Data Centers and SRP

A data center is a facility that houses networking equipment, computer servers and storage systems used to securely process, store and manage large amounts of digital data.

Large load customers (those with at least 20 megawatts of forecasted load), including data centers, require new infrastructure to meet their needs. Infrastructure includes dedicated substations, upgraded and new transmission lines and additional generation capacity, among other things.

SRP is committed to ensuring that the addition of new data centers in our service territory does not create a cost shift that increases electric prices for other customers. Like all new large business customers, data centers must pay upfront for the costs of new infrastructure to serve them, which may include new and upgraded transmission lines, substations, and more.

SRP recently took additional steps to further protect residential customers from cost shifts associated with adding new large load customers:

• In 2025, SRP introduced the Large Customer Integration Process to address requests for electricity for new large business customers such as data centers. This process requires a comprehensive engineering study to identify new infrastructure and other system upgrades required to serve new large business customers requesting service. SRP gives these potential customers cost estimates for their specific upgrades. The customer must pay these costs upfront, so they are not paid by other SRP customers. This process also helps make sure only viable projects move forward. 
• Large business customers that first take service after Nov. 1, 2025, are subject to new conditions within SRP’s E-67 price plan and must enter into an Agreement for Electric Service. The Agreement for Electric Service, among other things, establishes a long-term contractual framework for electric service under SRP’s E-67 price plan and includes significant commercial commitments that help mitigate financial risks to other customers and support the infrastructure investments needed to serve the load. These commitments are required in advance, often years before the customer is connected to the grid, and include:
  • 15-Year Minimum Term: The customer must commit to paying for its forecasted power requirements before SRP invests in the generation resources needed to serve them.
  • Collateral: The customer must provide substantial financial security protecting SRP and its other customers if the customer fails to meet its contractual commitments.
  • 80% Minimum Demand Charge: The customer is subject to a minimum billing requirement, with their demand charge based on the higher of their actual demand or 80% of their forecasted demand. This provides revenue certainty, even if the customer uses less power than originally projected and protects against shifting costs of building new generation assets to other customers.

SRP cannot refuse to serve a data center that meets all of SRP’s terms and conditions for service. Local governments determine whether data centers are appropriate for their communities, and what permits, entitlements and approvals are required. Like any other customer in SRP’s service territory, once a data center satisfies SRP’s conditions for service, SRP will plan for and work to serve their electrical needs.

Data centers have a wide range of energy use. Some data center sites require just a few megawatts, while large scale data centers may require hundreds of megawatts of power. For perspective, SRP's current generation capacity is approximately 13,000 MW. Some of the larger data centers currently in SRP’s system have a capacity load of 200 MW.

Data centers contributed 7% to SRP's summer 2026 peak demand record and are projected to be SRP's fastest-growing customer segment.

SRP assesses new data center needs through its Large Customer Integration Process, which helps ensure only viable projects move forward and requires the customer to pay upfront for the new infrastructure needed to serve them. As data centers move through the process, SRP will begin planning to meet their load forecast.

SRP obtains customer-provided load estimates, then supplements the customer-provided information with our knowledge of industry best practices and our own experience with data center customers. SRP then determines the generation, transmission and distribution equipment and infrastructure needed to meet this substantial load without risking the reliability of the system.

This expected data center load is further incorporated in SRP's total system through our Integrated System Plan, which aligns generation, transmission and distribution strategies. This approach prepares SRP for electrification, integrating distributed energy resources, and managing rapid load growth, while keeping power affordable and reliable.

It currently takes between five and eight years to complete the transmission infrastructure needed to serve a new data center.

SRP is among the most reliable utilities in the nation, according to the U.S. Energy Information Administration*. SRP will continue to take appropriate steps to maintain exceptional reliability.

SRP conducts extensive system planning to prepare for and accommodate load growth while maintaining reliable and affordable power.

Most cities in SRP's service territory have policies for water use that require new industrial water users, including data centers, to limit water use. In some cases, high intensity water users are required to acquire their own water supplies to avoid impacts to existing water users.

SRP is a raw water provider to local municipalities and does not provide water directly to data centers. As careful stewards of one of the Phoenix metropolitan area's largest water supplies, SRP continues to work with state and local municipalities to support a strong economy and plan for future growth.