But states, utilities, and communities need to give guidance.
Above, a report from PBS Newshour (send them a contribution if you have not yet) on new research that shows data centers, if properly managed, can be a net positive for grids, by using capacity that normally goes untapped during most days of the year.
Electric grids are sized to meet the extreme peak demands that only come around a few hours of a few days every year. The rest of the time there is a lot of slack capacity in the system, that ratepayers still have to pay for.
But if big users like data Centers can come in and use that excess capacity during most of the year, but will agree to flex during the peak demand times, and make extra capacity available when it is needed – so called “demand response” – then that’s like having a virtual power plant on your system that costs nothing.
Joe Dominguez, CEO of Constellation Energy, describes here.
A recent report in the Detroit News gave hints that this kind of thinking is being built into a new Data Center proposed just south of Ann Arbor.
As part of the agreement, Wilmot said the data center will pay for new DTE energy storage systems. That means DTE can store excess energy to be used during peak hours or when the grid is otherwise strained.
“Most importantly, data center development in DTE’s electric service territory will not increase customer rates,” DTE Energy CEO Joi Harris said in a statement. “Recent legislation passed by the Michigan legislature ensures our customers will not subsidize data center rates.”
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Below, Texas energy analyst Doug Lewin prompts guest Astrid Atkins to flesh out how this thinking is being implemented on ERCOT, the Texas grid.
Ohio Manufacturers Association:
In fact, increased demand from data centers can sometimes lower rates by spreading fixed infrastructure costs — like poles and wires — across more users. The main culprits behind higher bills are the soaring costs of maintaining and upgrading the electric grid and safeguarding it from extreme weather. Between 2005 and 2024, transmission costs nearly tripled and distribution costs more than doubled.
But a new study from researchers at Lawrence Berkeley National Laboratory and the consulting group Brattle suggests that, counterintuitively, more electricity demand can actually lower prices. Between 2019 and 2024, the researchers calculated, states with spikes in electricity demand saw lower prices overall. Instead, they found that the biggest factors behind rising rates were the cost of poles, wires and other electrical equipment — as well as the cost of safeguarding that infrastructure against future disasters.
“It’s contrary to what we’re seeing in the headlines today,” said Ryan Hledik, principal at Brattle and a member of the research team. “This is a much more nuanced issue than just, ‘We have a new data center, so rates will go up.’”
North Dakota, for example, which experienced an almost 40 percent increase in electricity demand thanks in part to an explosion of data centers, saw inflation-adjusted prices fall by around 3 cents per kilowatt-hour. Virginia, one of the country’s data center hubs, had a 14 percent increase in demand and a price drop of 1 cent per kilowatt-hour. California, on the other hand, which lost a few percentage points in demand, saw prices rise by more than 6 cents per kilowatt-hour.
Data centres, and other massive energy users, shutting down occasionally when needed, would be VERY useful in maintaining/stabilizing the grid. Difficulties and excuses are legion. It can be done!