Industrial electrification in the era of data centers: A Bayesian Optimization approach for grid-aware large load allocation

Jiyong Lee; Erhan Kutanoglu; Michael Baldea; Ilias Mitrai

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arXiv · 2606.23452

Industrial electrification in the era of data centers: A Bayesian Optimization approach for grid-aware large load allocation

Jiyong Lee·Erhan Kutanoglu·Michael Baldea·Ilias Mitrai

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Abstract

Large loads from industrial electrification and data centers are reshaping the planning and operation of the power grid. Identifying optimal large load siting decisions while accounting for transmission congestion is key to reducing expansion cost and operational risks. In this paper, we propose a leader-follower bilevel optimization framework to identify optimal large load allocation strategies. The leader determines the allocation of large loads, while the followers determine grid expansion cost and transmission utilization. This modeling approach explicitly integrates strategic planning with detailed short-term operational decisions. Moreover, we develop a Bayesian Optimization approach to efficiently solve the bilevel optimization problem by treating the followers as a black box. We use the framework to study large-scale load allocation from electrified oil refineries and data centers on a synthetic power grid that resembles key characteristics of the Texas (ERCOT) system. The results show that these large loads compete for electricity, and under high-load scenarios, data center demand is distributed across the entire grid, avoiding regions with high demand from industrial electrification.

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Jiyong Lee, Erhan Kutanoglu, Michael Baldea, Ilias Mitrai. 2026-06-28. Industrial electrification in the era of data centers: A Bayesian Optimization approach for grid-aware large load allocation. https://arxiv.org/abs/2606.23452

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