Can a data center developer bring its own capacity to the grid without building a power plant? Google is betting a gigawatt on it. On 22 October Google and Voltus, a company that aggregates distributed energy resources, announced that they will expand their virtual power plant in the PJM region by 1,070 MW. The two had signed for 100 MW in June.
How The Capacity Is Collected
Voltus signs up homes, shops and factories and pays them to reduce their consumption when the grid is under strain. The flexible load comes from batteries, smart thermostats, adjustments to industrial processes and, according to Utility Dive, on-site generation. Participants are paid through bill savings and direct payments, and Voltus offers the pooled capacity into PJM's market. Google funds the programme.
The ramp-up is not quick. A Voltus spokesperson told Utility Dive that full capacity should be reached in three to four years and that the contract with Google runs until 2040. The companies call it one of the largest distributed capacity portfolios a hyperscaler has deployed; according to Utility Dive, Voltus has about 8.5 GW of distributed assets under contract across North America.
Why PJM, And Why Now
PJM, the largest wholesale market in the United States with 67 million customers in 13 states and Washington, D.C., has fallen short of its reliability margins while capacity prices rose, with data center demand a major reason. Its market monitor, Monitoring Analytics, has argued that data centers and other large loads should bring their own new generation before they connect. PJM's own "bring your own new capacity" proposal, which included curtailing large loads without new supply during grid stress, was largely rejected by FERC earlier this month.
Against that background Google presents the deal as its own contribution of capacity to the grids that serve it. Voltus describes the arrangement as an alternative route to interconnection for data center developers, comparable to the power purchase agreements that once financed wind and solar.
Load Reduction Is Not Backup Power
A virtual power plant takes load off the grid at the peak; it does nothing for a hall when the utility feed is lost. The standby generators of a data center stay exactly where they were. What changes is the argument at the interconnection table: capacity that can be shown to the grid operator without new turbines or engines on site. Note also that many of the businesses enrolled will use their own on-site generators to cut their draw, so some of those engines may run more hours than before. Whether their cooling and maintenance plans were written for that is a fair question for every site that signs up.
Sources: Voltus, Utility Dive
