Demand Response Could Reduce The Burden Data Centers Put On Electrical Grids

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Last Updated on: 3rd March 2025, 10:59 am

Powering data centers is about to become a significant issue in the Untied States as demand for electricity to run them is increasing dramatically. To cope, utility companies are planning to build new methane-fired generating stations and even restart a half completed nuclear power plant in South Carolina. Many residents of traditionally Black communities fear the expansion of thermal generation will place additional burdens on their cities and towns. Ninety years ago, FDR and South Carolina Governor Blackwood worked together to bring electricity to rural South Carolina. But to build the power plant that would make it happen, they destroyed the homes of 900 Black sharecropping families. With them, 6,000 graves — including those of formerly enslaved people — were removed or desecrated. Today, as South Carolina races to power its digital future, history seems to be repeating itself, with Black communities once again paying the price for progress, says Canary Media.

Data Centers Put A Burden On Communities

Last year, the parent companies of Facebook and Google pledged more than $4 billion for new data centers in South Carolina. While state officials work to craft legislation to attract these new projects, residents and community advocates say this will ramp up environmental hazards, increase utility bills, and exacerbate health disparities. Meanwhile, experts say the economic promise of AI remains a mirage for Black communities, widening wealth gaps, and displacing workers. “Most Black households, especially rural ones in the South, are not using AI or as much computing power, but they are having to pay for that demand in both money and dirty air,” said Shelby Green, a researcher at the Energy and Policy Institute.

Energy experts argue that the growing electricity demands from data centers are prolonging America’s dependence on dirty energy sources. Nationwide, at least 17 fossil fuel generators scheduled for closure are now delayed or at risk of delay, and about 20 new fossil fuel projects are being planned to meet data centers’ soaring energy demands. By 2040, South Carolina projects the need for four new fossil fuel power plants. A Black community in Colleton County, South Carolina, recently celebrated the closing of a coal-fired power plant that was connected to poor health outcomes for residents. But now the state proposes to convert that very site into a methane-fired power plant to meet the energy demands of data centers.

Every year, the pollution from natural gas plants is responsible for approximately up to 12,000 early deaths in the US, studies show. “If you mapped all of the existing power plants in South Carolina, they’d follow the old path of one of the foundational pillars of the American economy through South Carolina — plantations and enslaved labor. We’ve seen the repeated pattern of these threats in our community,” says Xavier Boatwright, an activist who has worked on environmental issues in rural South Carolina for years.In South Carolina, and across the country, statistically, Black people use the least amount of electricity, yet experience the highest energy burden — meaning a larger share of their income goes toward energy bills.

Tech companies like Google are making huge profits by securing special deals with utility companies. Last year, the company inked a deal in South Carolina to pay less than half the rate that households pay for electricity. That low rate, coupled with tax breaks and state subsidies, are used to lure big tech companies. However, these deals force local families and households to cover the cost of building extra power plants, meaning everyday customers end up footing the bill. It’s just another example of the “heads we win, tails you lose” mentality adopted by corporations and governments that puts extra financial burdens and health risks on communities of color.

Demand Response To The Rescue

Tom Wilson of the Electric Power Research Institute tells Canary Media there is a way that some of the need for more thermal generating stations could be avoided. It’s called demand response, and it is a concept familiar to those who promote more distributed energy resources, virtual power plants, and EV chargers. In its simplest terms, it means that if data centers would agree to throttle back their energy usage somewhat during periods of peak demand, the need for those new generation resources could be reduced considerably. “Data centers are not just load. They can also be grid assets,” he said. His most recent project is called DCFlex — which stands for “data center flexibility.” It is a collaborative effort to get data centers to ​“support the electric grid, enable better asset utilization, and support the clean energy transition.”

That won’t be easy. From Virginia’s ​“Data Center Alley” to emerging hot spots in Arizona, Georgia, Indiana, Ohio, and beyond, utilities are being inundated with demands for round-the-clock power from data center projects that can add the equivalent of a small city’s electricity consumption within a few years. Meanwhile, it usually takes four or five years to connect new power plants to the grid. Flexibility could make a big difference, because the impacts of massive new utility customers like data centers are tied not just to how much power they need but specifically to when they need it. Utilities live and die by the few hours per year when demand for electricity peaks — usually during the hottest and coldest days. By refraining from using grid power during those peak hours, new data centers could significantly reduce their impact on utility costs and carbon emissions and unlock tens of gigawatts of ​“spare” capacity on US grids, according to a recent analysis.

Such flexibility won’t solve all the power problems that the massive expansion of data centers could cause, but for utilities struggling to plan and build the generation and grid infrastructure needed to support data centers, flexibility is worth exploring because data centers could make their operations flexible a lot faster than utilities can expand power grids and build power plants. Brian Janous, co-founder of Cloverleaf Infrastructure, which develops “clean-powered, ready-to-build sites for the largest electric loads,” such as data centers. “You need to understand, when a utility says, ​‘I can’t get you power,’ what they mean is, ​‘There are certain hours of the day I can’t get you power,’” he said. The data center industry ​“lacks visibility into this, which is kind of shocking,” given that data center flexibility is nothing new.

Janous thinks many utilities are eager for such flexibility propositions today. One unnamed utility executive told him recently that the backlog for connecting large data centers to its grid is now at least five years. ​“I asked, ​‘What if the data center could be dispatchable?” And he said, ​‘Oh, we could connect them tomorrow. But nobody’s asking me that.’” He outlined how that could work. Data centers would use onsite power generation or storage to replace part of the electricity they would otherwise get from the grid or use less electricity during peak hours. Using batteries to store electricity for later use would be a key part of the strategy.

Risks & Rewards For Data Centers

Historically, data centers haven’t been interested in standard demand-response programs and markets. The value of what they do with that electricity is just too high compared with the potential rewards. But if a data center’s participation in a demand-response program is the difference between it getting a grid connection or not, the programs become a lot more appealing. A DOE report on data center power use last year ​“identified no examples of grid-aware flexible operation at data centers today” in the US, which ​“may result from the fact that electricity providers only recently started having to say no to data center interconnection requests.”

Traditional data centers separate their computing capacity into individual ​“halls,” each of which has its own power conversion, cooling, and backup generation. Verrus, a company launched last year by Sidewalk Infrastructure Partners, a spinoff of Alphabet, is planning data center complexes with ​“a centralized battery in the center of all the data halls, with a sophisticated microgrid controller that allows it to think about all the data halls as interruptible and schedulable,” Jonathan Winer, a Sidewalk co-founder, said in an interview last year. Not every ​“hall” will be dedicated to tasks that can be interrupted, but some of them will be. “With AI training, I can press pause on it. These are multi-day, sometimes multi-week training runs, and you can press pause and resume,” he said.

Utilities in grid constrained parts of the country are beginning to take on the complexities of creating ​“flexible interconnection” policies and tariffs — the rules and rates for customers — that could provide data center developers some clarity on what a commitment to flexible operations could be worth to them. That’s a big part of the work underway at DCFlex, Tom Wilson said. “We have three main work streams. The first is aimed at defining the flexibilities that are possible and creating a taxonomy — each utility and regional transmission organization has different words for the same things, The second piece is aimed at incentives, rate structures, and regulatory issues on the utility side, looking at how they could effectively orchestrate flexibility. The third piece is how to build the planning and operational tools that incorporate flexibility. You need new tools…..to think about and utilize the new opportunities that flexibility can provide.” What that means is figuring out how to calculate the impact of flexible versus non-flexible large customers on long term planning for power plants, grids, and other infrastructure investments, which traditional planning processes don’t do today.

The Takeaway

It is oh, so trendy today to despise governments, regulations, and anything that resembles planning. Far better to move fast and break things, never stopping to consider who may be hurt as a result. Regular readers may notice that people are running around like their hair was on fire screaming about how charging all those electric cars will crash the grid, but no one is warning about data centers doing the same thing. What’s the difference? The fossil fuel industry is paying for all the disinformation about EVs but salivating at the prospect of building more thermal generation just when the scales were beginning to tip in favor of renewables. We can save the planet later. Today, there are profits to be made!

In a rational world, the idea of designing demand response into the data centers of the (near) future would be taken for granted. Google and Amazon and Microsoft would consider the welfare of the communities just outside the gates of their shiny new computer temples. Wendell Berry, a noted author and farmer, put it succinctly when he said, “How would you describe the difference between modern war and modern industry — between, say, bombing and strip mining, or between chemical warfare and chemical manufacturing? The difference seems to be only that in war the victimization of humans is directly intentional and in industry it is “accepted” as a “trade-off.” It is time to stop thinking of the health and wellness of people in lower income communities as “trade-offs.”