AEP, others press for FERC guidance on ‘gargantuan’ issue of data center colocation
Utility Dive, an Industry Dive publication ·Utility Dive·Industry Dive
Ethan Howland
5 min read
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Making sure the grid has adequate power supplies was one of the top issues that emerged during a technical conference on colocating data center load at power plants held on Friday by the Federal Energy Regulatory Commission.
“Colocation, I think it's a necessary but insufficient remedy for the larger illness that we face today, for having insufficient backbone transmission and insufficient forward-looking generation development,” said Aubrey Johnson, vice president for system and resource planning for the Midcontinent Independent System Operator.
Data centers, artificial intelligence and other information-related technologies are national resources with vast security and economic significance, according to FERC Chairman Willie Phillips.
“They belong in the United States, and I believe that the federal government, including this agency, should be doing the very best they can to nurture and foster their development,” Phillips said. Phillips dissented from the decision to reject the Susquehanna interconnection agreement, partly on national security grounds.
FERC Commissioner Mark Christie said colocation is a “gargantuan” issue that affects resource adequacy and fairness to consumers. “If you're taking dispatchable resources — and when we talk nukes, we clearly are talking dispatchable resources — if you're taking them out of the supply stack, what does that do to resource adequacy?”
During the conference, FERC Commissioner David Rosner called for figuring out a way to unlock the efficiency of colocated load and generation while making sure that everyone pays their “fair share” for the grid system.
FERC Commissioner Judy Chang asked if there could be near-term actions the agency could take while also considering longer-term solutions, such as developing rules to accommodate new types of customers.
AEP, others seek FERC guidance
The PJM Interconnection failed to get stakeholder agreement on how to handle colocated load, according to Stacey Burbure, vice president of FERC and RTO strategy and policy at American Electric Power.
“Commission leadership is desperately needed on this issue, and it's needed now,” Burbure said. “As we think about the need for regulatory certainty that is upon us, we have to keep it simple in terms of our basic fundamentals and ensure that if you are using the transmission system, if you are dependent upon it and reliant and it is necessary for your configuration to operate, that you pay your fair share of costs.”
Each colocated load will likely have unique circumstances that are best addressed at the local level by the regional transmission organization, local utility and the generator, according to Cole Muller, executive vice president for strategic ventures for Talen Energy. “If not, there is going to be uncertainty … that's going to start driving the load elsewhere,” Muller said.
Colocation is part of a broader issue, according to Mason Emnett, senior vice president for public policy at Constellation Energy.
“Overrotating on colocation versus grid connection is a bit of a distraction from some of the bigger challenges that we have that are going to require collaboration,” Emnett said, pointing to issues such as determining exactly how much load should pay for broad grid services.
Colocating data centers is a response to a “market inadequacy” for power supply, according to Brian George, U.S. federal lead for global energy market development at Google. “We're trying to figure out how we can get new loads onto the system in a way that meets our growth objectives,” George said. “It is not driven by the need to avoid transmission and distribution infrastructure upgrades.”
Is there enough power for data centers?
The debate around colocating load is a distraction from the key issue of resource adequacy, according to Joseph Bowring, president of Monitoring Analytics, PJM’s market monitor.
“The issue is reliability,” Bowring said, noting PJM faces a tight supply-demand balance. “Adding 10[,000] or 20,000 MW of load on a system that is already very tight doesn't make a lot of sense,” he said.
Colocated load could have a massive effect in Maryland, according to Maryland state Sen. Katie Fry Hester, D, who cited recent testimony Bowring made at a Maryland Public Service Commission conference on colocated load.
Bowring estimated that removing 1,000 MW from Constellation's Calvert Cliffs nuclear plant in Maryland would have increased capacity costs in the PJM’s last capacity auction by about $332 million, or 30%, for Maryland while removing 10,000 MW of supply from PJM’s day-ahead energy market in 2023 would have driven costs up by up to $18 billion, or by 71%. Bowring told the PSC the potential cost increases were caused by removing supply in a tight situation.
Constellation has been exploring a colocated data center at the Calvert Cliffs plant and elsewhere but is being blocked in those efforts by Exelon, according to an Oct. 30 filing by Constellation at FERC.
Hester urged FERC to issue guidance on colocated load and to put a hold on any applications for non-network, colocated load until it comes out.
Bowring asked why big data centers don’t supply their own new generation rather than taking electricity from existing power plants.
Google has no interest in degrading the grid, according to George. “The grid has an immense reliability benefit that we are simply not interested in walking away from and so we have every interest in getting the grid to be that reliability resource,” George said. “We have no interest in diverting existing reliability grid connected resources away from the grid.”
FERC will likely ask for post-conference comments, according to ClearView Energy Partners. The agency could release a policy statement outlining factors that FERC would use to evaluate future proceedings, including on cost allocation issues, the research firm said Monday.
A policy statement or proposed rulemaking is unlikely to come before next spring or summer, ClearView said.
