It’s clear that escalating demand from data centers is straining a power grid that’s already on its knees. This presents a critical challenge for grid stability but is also an opportunity for data centers and utilities to collaborate.
Rather than viewing this as a zero-sum trade-off, where grid stability for some comes at the expense of others, data centers, which provide vital services to society, can be part of the solution.
The key lies in working with the power industry to create a reliable system for all users, harnessing the substantial power resources data centers have at their disposal to address the challenges of growing demand and constrained supply.
Growing demand …
Demand is exploding due to population growth, expanding electrification, reshored manufacturing, and the increase of AI data centers.
…And constrained supply
Reserve capacity is dropping below safe levels as coal and nuclear plants retire without sufficient firm replacements. While renewables are growing, their intermittency creates reliability challenges.
Furthermore, conventional plants are strained by constant ramping, and new gas-fired plants face multi-year construction and component lead times.
Our aging grid is struggling to keep pace. Faults and equipment failures are increasing, and replacement lead times for critical components are extending for years.[1]
The grid is already at risk of outages. In fact, the U.S. Department of Energy (DOE) recently warned that without major infrastructure investments, blackouts could increase 100-fold by 2030.[2] A near-blackout in Virginia in 2024, where 60 data centers simultaneously dropped offline due to a grid disturbance, vividly demonstrated the potential impact of data centers on grid stability.
The situation is not any better for data center operators. Year-long interconnection backlogs result in significant exposure for operators who’ve already invested money in real estate and construction. Meanwhile, profit margins are being squeezed by rocketing energy prices, sometimes jeopardizing the entire business model.[3]
Bottom line? The current system isn’t working for grid operators or data centers.
These solutions help data centers take control of their own energy needs. They’re also a potential source of dispatchable power to support the grid when needed.
Large-scale on-site generation, expanded storage, plus existing diesel and gas backup generators, make data centers well-placed to withstand more routine curtailment. But what if they could also offer this as a service to grid operators?
With their large, potentially flexible loads, data centers can provide demand-side response to help stabilize a grid increasingly powered by intermittent renewables. What’s more, curtailment could be an effective way of making space for new loads on the grid, effectively giving “breathing room on the existing system”.[7] This would help alleviate interconnection backlogs while reducing the costs of capacity expansion.
Data centers have often been reluctant to take part in any programs that constrain their power usage. However, as the sector continues to expand, its energy consumption and impact on the grid are a growing concern for many.
But we believe the benefits of collaborating with grid operators go beyond simply being “good grid citizens.” By working together, data centers may solve their own power problems and help bring about a more stable grid for all users. It’s an opportunity that should be grasped by the industry.
[1] Rethinking Load Growth: Assessing the Potential of Large Flexible Loads in US Power Systems
[3] Whitepaper
[4] Microsoft's San Jose data center will use food waste gas for back up power - DCD
[5] Google to buy nuclear power for AI datacentres in ‘world first’ deal | Google | The Guardian
[7] Existing US grid can handle ‘significant’ new flexible load: report | Utility Dive
[8] Google partners with I&M and TVA to expand use of demand response at its AI data centers - DCD
[9] Meta files application to start selling wholesale power - DCD
[10] Riot Responds to Recent Inquiries Regarding Its Power Strategy | Riot Platforms