Demand Response Program for Data Centers

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.