be deployed elsewhere in Nevada, where data centers are booming.

Both Liberty Utilities and NV Energy have said the phase-out has long been planned; and NV Energy say data centers are not to blame. But it’s hard to understand why they don’t play a role. NV Energy alone has applications for more than 22 gigawatts of load, what if a Bloomberg report points out that this is more than forty times what Lake Tahoe uses at its peak.

If data centers were not in play, you could easily see a world where Liberty Utilities and NV Energy renew their contracts. But because data center customers are willing to pay whatever it takes to get electricity, it was inevitable that traditional customers in Lake Tahoe would be left out in the cold.

The timing couldn’t be worse. Energy markets are a tough environment today, strained by rising demand and tightening supply, exacerbated by the Trump administration’s decision to attack Iran.

Lake Tahoe’s conditions are made worse by the fact that its power lines share more connections with Nevada’s power grid than California’s. This means that the community must either find another energy supplier within NV Energy’s territory or elsewhere in the West.

Given that NV Energy has already prioritized data centers over the mountain town, it’s likely that Lake Tahoe residents — and second-home owners — will have to find another regional energy producer.

That won’t be easy either. One is over there, in Utah, a county commission recently approved a 40,000-acre data center development that could consume up to 9 gigawatts of electricity when completed. Today the entire state uses Utah about 4 gigawatts. It’s almost certain that demand on that scale will push up prices across the region.

The confluence of these factors means that Lake Tahoe will likely pay more for electricity next year than it does now. Locals will be hit hardest, but people who own second homes in the area, many of whom are from Silicon Valley, may also feel the pinch.

The injustice of the AI ​​energy crisis is that the people who suffer most from it have had very little say in the technology or its rollout. Lake Tahoe’s power situation shows this is starting to change, but probably not enough to make a difference.