Dive Brief:
- Google will fund a three-year, 100-MW virtual power plant in the PJM Interconnection with the aim of creating an “industry-leading scalable blueprint” for unlocking capacity to meet data center demand, the tech giant announced Tuesday.
- The company is partnering with VPP operator Voltus, which will aggregate distributed energy resources from residential, commercial and industrial customers across the regional transmission organization, a spokesperson for Voltus said in an email.
- Google has also worked to make its own data centers flexible, Amanda Peterson Corio, the company’s global head of data center energy, told Utility Dive, but reasons that it is often faster and more cost effective to pay other customers to shift their electricity usage. “The cost of capital in the data center, of our chips, can be billions and billions of dollars of hardware that only gets utilized to our customers if it’s running,” she said. “While there may be optionality for flexibility for some of our training of those chips, we want to make sure that we’re bringing all resources to bear from the system.”
Dive Insight:
The Google-Voltus deal, which the companies call a “first-of-its-kind,” comes amid rising electricity costs, shrinking reserve margins and aggressive load growth from artificial intelligence data centers, particularly in PJM.
PJM’s struggles, which have played out over several years of record-high capacity auctions and, more recently, reliability margin shortfalls, have prompted calls to overhaul the market or bring back some elements of the vertically integrated utility model.
Corio offered a diplomatic answer when asked in an interview if Google prefers to work in vertically integrated or deregulated markets, saying the company “partners across the ecosystem.”
“What’s really important, across any system, is transparency,” she said. “One of the great things about markets is that it allows us to get more information, to be more clear, to be able to do the modeling where distributed energy resources could be deployed, or to understand where there are bottlenecks.”
“There can be improvements in all market structures, quite frankly,” she added.
The pressure to meet rising demand, not only from large commercial and industrial loads but also broader electrification, is spurring a utility capital spending spree that is expected to surpass $1 trillion over the next five years. A significant amount is going to new gas-fired power plants that threaten the climate goals large companies like Google have spent years promoting.
But public backlash could alter those plans, with electricity prices taking center stage in several recent statewide elections. Three-quarters of Americans say they want stronger utility oversight, according to one recent report, which also calculated that utilities filed $9.4 billion in rate increase requests impacting 81 million people in the first quarter of this year.
The Google-Voltus announcement emphasized its potential to save on system costs, noting that expanding the grid to handle short periods of peak demand is “a primary driver of costs for electricity customers.”
“As a result, much of the nation’s electricity infrastructure and available capacity sits unused for most of the year,” it said. It said the partnership “establishes a repeatable path for other large energy users to follow.”
Corio said advancements in recent years have made it possible to build a multidirectional grid, not just a generation-to-load system, and she hopes the company’s new VPP can help.
“Our message to utilities is: Talk to us,” she said. “We’re very, very thoughtful about designing the structures today that 10 years from now we’re still going to like, and that can only happen if we work together and have greater transparency on both ends.”
