On Wednesday SB 1047 Electric utilities; demand response programs for certain customers, Senator Roem’s bill as summarized below passed the house. This was one of the few data center bills to survive the legislative session. Until it started to look like the bill might pass, I had not given a lot of thought to it. So, let’s talk about it.
First, the surviving bill only requires the Virginia
Department of Energy to work with the State Corporation Commission (SCC) to
study the need for demand response programs in Virginia. The programs do exist
for residential customers.
In a demand response program, the utility company provides
financial incentives for customers to reduce demand on the grid by reducing
power usage or shifting to on-site generation. These demand response programs
usually include critical peak pricing, variable peak pricing, real time
pricing, and critical peak rebates. Demand response programs also include
programs for smaller users which provide the ability for the power
companies to cycle air conditioners, heat pumps and water heaters on and off
during periods of peak demand to manage the load. This cannot be done for data
centers.
To protect the grid in times of high demand, due to weather
or disruptions data centers have not been willing to voluntarily reduce
their power draw. No data centers in Virginia participates in
Dominion Energy’s demand response program, in which organizations agree
to reduce their power load if there is
a shortage. Data center
operators said that’s because they have no control over
their customers’ power demands.
About two years ago in Dev/sustainability ran an article, “Why
don't data centers participate in demand response?” by David Mytton where
he said “The primary purpose of a data center is to provide a secure, reliable,
and well connected place for IT workloads to operate efficiently. Power is a
crucial aspect of this and data centers invest a lot of money into ensuring
that the IT equipment always has power. This involves backup batteries,
generators, and emergency fuel delivery contracts to ensure continuity.
If power to a data center could be taken offline at short
notice it would either need to shut down entirely or (more likely) would have
to switch to an alternative source of power. Shutting down entirely is
impractical even if a single entity controlled all the equipment and systems
within the data centers. Building applications to shift load is very
expensive and difficult to do. And switching to backup is a risky process
in itself, even when tested regularly. Long duration batteries are still too
expensive and too immature in their development to make them a reliable option,
although large scale batteries are being deployed.”
He went on to say: “the additional revenue of participating
in demand response is therefore meaningless in comparison to the risks and
costs of migrating workloads. That’s why data centers don’t (and won’t)
participate in demand response. “
This week Amazon Web Services experienced a power outage at
its Tanner Way facility in Manassas. The backup generators kicked on to keep
the operation running. Neighbors of the campus expressed dismay at the sound of
the backup generators and fumes from the diesel generators. If SB 1047 requires
data centers to run on backup generators during periods of high power demand
and pays the companies for noise and diesel pollution, we might end up with
very unhappy residents and data center companies. The current bill specifically
says:
“that any
demand response program (a) meet the minimum reliability and resource adequacy
standards set by the regional transmission entity of which the utility is a
member, (b) reduce customers' energy consumption during the grid's emergency
events or when called upon, (c) not increase local air pollution through the
use of fossil fuels generators, and (d) be cost-effective.”
There may be another way. In an article that was published
in Data Center Frontier “Google Is Now Reducing Data Center Energy Use
During Local Power Emergencies’ by Matt Vincent, another approach was
discussed. “Google has… a system optimized to reduce the energy use of data
centers when there is a local power emergency. Core functions of the system,
which has the hallmarks of a universally applicable technology, include
postponing low-priority workloads, and moving others to other regions that are
less constrained.”
“The system as developed and piloted by Google represents a
new way to reduce its data centers’ electricity consumption when there is high
stress on the local power grid, by shifting some non-urgent compute tasks to
other times and locations, without impacting the most commonly used Google
services.”
“… Google is using this task-shifting capability for a demand
response system, as a means of temporarily reducing power consumption at
certain data centers to provide flexibility when it is needed, to help local
grids continue operating reliably and efficiently…. Google said its demand response pilot programs are in
effect in parts of Europe and Asia, and centrally in the U.S.”
“In collaboration with its local utility partners, Google
affirmed that via the demand response system, it reduced its data centers’
power consumption in these regions during these periods, helping to ensure that
the local grids could operate reliably in meeting the needs of local
communities.”
So, there may be another way that data centers can reduce
power use temporarily without shutting down operations or stepping off to back
up powers. Demand response programs for data centers may have potential. Let’s
see.
SB 1047 -
Electric utilities; demand response programs for certain customers.
Patron: Sen. Roem
Status: Passed Senate
Referred to House Committee on Labor and Commerce;
Passed Committee, passed House.
A BILL to amend the Code of Virginia by adding a section
numbered 56-596.2:3, relating to electric utilities; demand response programs
for certain customers.
SUMMARY AS PASSED:
1. § 1. That the Department of Energy,
in consultation with the State Corporation Commission, shall evaluate and
assess benefits, impacts, best practices, and implementation recommendations
for demand response programs in the Commonwealth. Such evaluation and
assessment shall consider (i) existing utilization of demand response
programs and networks in the Commonwealth; (ii) current and prospective
participation rates; and (iii) potential requirements that any demand response
program (a) meet the minimum reliability and resource adequacy standards set by
the regional transmission entity of which the utility is a member, (b) reduce
customers' energy consumption during the grid's emergency events or when called
upon, (c) not increase local air pollution through the use of fossil fuels
generators, and (d) be cost-effective. The Department of Energy shall report
such evaluation and assessment to the Senate Committee on Commerce and Labor
and the House Committee on Labor and Commerce no later than November 1, 2025.