In the ongoing power crisis, the demand for strategic cooperation between data center developers and grid operators is stronger than ever before.

For many years, data center operators have largely regarded electricity as an internal matter: how to lay cables where needed, how to improve power efficiency (PUE), and how to better monitor power management. But now attention is directed to the outside. Modern power issues are all about how to obtain more electricity for data centers, how to add renewable resources, and how to better collaborate with utilities.

For example, microgrids may provide opportunities to address the burden on the power grid and transform data centers into better grid citizens. However, due to the stark contrast between data centers and utility companies, the implementation of these measures may be both difficult and expensive. What is emerging is the need for strategic cooperation between data center developers and power grid operators.

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"Data centers and utilities have completely opposite cultures," said Allan Schurr, Chief Business Officer of Enchanted Rock, a microgrid expert.

Data center operators may expect the power grid to provide fast services. But they are just a voice in the rapidly changing power infrastructure. Most utility companies are under attack from consumers, industries, and regulatory agencies from all directions. In the past few years, they have had to cope with more changes compared to the past 50 years.

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Rick Rys, Consulting Director of ARC Advisory Group, stated that the new market for wholesale energy, capacity, and ancillary services is having a significant impact on the operation of the power grid and the financial impact on energy suppliers and consumers.


Understanding the field of utility
At the World Exhibition and Conference on Data Centers held in Washington D.C. this year, Schurr explained how the public utility sector operates and what is important to it. He said that the power grid is the most complex machine in the world. It must constantly balance supply and demand. An error can be catastrophic and take several weeks to resolve.
Therefore, power grid operators and utility companies often have a conservative mindset. They must design networks for worst-case scenarios such as winter storms Uri and Elliott, in which utility companies must take turns cutting off power to avoid grid collapse. They must also arrange sufficient electricity for the expected peak demand so that they will not be in short supply.

In terms of increasing electricity, they are unlikely to lay the red carpet for data centers that now require an additional 10 megawatts and new transmission interconnections.

"Utility companies believe that interconnectivity is a long-term commitment that may extend much longer than the lifespan of data centers," Schurr said.

Using Public Utility Data Centers
Michael Donohue, Managing Director of Business Development at Cumulus Data, is optimistic about how data centers and utility companies can coordinate their work.

"Some people are worried that we will run out of electricity, but we think it's unlikely," he said. It is quite feasible for data centers to collaborate and integrate with the power grid.

He supported his assertion of electricity availability by showcasing the ERCOT power district in Texas. He said that except for a few hours a year, the price is relatively low. The sudden peaks and extreme prices of these points have caused some people to worry about a shortage of electricity, but for most of the year, there is more than enough electricity.

Donoho added that Texas is a model for how the country can respond to soaring electricity demand. Although the electricity load of most utility companies has not increased for decades, the state's load has been steadily increasing. However, the power grid has responded relatively well. Texas has also been steadily increasing its wind and solar power generation, while gradually phasing out its coal-fired power plants.
"The problem really lies in familiarity," Donoho said. Employees of utility companies outside of Texas have been working for 20 years without ever addressing the issue of load growth. However, now they are facing huge growth due to artificial intelligence, data center expansion, and electric vehicles.

At ERCOT, prices hover around $25 per kilowatt for most of the year. But in summer, they may soar to $4000 per kilowatt.

"The peak power of several hundred hours per year is causing problems everywhere," Donohue said. This gives rise to the idea of insufficient power.
Therefore, ERCOT has been constructing natural gas based peak shaving factories to provide the required energy during summer peak periods. At the same time, transmission lines are being expanded, and utility companies are planning to increase more electricity.

"Some data centers are building their own microgrids, while utility companies have completed long-term planning and obtained more approval for transmission and generation," Donohue said. Once the power grid is strengthened, these data centers can be re integrated with the grid.


Viewing problems from a utility perspective
Marcisha Adams, Vice President of Power and Utilities at Yuden Digital Infrastructure, has worked for many years at a large utility company in Georgia. She understands power grid issues from the perspectives of utilities and data centers. She suggested that data centers need to spend time understanding the perspective of utilities. They typically operate on a long-term schedule and may require several years of processes and approvals.

One of the issues she encountered was that the standard utility practice is not to order equipment until new interconnections, substations, or data center feeds have been fully approved.

"We have reached an agreement with the utility company that if our project is not approved, we will pay for it, so they agreed to order the equipment earlier," Adams said.

The research conducted by utilities and transmission operators focuses on the coming years. Before the boom in artificial intelligence and data center power, they will receive warnings from large additional customers planning to connect to the grid for up to six years. Now, data centers immediately need more electricity.
She said one solution is to transfer data center facilities from first tier cities with severe power constraints to second tier towns such as Columbus and Reno, where electricity is more likely to be obtained. Oklahoma, Georgia, and Mississippi are further emerging markets for data centers due to the availability of electricity.

Adams said, "Many of these areas have manufacturing bases and require a strong transmission backbone network so that data centers can more easily access these areas.".


Backup generation options
Brett Collard, Vice President of Enterprise Development at Compass Datacenters, suggests seeking data centers with more electricity to fully utilize their backup generators. Public utility companies can even incentivize data centers to use these assets on a backup basis.

Collard stated that his company has reached an agreement with utility companies in Phoenix to switch from utility electricity to backup assets for up to 500 hours annually. They are paid for by the utility company for this feature, but so far, they only need to implement it for about 25 hours per year.

"We utilize these backup assets during peak periods to help stabilize the power grid and respond to demand," Collard said

This type of plan is a good way to establish better relationships with utility companies. Then, the data center can be built on this basis and find ways to obtain more electricity.

"We are currently working hard to find production capacity to cope with peak demand," Collard said. "Accelerating the speed of going public is crucial: we can't wait for five to seven years."