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It’s become the animating question in the U.S. electricity industry: How can power-hungry data centers get the energy they need?
The obvious answers have proven insufficient. Solar and wind power projects face yearslong wait times to interconnect to constrained grids. Moves to siphon off existing nuclear power to avoid these grid bottlenecks have proven controversial. And building new fossil gas–fired power plants will not only worsen climate change but may simply be impossible on the timeline that data centers require given current gas turbine backlogs.
But there may be faster and cheaper ways to bring lots of clean energy online to match new data center demand — it just requires some creative thinking.
One idea is to couple new clean power with some of the dirtier, if only rarely used, fossil-fuel power plants already connected to the grid — an approach that, counterintuitively enough, could end up not just faster but cleaner than alternatives.
That’s the proposition think tank RMI lays out in a recent paper describing the potential for so-called “power couples,” which the authors define as lots of new solar, wind, and batteries connected to existing fossil gas–fired “peaker” plants, which basically act as emergency generators for the grid at large, all in service of a data center or other facility that uses large amounts of power.
The biggest data centers now being planned across the country by tech giants like Amazon, Google, Meta, and Microsoft can use hundreds of megawatts to gigawatts of electricity. In some of the country’s biggest data center hot spots, there simply isn’t enough capacity left to connect that much new load right now.
But in the “power couple” structure, those data centers wouldn’t even draw from the grid, explained Uday Varadarajan, a senior principal at RMI’s carbon-free electricity program and co-author of the report. Instead, they’d be connected to clean power behind the “point of interconnection” between peaker plants and the grid at large.
That could also allow new large-scale clean power projects to connect directly to the data center. Some of those solar, wind, and battery developments are already permitted and awaiting grid interconnection — and all of them can be built much faster than new gas-fired power plants, according to industry experts. Allowing some of these projects to avoid the interconnection backlogs and grid upgrade costs would get clean power online much faster.
Of course, few if any data centers can rely solely on the sun and wind to serve their round-the-clock power needs, even with batteries to store some of that power for when demand is highest. That’s where the peaker plant comes in, Varadarajan said.
Peaker plants can serve as a circuit breaker of sorts between the grid on one side and the new data center and all its clean power and batteries on the other side. When there’s not enough clean power for the data center, “we allow the new load to draw from the existing gas plant in a limited way,” he said. The key is making sure the data center doesn’t impinge on when the grid needs that peaking power.
In that sense, the peaker plants are more like gas-fired backups for a largely clean power mix. It’s a natural fit: Peaker plants are designed to fire up only when the grid really needs them, largely during summer heat waves or winter cold snaps when demand for electricity peaks (hence their name).
That leaves a lot of hours when those plants aren’t using their connections to the grid at large — which creates an opening for clean power to use them, Varadarajan said. Developers will probably want to “overbuild” the amount of dedicated solar, wind, and batteries supplying data centers, so they can rely on those resources during more hours of the year. That means the renewables will often generate more than the data center needs at a particular moment, but in the power couple arrangement that extra power wouldn’t go to waste — it’d flow to the grid using the peaker plant’s oft-idle grid connection.
Importantly, from the perspective of a utility or grid operator, this setup is potentially far less disruptive than adding a big new load or trying to interconnect a brand-new source of generation, Varadarajan said. Many U.S. grid operators already have rules to allow sites that have grid connections to add different types of generation capacity or to use a power plant’s existing capacity more frequently.
And because the data centers will have all the power they need behind the interconnection point, power couples won’t have to enter the complicated technical and regulatory realm of projects that both inject and draw power from the grid — a status that can be a significant hangup for battery and “hybrid” battery-solar or battery-wind projects in some regions.
RMI mapped the lower 48 states for suitable power-couple sites, looking for peaker plants with enough available land within a 10-kilometer radius to be able to build solar power that can cover at least 60% of an accompanying data center’s annual electricity needs. But the sites identified in its analysis could add significantly more clean power than that — about 88% of the modeled data centers’ annual power consumption on average.
RMI’s analysis wasn’t limited solely to peaker plants. Of the roughly 160 power plants in its final report, just over 40 were combined cycle gas turbine (CCGT) power plants, a more efficient type of gas-fired power plant. Most CCGTs tend to operate regularly throughout the year to provide “baseload” grid power, but RMI looked at some “load-following” CCGTs, which ramp up and down as grid demand rises and falls, and are therefore idle often enough to supply a power couple’s data center needs.
As for cost, RMI’s analysis found that more than 50 gigawatts of new data center or “other concentrated loads” could be supported by power couple developments at an all-in price of no more than $200 per megawatt-hour. More than 30 gigawatts of that new construction could be powered at less than $100 per megawatt-hour.
Those prices are higher than what data center developers might expect to secure from utilities with low-cost power, ample grid capacity, and an eagerness for the economic development such customers could bring. They’re also higher than recent average prices for solar and wind power purchase agreements in the U.S.
But for the tech giants and data center developers competing for scarce space on crowded grids, price could no longer be as significant as being able to get power quickly. Industry analysts have calculated that Microsoft may be offering more than $100 per megawatt-hour for the power it will get from a deal with Constellation Energy to restart a nuclear reactor at the Three Mile Island site in Pennsylvania — and that’s for power that won’t be delivered until near the end of the decade at the earliest.
Faster routes to getting clean power online could be worth an even greater premium, Varadarajan said — and “a lot of the data centers aren’t particularly price-sensitive to begin with.” So the price ranges for the power couples RMI analyzed are “not completely crazy.”
The price points also vary widely across the sites that RMI modeled. In some cases, they can drop into the $60 per megawatt-hour range, well within striking distance of plain-vanilla power purchase agreements for clean energy — although those lower-cost options also tended to yield less annual clean energy supply.
Even at higher prices, solar and wind power that flows directly to data centers could be attractive for tech companies like Google and Microsoft that are striving to achieve 24/7 clean energy targets. “This is a product that’s giving you bundled capacity, energy, and clean power,” Varadarajan said.
In fact, the concept laid out in RMI’s report looks a bit like what Google and partners Intersect Power and TPG Rise Climate are undertaking in a plan to invest $20 billion through 2030 in newly built wind, solar, and batteries to mostly power new data centers.
Intersect Power CEO Sheldon Kimber has proposed that this is a better way to meet growing demand for industrial-scale electricity, rather than trying to negotiate the complex and sometimes contradictory regulatory and economic hurdles required to add generation and loads to utility grids.
Intersect Power has proposed building its own gas-fired generation instead of relying on existing peaker plants. Whatever the fossil-fuel backup source, Kimber told Canary Media that parts of the country with good solar and wind resources can probably power a big load like a data center with electricity that’s carbon-free about 80% or more of the year.
A power couple also looks something like the “energy parks” concept that think tank Energy Innovation put forth in a December report. Energy parks are combinations of large loads like data centers powered by new solar, wind, and batteries — and some fossil-fuel backup power — all connected to the grid at a single point.
For clean energy developers, the ability to secure a major customer and avoid grid interconnection wait times and grid upgrade cost uncertainties takes away a lot of risk, said Eric Gimon, Energy Innovation policy adviser and a co-author of the group’s recent report. “You still need permits — but you’re not waiting for years to learn if you can interconnect or not. And you’ve got a committed buyer” for the newly built power.
That’s not to say that current regulations make these kinds of projects easy. It’s probably simplest in Texas, where a deregulated energy regime has allowed clean energy and batteries to thrive. That’s where Google and Intersect Power are planning their first projects.
The situation is more mixed in other parts of the country, depending on the rules that apply. For example, RMI has tracked gigawatts of new generation added to existing power plants’ grid connections under so-called “surplus interconnection service” rules across the territories of the Midcontinent Independent System Operator and Southwest Power Pool, two entities that manage transmission grids and energy markets across a swath of Midwestern and Great Plains states.
But PJM Interconnection, which manages the transmission grid and energy markets providing power to about 65 million people from Washington, D.C., and 13 states from Virginia to Illinois, has only recently started amending its regulatory regimes to allow this surplus interconnection option in ways that energy developers say they can work with.
In many parts of the country where utilities retain monopolies over the right to build generation, operate power grids, and sell electricity to all customers in their service territories, pathways for other companies to build and own clean energy remain largely untested.
But those “vertically integrated” utility territories could also be a key venue for energy parks, according to Ari Peskoe, director of Harvard Law School’s Electricity Law Initiative.
Peskoe co-wrote a recent paper laying out the risk that utilities may build power plants and expand their grids to serve gigawatts of new data center demand and then pass on a disproportionate share of those costs to ratepayers.
Energy parks could help insulate everyday customers from these potential rate hikes, he wrote, since only the companies building the data center and the new generation would be responsible for the costs involved. But for that to happen, state lawmakers will have to make these arrangements legal.
Or utilities could build power couples themselves. RMI’s analysis finds that opportunities exist in the deregulated market of Texas and the backed-up grids managed by PJM but also across much of the Southeastern U.S. where utilities largely retain monopoly status over generation, grids, and retail customers. Those utilities face massive demand growth from prospective data centers — and pressure from tech companies to find cleaner options than gas-fired power plants.
The technical potential for using existing grid connections to boost clean power capacity is enormous. A report from think tank GridLab and the University of California, Berkeley found surplus interconnection sites across the country that could support nearly 700 gigawatts of new generation.
To be sure, that’s a theoretical maximum that’s almost certain to remain unrealized due to real-world constraints and basic energy economics. “But a screaming success would be that we could unlock 10% of that opportunity” over the next decade, said Ric O’Connell, GridLab’s founding executive director.
That won’t be simple to achieve. One early hurdle is setting up the contractual structures between existing power plant owners and the developers of data centers and clean energy, O’Connell said. Even when those are done, conflicts could arise between power-couple project partners and incumbent generators, transmission grid owners, and utilities.
“There’s a lot of regulatory risk behind this approach that I hope can be mitigated because the benefits are really strong,” he said.
Varadarajan agreed that power couples are “not an easy transaction to do. I’m not saying it won’t be complicated.” But as reports like those from RMI, GridLab, and Energy Innovation indicate, “this is a good opportunity for everyone to take a look at what they’ve got and use their interconnection rights to the greatest value.”
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