title: 202. Amazon Data Centers Aren’t Raising Your Electric Bills—They May Be Lowering Them
author: The POWER Podcast
contenttype: podcast
publication: The POWER Podcast
published: 2025-12-29T18:17:36
sourceurl: http://dts.podtrac.com/redirect.mp3/feeds.soundcloud.com/stream/2238520289-user-755104578-202-amazon-data-centers-arent-raising-your-electric-billsthey-may-be-lowering-them.mp3
word_count: 4393
Hi, everyone. This is Aaron Larson, Executive Editor of Power Magazine, and you're listening to the Power Podcast. On today's episode, I'm joined by Mandy Ulrich. Mandy is the Senior Manager for Energy and Water America East at AWS or Amazon Web Services. Thank you, Mandy, for coming on the program, and please tell a little bit about yourself and what you do with AWS. Yeah. So first, Aaron, I just want to say thank you so much for having me on today. I'm really excited to get a chance to talk more about what we're doing at AWS when it comes to ensuring that we have reliable energy to support our operations and doing that in ways that are helping us to be good members of the communities that we operate in. So excited about being here today. Let me tell you just a little bit about my background. Unlike most people in the energy industry, I had me entering career path. I started actually out of college as a statistician at the Census Bureau, and I spent about 17 years in the federal government in lots of various roles. Primarily before leaving the federal government, I was leading large software development programs, such as moving the Census Bureau's data collection and processing systems over to support online data collection for the 2020 Census. So it was exciting to run a lot of those programs, but after 17 years, I sort of had a little bit of a bee in my bonnet, and I was ready to try out something different. And I did some research on a lot of companies at that time, and I found Amazon's leadership principles. And I don't know if you and your listeners are very familiar with those, but Amazon has a set of what we call our leadership principles that really set the stage for how we operate, how we think about problems and challenges, how we think about our interaction with our community, our customers, our stakeholders, and those leadership principles really resonated with me. They spoke to how I like to operate in my sort of space, not only at work, but also just in life. And so I applied for a job at AWS, originally as a technical infrastructure program manager. So that's how I started my career at AWS. And did that for a little while, where I was working to build out and data centers, and supporting sort of the pulling together of various pieces of our power, whether that's real estate, water, energy, construction to ensure that we work, delivering the data centers to support our customers on time. And after I have done that for a little while, I transitioned over to the planning side of our organization, where I led the program that projected our supply response across the globe for AWS and fed into our CAPEX planning. So it's really cool to see both of these parts of the business, both the planning side, as well as the execution side. But after doing that for a few years, I've been at AWS now almost seven years, which is such a long time, and it's been such a great experience for me, that I sort of was ready to try again, a little bit something new, sort of a common theme in my path. And at that time, I was really lucky enough to fall into an opportunity on our energy team at AWS in the Americas. At that time, I was leading our energy west and Latin America team. But it was really just an exciting thing. I know how important energy and water are to not just our ability to deliver data centers, but also just our world. I'm a mom for kids, and it's really important to me that I'm doing things in a way that not only are really supporting our way of life right now, but also are setting us up for a great future, not just for me, but for my kids and my future family too. So, fail into this role, and it's been, I like to say this has been my favorite job because it really has. It's an opportunity to work on really challenging problems, and at the scale that AWS delivers where we can have real impact on what's happening in our communities and across the world. So that's sort of my background and where I've come from and how I've gotten here. And so it's a fun time to be in this industry. We have a lot of work in front of us to continue to make grid enhancements, grid reform, grid support across the country. And it's a fun time to be in this space. Yeah, that's a really fascinating journey to get to the point where you are right now. And thanks for sharing all that background. So in your current role with Amazon Web Services, can you talk a little bit about how you work with utilities and energy providers and what that looks like for AWS? Yeah, so when we talk a little bit, we talk a little bit about how I'm leading the Eastern chart for our energy and water team. And so when we talk about ease, what that really looks like to us is the PJM market. So in that space, I work really closely with utility and energy providers to just make sure that our operations are being powered reliably while we're also benefiting local communities. So we need to support our customers that are leveraging these data centers, whether that be healthcare industries or the ability to online bank from my phone. And so we want to ensure that we've got the right reliable power to support that. And we want to do that in a way that is collaborative with our local utility partners. We know also that it takes a while to build out power infrastructure. And the utilities need to have a good plan in place to do that. And so we partner with those utilities that we're working with to come up with a plan, ensure that they know what our needs are to support our customers. And then we work to invest in that power grid infrastructure development improvements. So as we think about this, our big focus is ensuring reliable affordable energy while also supporting the grid modernization effort and making sure at the same time that we're really being good neighbors to these communities in which we operate. We we land our data centers in the community. We intend to be there for the long haul. And we want to ensure that, you know, we're supporting those communities in ways that are meaningful for them. You know, we hear a lot about the amount of power that's going to be needed for data centers. And obviously, Amazon Web Services is one of the largest data center operators. So what is your broader strategy for powering all of this infrastructure? You know, it's super interesting, as I was talking a little bit earlier, that this is like a cool time to be in this industry. And I think a lot of that is because we're seeing such an increasing dependence on technology. You know, whether that is the use of smart appliances, you know, in my life, in my house, when it's time for dinner, we use our Alexa to announce that it's time for dinner. So all my kids can come running or to make sure that we can see if our packages got delivered for all of the holiday shopping that we had been doing. And so whether it's that or whether it's streaming services, you know, spending time sort of cuddled on the couch. I have some kids in college. And so as they've come back, sort of spending some time catching up on our shows, on our streaming services. And then just leveraging a lot of these AI chatbots, those are really helping me as a busy working mom to make sure that I can use my time efficiently. And so we're increasingly dependent on these. Data centers are really that critical backbone that support all of this technology. We've seen such an increase with like global internet traffic or, you know, studies are showing that since 2019 that's up two and a half times. We're seeing like 40 50% of the global population with access now to 5G coverage. People are expecting that they're going to access these things on their phone and on their devices. And as we move into the future, even in 2024, 40% of companies were reporting that they were using AI. I know I'm using it at work. I know a lot of my friends have been talking about how they're using it work. And so we're continuing to see this. So this really just underscores why data centers are continuing to expand because they're so critical to supporting this digital access across the globe. But we got to do it in a responsible way when it comes to managing energy responsibly. And this is what is really cool about AWS and our approach here. We think about energy efficiency in lots of ways. One of those is how we think about our designs for the data centers themselves, you know, as we're thinking about these buildings, these structures that hold all of the storage and compute power. Those data centers, we're looking to make them more energy efficient. I talked a little bit at the beginning about how coming to AWS was really driven based on those leadership principles. We have some that are around invent and simplify and it's been really interesting to be surrounded by a lot of really smart people who are taking their design mark in very seriously. And so they've made some big progress here where we've seen in order to support sort of our AI workloads, this innovative design. We've seen our designs providing 12% more compute power tells us reduce the overall need for the number of data centers. We also think about that when it comes to cooling. And so with some more efficient cooling systems, we've been able to reduce the mechanical energy consumption. We have to 46% and then just even when we're thinking about the building itself, the structure itself, we have been using lower carbon concrete and steel, which has helped us reduce embodied carbon by 35%. It not just the building, right? We also think about how do we improve the efficiency of the compute and storage that's running within the building itself. And so we design our own purpose built chips and we've seen examples such as our graviton based instances that are using up to 60% less energy for the same performance and we're seeing wide adoption. We have over 70,000 customers that have currently adopted these chips. Not just our graviton instances are inference two based instances also are offering up to 50% better performance per watt. So we thought about it when it comes to how we build our data centers. We thought about it when it comes to what goes in those data centers. And we pay attention, right? We're a very data driven company and so we measure our performance. And 2024, AWS achieved a global power usage effectiveness. So that's PUE score that we talk about of 1.15, which is significantly better than the public cloud industry average. That's 1.25. And then when we look at sort of on-prem data centers where people are sort of managing this on their own corporate infrastructure, their PUE average is about 1.63. So we're excited when people move from these on-prem on-prem instances over to our very efficient way of managing. We have a lot of practice in the space and we've seen results from this such as a center had done some studies that showed that using that AWS infrastructure has been 4.1 times more efficient than when companies are managing this on on-prem. And maybe the other thing I think that's really important as you think about our broader strategy in addition to like how do we think about leveraging things more efficiently is also our progress towards carbon-free energy investment. You know, we have some really cool stats out there that I'm really proud of that we have been the largest corporate purchaser of renewable energy for five years now. We have enabled more than 600 renewable energy projects across the globe. And when we put that in context, that really is enough power enough to power enough renewable energy to power 8.3 million US homes. So very large numbers, I talked a little bit earlier about our ability to operate at scale and have impact at scale. This is like the impact that I'm talking about. We know that renewable energy is just one piece of a pie that we need to be looking at. And so we've also invested billions in nuclear energy. Your listeners have probably heard us talk about the small modular reactors and other nuclear powers that we've been investing in in Washington state and in Pennsylvania. We also are thinking about storage and what does battery storage look like? So we've invested in 11 solar plus battery storage projects that are helping to sort of deliver that stored solar energy when we see peak demand periods. And so through all of these efforts, we continue to set goals for ourselves. And probably everybody's heard a little us talk about this exciting goal that we had set to match 100% of our electricity consumption with renewable energy. And we completed that seven years ahead of schedule. So we continue to be excited about and investigating and trying and learning in order to get us towards our carbon free goals. Yeah, it is really fascinating to think about the scale that AWS is working at. I mean, you talk about the renewable energy that you've added and investing in nuclear power and battery storage. I mean, you guys have a portfolio that's larger than most utilities in the world. So it's truly phenomenal the scale that you're talking about. It's hard to imagine being in a place where I can have such impact as I get to have here. I'd like to talk about another study that was recently released by Energy and Environmental Economics Incorporated, which is also known as E3. And in that study, it was focused on Amazon data centers and how they impact local power systems. Can you tell us or tell listeners a little bit more about the study, how it came about and some of the key findings from it? Yeah, absolutely. We're really excited to talk about this. Another one of those leadership principles that we have at Amazon is dive deep. We really want to understand the data. We don't want sort of just make assumptions. We want to dig in and we want to do it in ways that allow us to get access to the information that helps us either prove or disprove what we believe. And so this study was super interesting because what we've really found here is that simple simple answer is that Amazon data centers are not being subsidized by other utility customers. So with these data centers that were evaluated during the study, they're projected to generate surplus revenues of $33,500 per megawatt in 2025. And then as we look into the future, in 2030, we expect that to increase to $60,650 per megawatt. So E3 is an independent firm and they have completed their own analysis and completed and shared their conclusions and their findings. Amazon did commission this study, but as I mentioned, this is really so that we can understand and have clear data that helps us understand and determine if Amazon data centers were increasing power bills for other US residents. And again, what we found was Amazon data centers are not being subsidized by other utility customers. Something that was like really interesting in the study and Aaron was that we know that as you know, as we talk about scale and in all of the various locations that we operate, we know that different market structures or different regulatory frameworks might look different. And so we actually within this had covered a diverse set of territories. We included large investor owned utilities in this study. So specific gas and electric and dominion energy. We looked at some midsize space when the investor owned utility with energy. And then we also worked with some cooperatives across the country. And so we've looked at the Eumatilla electric cooperative up in the Pacific Northwest so that we could really understand, you know, what does this look like across all of these various structures? And across that, what we saw was and what the study showed was that Amazon data centers are really driving crucial investments in grid infrastructure that are important to us and our immediate needs. But that are also supporting local residential and commercial growth and really helping to just improve system reliability for all of us as customers. And what does that ultimately mean for the utilities and customers that they're serving? Yeah, I think the bottom line here is that it means that Amazon fully covers its own electricity cost. These costs and expenses are not added to other customers' bills. An example would be if you think about our typical Amazon data center, 100 megawatts, that could generate $3.4 million in surplus revenues in 2025. And then again, as I talked about as we look into the future, that increased to about $6.1 million for that 100 megawatt data center in 2030. And with that, that financial surplus utilities like Entergy Mississippi or Pacific Gas and Electric and the others, they can use that to modernize the power grid. And what that does is it really improves your reliability for the benefit of all of the customers. As we think about sort of like where is this coming from? How does this work? These surplus revenues are really coming from the revenue that's generated through our arrangements with these utilities above the utilities regulated rate of return. And the utilities have obviously the discretion and ability according to their various regulatory frameworks to determine how to use those additional margins. But in Mississippi, very specifically, we saw that Entergy is using these investments from Amazon and other large customers. And they're using that to fund their $300 million super power Mississippi grid reliability campaign. They're doing it at no cost to the residential customers. And what they're targeting there is to reduce their outages by approximately 50%. That's an incredible that they're finding, you know, ways to reduce outages as a result. So that's great to hear. I know that I like my power to work when I want it to work. So it's a really important thing to do to help people. So as you noted, you know, the study found that the residential customers weren't subsidizing your data center operations. But another interesting thing that came out of this is that it noted that utilities and data center operators must continue to innovate to ensure that that doesn't change in the future. So can you share some examples of how Amazon is thinking about that and planning for the future? Yeah, absolutely. I have a few good examples of this. So, you know, while the E3 study does validate that the existing rate policies and structures have really been effective, you know, across these various markets and regulatory frameworks in preventing any cross-substitiation. But we are seeing that utilities are increasingly adopting these specialized rate structures for large industrial customers with really the intention that that, you know, we're ensuring that those large industrial customers are paying for their electricity and their infrastructure costs and preventing those costs from being shifted to other customers. And so we, as I was mentioning earlier, you know, in the start of those of your topic in the beginning, my team and our other, my counterparts across in our central and west regions, we really want to work closely with utilities and figure out innovative approaches so that we can power our data centers so that we can support grid modernization. That's important to us and to our communities who are, by the way, filled with our customers. And also that we ensure while we're doing it that we are covering our costs and they're not being passed on to other ratepayers. So, some cool examples of that. One, in Energy, Mrs. Cipi, I talked a little bit earlier about the superpower campaign. So, through the collaboration that we've had with Energy, Amazon is not only covering our own service costs, but we are helping to enable 300 million dollars in grid improvements that, as I mentioned, are intended to reduce power outages by 50 percent within five years. So, that is huge and really exciting. Another one is in the Indiana Nipsco Territory. We have the Nipsco GenCo project where we've worked with Nipsco to design this first kind agreement through the newly created subsidiary Nipsco Generation LLC. So, otherwise known as GenCo. And under that structure, it operates under a commercial contract term rather than that sort of traditional utility ratemaking, which then creates the separate generation company, which isolates economic risks from those existing repayers. So, Nipsco's existing customers will have no financial responsibility for powering Amazon data centers. And through that, as we're leveraging their existing transmission infrastructure, it helps to save a billion dollars over the life of the contract. So, we've also thought ahead, you know, I think one of the things that's important and I hear a lot is like, okay, this is great for now, but what about what's next? So, as we build out that agreement, we also have included provisions that ensure that any costs that are associated with any overruns or construction delays, and times these things happen, that none of those are passed on to Nipsco's existing customers either. I think one more example that I'd like to share is in the Pacific Northwest, I was talking a little bit about how we work also with cooperatives. So, with the Yamatilla Electric Cooperative, in 2023, we announced a self-supply agreement with them, which allowed Amazon to take on responsibility of sourcing and selecting the energy supply that will power data center operations. She's really cool for us for a few reasons. One of which is that it allowed us to really look and determine and include additional renewable energy resources into our plans as well. You talked about Nipsco and that for listeners that may not know is northern Indiana Public Service Company. Can you share a little bit more about that and why that particular project is so innovative? Yeah, you know, this one is really interesting. We talk about it a lot internally too, and are excited to talk about it externally. So, this is really a groundbreaking model, and in this model, Amazon is paying for all costs to power our Indiana data centers, and so really there's no financial responsibility that's passed on to any of these existing Nipsco customers. In this agreement, we are investing in three gigawatts of electrical capacity, and of that, 2.4 gigawatts are going to be used for our data center operations. But the other 600 megawatts there are reserved to specifically to support grid reliability for all of Nipsco's customers. So, as I was mentioning a minute ago, we will pay to use Nipsco's existing transmission lines, which generates approximately a billion dollars in savings that will then be passed back to customers over the term of the agreement. So, this really gives some very tangible savings to existing repayers, and isolates our costs. So, it's just a big win-win for everyone, and it also important, Maine, as we talked earlier about the importance of data centers to support the technological advances and our digital way of life that we have now. This project adds 2.4 gigawatts of power that accelerate data center capacity, which is really important, and it's doing that in a way that also is enhancing grid reliability through these new infrastructure investments. With that, we are also bringing to the table community benefits, as I mentioned, when we set up shops somewhere, we want to be a good neighbor and be a strong part of that community. And so, with this, we're bringing community benefits through thousands of high-skilled jobs, through significant tax revenue that go to benefits schools and other services, as well as workforce development programs. One of the really cool things about being at AWS is our work that we do with our in-communities program, where, you know, members of the AWS community go out and volunteer and participate in the local community. I know that I really get enjoyed doing that myself, and so it's just really cool to watch all of the great things we're doing to be good members of our community. While we're working hard to ensure that we have the power we need to support our customers, and to do that in a reliable way. Well, it's fascinating, and it sounds like you're doing really great work that is supporting communities, supporting the grid, and supporting your own necessary services. So, it's great to hear. Yeah. Well, thank you, Mandy. Again, for listeners. I've been speaking with Mandy Ulrich, Senior Manager for Energy and Water for America East at AWS. Is there anything that I haven't asked about that you think would be important to mention? You know, I just want to sort of reiterate that we're excited about the results of this E3 independent study that really just made clear and checked that our assumptions are accurate, that Amazon data centers are not being subsidized by other utility customers. And so, we're excited to keep covering our own electricity cost and keep from adding any of those expenses to anyone else's bill. Well, thanks again, Mandy, and keep up to good work. Thanks so much. Appreciate you having me today.