Greg Abel sees big growth for utilities on data center buildouts

Greg Abel, CEO of Berkshire Hathaway Energy, highlighted the significant growth opportunities for utilities driven by the increasing energy demands of data centers and hyperscalers, particularly those associated with artificial intelligence. He cited Iowa as a prime example, where Berkshire Hathaway Energy serves nearly 50% of the state and already supplies 8% of the peak load for four very large hyperscaler data centers. Abel noted that the company plans to increase this by 50% over the next five years. Abel emphasized a core principle: the full cost burden of energy infrastructure for data centers must be borne by the hyperscalers themselves, preventing any impact on the rates of other customers. He pointed to MidAmerican Energy, a Berkshire Hathaway Energy subsidiary, as a successful model, where despite significant data center infrastructure development, their rates remain 45% below the national average. However, Abel also addressed challenges, particularly the "regulatory compact." This compact, which involves a specific set of returns for capital investment based on assumed risks, is becoming stressed due to factors like inflation and the rapid growth of data centers. He explained that regulators and governors often want to avoid rate increases and transfer risk back to utilities. Abel asserted that Berkshire Hathaway Energy will only deploy capital into these businesses if the balanced return and risk model is maintained.