by Shannon Heckt
Virginia’s surging energy demands require more power generation infrastructure to be built, a slow process that’s delaying new data centers waiting to be connected to the grid.
Dominion Energy, the state’s largest utility, has an estimated 70 gigawatts worth of projects in their queue that need more power sources online before they can link to the energy network. The company is able to connect about 10 large-load customers a year.
Tech companies are responding by creating their own power to try to skip the line.
Dominion’s data center customers have an average wait of seven years to be connected to the grid. Project proposals containing on-site power generation for data centers – including natural gas turbines — have increased. This has heightened community concerns about air pollution, and created a gap in the state’s clean energy goals.
How data centers plan to produce their own power
The build-your-own power approach is called “behind the meter.”
The idea is that the data center industry would be able to acquire and use their own gas turbines, or other power methods, faster than utility companies can get them up and running.
“Access to reliable power in a timely manner is the pacing challenge to meeting America’s unprecedented demand for data and digital services,” said Aaron Tinjum, vice president of energy for the Data Center Coalition. “Given this challenge, data center companies are exploring innovative energy strategies to meet unprecedented demand for digital services, including on-site generation.”
Gas turbines owned by data centers and only serve their facilities are not beholden to the Virginia Clean Economy Act. That law requires utilities to retire their carbon emitting power sources by 2050.
Since data center-operated energy sources are not typically providing power to the general public, they also do not have to go through State Corporation Commission’s approval process to find them “in the public interest”, as energy generation projects for utilities are required to do.
If a data center’s natural gas turbines are over 25 megawatts then they have to participate in the carbon allowance auction as part of the Regional Greenhouse Gas Initiative, but there are ways around that.
“You may have 25 MW of gas generation at a data center site, but it’s spread across four or five different turbines that don’t individually need the stationary source threshold,” Lee Francis with the League of Conservation Voters explained.
Legislators, governor weigh in
State lawmakers tried to curb the environmental impacts of data centers, including those who chose to use carbon emitting power sources, this year and the debate was central to the months-long budget battle that brought Virginia to the brink of its first-ever government shutdown.
The House version of the budget initially included environmental requirements that the industry would have had to meet in order to keep being exempt from the state’s sales and use tax.
Del. Rip Sullivan, D-Fairfax, introduced House Bill 897 to address energy and water use, but also had behind the meter gas generation in mind. His bill wasn’t designed to ban the use of natural gas turbines, he said, but to draw a line in the sand and create more stringent baseline environmental expectations for the industry.
“It seems to me there’s no single silver bullet. I keep coming back to the principles that were embodied in HB897: Make sure data centers are using as little energy as possible, make sure that they are, weaning in themselves off of diesel generation and using a different kind of backup power,” Sullivan said in an interview last week.
Those environmental requirements weren’t included in the final budget language, but will be analyzed by the task force that was formed to examine further regulations for the state’s booming data center industry. Lawmakers did levy a new tax on the industry that’s expected to generate $1.2 billion over the biennium.
Gov. Abigail Spanberger advocated for the industry’s tax exemption to continue, both to honor standing contracts with data centers and preserve the state’s economic interests and reputation with businesses.
But in an interview with the press on Thursday, Spanberger pushed for data centers to look to clean energy technology first before bringing more polluting sources online.
It’s good that large-load users want to bring their own power generation to take them off the grid, Spanberger said, but there should be more research into what may be hindering the industry from turning towards cleaner energy sources.
“I do not want to see us move in a place where we think, as a commonwealth, we’re on path towards meeting the VCEA goals but that’s because there’s all this generation that is sort of outside of the scope of what is counted,” Spanberger said. “Now how does Virginia become the place where (there are) the best in class generation efforts in newer technologies?”
As data centers push for more power, environmental concerns amplify
Dominion is required to serve the customers who ask them for power, but there’s no requirements on how fast they have to meet those requests. Amid unprecedented load growth, the company has policies in place to manage how and when it makes power connections to prevent stranded assets and maintain grid reliability.
But data companies have aired their frustration with Dominion’s lengthy connection queue. In the SCC case regarding large load connection queue policies, the Data Center Coalition argued that Dominion’s “large load interconnection queue process standards lack transparency and treat high quality, well capitalized projects, the same as speculative projects.”
This comes after a Federal Energy Regulatory Commission directive for regional grid operators to “justify or reform the rules that govern how data centers, manufacturing facilities, and other large energy users connect to the electric grid.”
This means that PJM, the regional grid operator for the majority of the East Coast, will have to defend or revise its policies when it comes to connecting these large load customers to the grid.
In a letter to PJM sent last month, SCC Chair Kelsey Bagot and the Data Center Coalition President Josh Levi agreed to convene a work group to study standardized retail tariff provisions for mandatory or voluntary interruptible service.
The group will also examine backup power generation regulations to manage grid reliability, and ensure that costs are not being shifted onto residential ratepayers.
The Piedmont Environmental Council said the letter was vague and lacked details on who will be involved in these conversations. The group is especially worried about how discussions on possible increased use of the backup diesel generators as a way to manage grid strain will play out.
“It’s just basically saying, ‘we’re willing to do it – we’re gonna start digging into this.’ But it’s concerning that they don’t identify any other stakeholders. They don’t say, ‘and we’re gonna talk to the environmental community, or we’re gonna talk to anybody else other than the data in our industry,’” said Julie Bolthouse, PEC’s director of land use.
Data center proposals have met increasing community pushback statewide, with hundreds of residents turning out to speak up at local board of supervisors meetings. Plans that contain self-generated power through natural gas turbines compound the concerns of people who would have to live near the polluting facilities.
In recent years, residents and lawmakers have fought against the use of diesel back up generators due to the high levels of emissions that come from the older, lower tier generators.
New laws have been passed to ensure cleaner generators are installed at future data center sites. But during peak energy use days, like the state saw in early July, PJM allowed utilities to ask data centers to kick on backup power if needed for grid reliability.
In Shenandoah County in the city of Strasburg, local residents are opposed to a proposed project that includes two data centers as well as gas turbine power generations that are said to be in front of the meter – meaning the power would be sold back onto the grid.
Strasburg resident Kaylee Tanner is keeping tabs on applications for the project that would be near her home.
“The sound levels of that are going to be insane. What kind of pollution is that putting into the air? I have no idea what that’s going to emit into our air quality,” Tanner said.
Data center proposals keep cropping up
Another proposed data center with on-site gas generation is going through the approvals process in Wise County, Cardinal News reported earlier this year.
In Prince William County, a massive data center complex proposal that included natural gas turbines was recently shot down by county supervisors. Another proposal that included on-site power generation was withdrawn by the company over tax debates.
In Fauquier County, developers changed their original proposal for the Remington technology park proposal to a new, different kind of behind the meter energy power generation through fuel cell power.
This technology uses an electrochemical process on the natural gas rather than combustion, which leads to less air and noise pollution compared to a traditional turbine. Another similar power plant is proposed nearby in Fairfax County, Northern Virginia Magazine reported in May.
The PEC said that since it is such a new technology that has not yet been deployed in Virginia, there are still many questions they want answered before it is built.
“Are there any safety ramifications with this? What are the risks? Do we even know because no one else has done it?” Bolthouse said.
The Department of Environmental Quality has approved just one air permit for a data center campus with on-site gas generation, the Vantage VA2 data center. On Friday, during a historical air pollution event due to wildfire smoke blanketing the commonwealth, DEQ reported that the facility had “a failure of a critical 480V Circuit Breaker” the night before, prompting the facility to run the backup diesel generators for several hours.
Local residents have pushed back against the project, telling DC News Now that they were not told gas turbines would be built alongside the proposed data center and were not made aware until construction had already begun.
DEQ officials said the agency has received one other application from a data center project for operating their own gas turbines, in Charles City.
Mind the gap
Deeds said loopholes in the law that allow a proliferation of gas turbines to supply power to data centers behind the meter and set the state back in its clean energy goals should be addressed “if they’re getting around the (Virginia) Clean Economy Act.”
“And if that’s the case, then that undermines that argument that was made to me,” Deeds said of his prior conversations with data center industry representatives.
Spanberger said Virginia being the data center capital of the world allows the state to hold the cards when it comes to regulating the industry with clean energy goals in mind.
“We have two options. We can either sort of walk away from the conversation, in which case, the data center goes to Maryland or goes to Pennsylvania, it’s still PJM that is still impacting our costs,” Spanberger said, adding that data centers in other states also still impact the environment.
”Virginia is really unique (in) the level of pull and the level of levers that we have, in being a leader in driving an entire industry in a particular direction.”
(This story originally appeared in Virginia Mercury and is being republished here with permission.)
