Can crowdsourcing help solve the data-center power crunch?

Data centers are creating problems for the congested, overburdened U.S. power grid. One company thinks it can crowdsource the solution.

California-based Voltus operates ​“virtual power plants” across North America, controlling the amount of electricity that participating homes and businesses consume or send to the grid via resources like rooftop solar and batteries.

Last month, the firm unveiled its ​“bring your own capacity” plan. Put simply, the idea is for data center operators to pay other utility customers to reduce their power use when electricity demand peaks, a move that would diminish strain on the system without disrupting computing processes at data centers.

That’s where the bring-your-own-capacity concept could fill the gaps, said Dana Guernsey, Voltus’ CEO and cofounder.

The approach benefits utilities and their customers because it’s a lot cheaper to reduce energy use than it is to build new power plants and infrastructure. And it benefits data centers by offering a much faster route to getting a grid interconnection, as developers wouldn’t have to wait years for utilities to bring new power generation online.

“The hyperscalers and data center developers are eager to fund this,” Guernsey told Canary Media. ​“It’s more affordable, it’s faster, and it’s an investment back into the communities.”

Voltus is in a good position to spearhead this work, she said. As a virtual power plant operator, it already aggregates backup batteries, electric vehicles, smart appliances, and other fast-responding technologies to provide on-demand relief to the grid. Voltus was recently dubbed the top company in this sector by analytics firm Wood Mackenzie, and after several years of rapid growth, it now has more than 7.5 gigawatts of scattered ​“demand response” capacity under management.

In general, virtual power plants, or VPPs, could meet 10% to 20% of U.S. peak grid needs in the coming years and save utility customers roughly $10 billion in annual costs, according to a U.S. Department of Energy analysis released in January. Voltus’ new plan is to harness the power of VPPs to help specifically with the data-center-driven electricity crunch — a creative idea with big potential, if the company can convince utilities to play ball.

“The right way to serve data center load quickly, at scale, and less expensively and more sustainably, is to leverage the existing resources on the grid as efficiently as possible,” said Brian Janous, Cloverleaf’s chief commercial officer.

Data centers, which are facing yearslong wait times to connect to the grid, are considering every available option. In Wisconsin, Cloverleaf is planning a flagship data center project that could draw up to 3.5 gigawatts of power from the grid when it’s fully built at the end of 2030. Cloverleaf has worked with utility We Energies and its parent company, WEC Energy Group, to develop a tariff that will put the onus on Cloverleaf to pay for the new resources the utility is building to meet its facility’s energy needs.

While specifics on that deal remain confidential, Janous noted that it could include demand response and VPP resources.

“The conversation we’ve been having with utilities is, we want to connect fast. If you tell us, ​‘You have to come back in seven years, after the completion of my latest gas-fired power plant,’ I’ll go somewhere else,” he said. But if Cloverleaf can work with a company like Voltus to supply the necessary energy capacity within months, a utility may be able to connect a data center faster.

Guernsey highlighted other examples of data centers bringing their own capacity to utilities. In August, Google announced agreements with Indiana Michigan Power and the Tennessee Valley Authority to reduce the peak loads of data centers in their territories.

But part of Google’s deal with Indiana Michigan Power includes transferring credits for a portion of carbon-free energy Google has contracted to serve its data centers in the region to help the utility meet its capacity requirements. In this case, the tech giant offered up its renewable-energy resources to cover its data centers’ power use, but Google could have leveraged VPPs for that purpose just as easily, Guernsey said.