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How virtual power plants could provide energy for data centers
Would you take a payment to ramp down your electricity use? Would it change anything if you were doing so to help power a local data center?
Google just signed a new deal to help pay for a virtual power plant (VPP) in the largest power grid in the US. The agreement is with Voltus, a leading VPP and distributed energy resources platform.
Voltus will set up the virtual power plant, grouping together devices like electric vehicles and smart thermostats. It’ll pay customers to participate, and the company will dial back power or use the stored energy during times when the grid is stressed. Google will foot the bill for setting it up, and the extra capacity generated by the project will help run its data centers in the region.
This is one of the most concrete examples so far of a tech giant using a VPP to help meet energy demand for data centers. But there are still some lingering questions about just how far this sort of program can go, and what the limits are.
Last year, it felt as if everyone was talking about data center flexibility. A high-profile study from Duke University found that if data centers agreed to decrease their energy demand for roughly 40 hours per year, a whole bunch of them (about 100 gigawatts’ worth) could come online without making new power plants or transmission equipment necessary.
The underlying reason is that our power grid is designed not for our average energy use, but for the absolute maximum: the brutally hot July evening when everyone is blasting their air conditioners, watching Love Island, and microwaving popcorn. If a data center is willing to refrain from pulling so much power during those high-stress times, the grid can happily support it the rest of the year.
One lingering question here is about incentives: How would you get data centers to agree to this? After all, they might not have a very flexible load, especially now that AI use is more widespread—training a model can easily be delayed or shifted, but customer demand is more immediate. Giving up computing capacity could mean losing revenue.
Regulation is one approach that could work here. One proposal in the US would allow new data centers to come online years sooner if they agree to lower demand when the grid is nearing its max. And a new Texas law requires large users to switch to backup power or curtail their demand in emergency situations.
Another approach is for data center operators to pay for other people to be flexible.
Voltus announced a new program in September that allows data centers to finance flexibility on their local grid. The company calls it “Bring your own capacity.” Google is now the first named customer taking advantage of this program.
In the new agreement, Voltus will pay people who agree to participate in the virtual power plant. The plant will be part of PJM, the grid that covers much of the US East Coast. The company says it will be able to aggregate up to 100 megawatts of distributed energy resources each year. The plant should be operational in 2027, according to Voltus.
This isn’t Google’s first foray into flexibility; the company has agreements with utilities across the US to limit or shift its own energy demand, which can help free up grid capacity. As the company pointed out in a blog post earlier this year, though, there are limits on how flexible a data center can be, and not every facility will be able to ramp down its power demand.
“There is no one solution for expanding grid capacity and we’re continuing to explore all options, including the many avenues for load flexibility,” said Michael Terrell, Google’s global head of advanced energy, in an emailed statement in response to written questions.
Once again, I’m wondering about incentives here. These companies are asking homes and businesses to be flexible. Will they agree?
A recent study in California looked at local people’s willingness to participate in managed electric-vehicle charging. Essentially, the program pays people to give up control of when they charge their EVs. This is another way to help smooth out electricity demand and ease the burden on the grid.
The problem? Not many people signed up. With no economic incentive, only 1% of EV owners enrolled in managed charging. At $40 per month (about 15% of their power bill), only 4.6% did.
This is a different situation and a different region from the one in which Google is working with Voltus. (It’s worth noting that the companies aren’t sharing how much they plan to pay the participants, which will obviously be a big determinant in participation for this kind of project.)
But this study shows that even with money on the table, people may not always jump at the chance to cede control of their electricity demand. And it certainly feels relevant that about 70% of Americans oppose AI data centers in their area, according to recent Gallup polling.
Being flexible sounds like a great idea in theory, and these financed VPPs could provide an immediate route to meeting energy demand. But as we move from idea to implementation, it’ll be interesting to see whether trial runs work as intended.
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