For data centers, load flexibility is increasingly being pitched as a quicker path to power — and a way to make better use of the existing grid. The past few days have made that clear, with Energy Secretary Chris Wright directing the Federal Energy Regulatory Commission to speed up the interconnection for curtailable large loads, and OpenAI also endorsing load flexibility in yesterday’s letter to the White House.
And data centers themselves have been experimenting with ways to achieve it, from shifting computational workloads to investing in on-site generation. This morning, a coalition including Nvidia, Emerald AI, EPRI, Digital Realty, and PJM announced the world’s first power-flexible AI facility, in Virginia.
But energy measurement platform WattCarbon is pitching that data centers can achieve some similar benefits by investing in virtual power plants in the communities where they’re being built.
Today, the company is launching Repowering California, a program to incentivize large energy users, including data centers, to enter into power purchase agreements for local VPPs made up of distributed energy resources such as load-shifting heat pumps and other energy efficiency projects, in exchange for certificates attesting to the amount of flexibility and extra capacity these DERs are contributing to the grid. McGee Young, WattCarbon CEO and founder, told Latitude Media that the idea is for large loads to use those certificates to demonstrate they’ve contributed to reducing load at times of grid stress when they’re negotiating with a utility for a grid connection.
“As a data center, if I [help finance] 10,000 heat pumps and replace all this resistance heating, I’ve created significant headspace on the grid during peak demand periods,” he said. “Now I can use that to negotiate my interconnection agreement with my utility.” This is particularly relevant for existing data centers looking to expand their capacity.
How it works
The initiative builds on the California Public Utilities Commission Market Access Program, which offers payments to customers installing energy-saving upgrades, such as heat pumps. The payments are based on the amount of energy saved, measured through a methodology that Young first developed when he was the CTO of demand flexibility platform Recurve, and then adopted by the state program.
While a nice incentive for customers and companies looking to install energy-saving infrastructure, these “avoided cost” payments are not that relevant to data centers and other large loads. But the fact that the enrolled projects are credited by the state for their system benefit and certified by the utility for their capacity savings is.
WattCarbon’s new initiative is designed to bring data centers into the fold, and essentially have them contract the certified saved capacity from the enrolled VPPs, which get an extra payment on top of the one coming from the program. WattCarbon then issues a certificate attesting to the VPP’s contribution to the grid.
“And then the data center can take that to the utility and say, ‘Hey, you’re already recognizing that this is capacity that was created. We want to take responsibility for it. We want the credit for it as we have our negotiation about this new load in this area,’” Young said.
This could complement other flexibility strategies, like building on-site energy storage, according to Young.
Over the past year, WattCarbon has been working with energy efficiency companies, such as Rewiring America and Harvest Thermal, helping them enroll DER projects into the MAP program and making sure the system works. “Now we have everything ready, so any large load can sign a contract for the flexibility and then take that to their utility,” Young said.
The program, however, still hasn’t signed any contracts with data centers or other large load users. The announcement comes at a time when many new data centers are being built with the ability to curtail load already embedded in them, and flexibility options are becoming more common. It remains to be seen both how appealing this model will be for these large loads, and how much weight the flexibility certificates will hold in a load negotiation with a utility.
But, according to Young, there’s a narrative around the program that can be particularly attractive for new data centers, which are being increasingly blamed for soaring energy prices and are facing a lot of community backlash.
“When you say, ‘I’m going to go build a data center and jack up everybody’s rates,’ the pitchforks come out,” Young said. “While now it can be, ‘Hey, we’re going to come make a community investment into lowering bills and tapping into flexible resources’… The politics of that are much more compelling.”
