Data centers are flocking to Ohio. Here comes the transmission to support them

A stack of servers with various wires leading in and out of electrical boxes
Courtesy: Taylor Vick on Unsplash

If you build it, they will come.

Surely heeding the same whispers in the cornfields that directed Kevin Costner to build the Field of Dreams, electric utilities are proposing massive transmission projects to support the power demands of data centers, and investors want a piece of the action.

American Electric Power (AEP), which serves 11 states and owns the largest electricity transmission system in the country, announced an agreement this week for a strategic partnership between KKR and PSP Investments to acquire a 19.9% equity interest in AEP’s Ohio and Indiana & Michigan Transmission Companies (Transcos) for $2.82 billion. The Transcos are transmission-only, Federal Energy Regulatory Commission (FERC) regulated utilities that build, own and operate transmission infrastructure. The 19.9% minority equity interest represents approximately 5% of AEP’s total transmission rate base.

AEP says the transaction will support its five-year, $54 billion capital growth plan, which includes investments in transmission, distribution, and generation projects.

“Executing on our five-year capital plan is critical to meeting growing energy demand and bolstering reliability for our customers. Electricity demand is anticipated to grow significantly in AEP’s footprint by the end of the decade,” explained Bill Fehrman, AEP president and chief executive officer. “Areas such as Ohio and Indiana are experiencing growth that has not been seen for decades. This transaction allows us to address a portion of our capital needs efficiently and at a very attractive valuation, benefiting our customers and supporting economic development in our states.”

The Transcos have tendrils in PJM territory (Ohio, northeast Indiana) and on the Midcontinent Independent System Operator (MISO) grid (Michigan, the rest of Indiana). Both regions are grappling with reliability concerns amidst data center development, and the large power consumers fueling AI, storing your photos, and keeping TikTok tockin’ are popping up in some places you might not suspect.

The new frontier for data centers

Data center demand in the U.S. is growing exponentially. According to a recent study from the Electric Power Research Institute (EPRI), data centers could consume up to 9% of U.S. electricity generation by 2030, more than double the current amount. McKinsey & Company projects demand will eclipse 35 gigawatts (GW) by 2030, up from 19 GW in 2023. According to commercial real estate firm JLL, demand is expected to increase at a 23% compound annual growth rate through then. 

However, data center development is not evenly distributed across the United States. Instead, distinct pockets in several places across the country have emerged, usually lured by some combination of available capacity and friendly tax policy. 15 states accounted for an estimated 80% of the national data center load in 2023, with particularly high concentrations in Virginia, Texas, and California.

Known data centers by U.S. state as of January 10, 2025. Courtesy: DataCenterMap.com

However, increasingly limited interconnection capacity and higher costs are driving some developers into less-constrained states like Arizona, Iowa, and Oregon. Although northern Virginia and its “Data Center Alley” continue to dominate the U.S. and global markets, another attractive destination on PJM’s grid has recently emerged: Ohio.

Ohio is home to at least 172 data centers, the fourth-most in the United States, trailing only the aforementioned Virginia, Texas, and California. Ohio has more than neighboring Pennsylvania, Michigan, and Indiana combined. Developers enjoy favorable tax policies, like Ohio’s data center sales tax exemption, a robust grid with cooperative utilities, and communities eager to diversify their economies.

Housing operations for hyperscalers like AWS, Google, and Meta, Ohio’s electric demands are increasing by 10 times the historic growth rate, according to AEP, which has signed agreements that will nearly double the load it serves in five years. Columbus Business First reports that AEP has stopped signing new service agreements because of capacity constraints and the utility has a queue of more than 50 customers, mostly data centers, wanting more than 30 GW of power.

It’s clear AEP has got some construction to do- and it doesn’t plan to do it alone.

Big transmission plans

In September 2024, Dominion Energy Virginia, AEP, and FirstEnergy Corp. jointly proposed 18 new regional electric transmission projects in PJM Interconnection territory to address “an unprecedented pace” of load growth blamed on the proliferation of data centers, the electrification of transportation and heating, and increased domestic manufacturing. The projects, proposed through PJM’s Regional Transmission Expansion Plan (RTEP) process, would cross the Dominion, Allegheny Power (part of First Energy’s footprint), and AEP zones. The proposals include several new 765-kV, 500-kV, and 345-kV transmission lines in Virginia, Ohio, and West Virginia.

“By leveraging the expertise and resources of three industry leaders whose transmission zones border one another, we’re better able to develop superior and more cost-effective solutions required to effectively resolve reliability issues across the PJM region,” detailed Ed Baine, president of Dominion Energy Virginia. “These projects are more comprehensive and will be more effective than what each of our companies would be able to develop individually.”

One of them, the roughly 225-mile F8 Solution, consists of sub-projects that will cost nearly $2 billion (accounting for inflation) by when it is expected to be operational in June 2029.

PJM staff will use the proposals to develop a transmission plan to meet its pending needs, which, at the moment, are plentiful. Legacy generation sources are being retired in the region, as more renewables are added to the grid, changing PJM’s energy mix amidst staggering load growth. Ratepayers will start to see the effects this year on their bills, and will likely feel the impacts for many years to come, putting a serious damper on any ideas one might have about lighting a baseball field out in corn country- but at least we’ll have AI, right?

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