Hyperscaler Google has reached an agreement with Indiana Michigan Power(I&M)that could serve as a model for future demand response structures between utilities and large load customers.
I&M,an American Electric Power(AEP)company,recently filed a special,joint contract with Google that is designed to support I&M’s capacity needs through clean generation and the use of a demand response structure.The collaborative effort between I&M and Google was filed with the Indiana Utilities Regulatory Commission(IURC)on July 30.It outlines a custom demand response structure that aligns with Google’s operational abilities,which apparently are becoming more elastic thanks to the very processes going on inside its data centers.
Through its participation,Google will leverage“new capabilities”that allow it to make machine learning(ML)more flexible,allowing the company to reduce or shift electricity demand to carry out non-urgent tasks during hours when the electric grid is under less stress.This is huge for I&M,which can accordingly decrease its peak load in times of high energy demand.As a large load customer,Google’s participation in the program boosts Indiana Michigan Power’s ability to manage peaks,which helps lower overall energy costs for ratepayers.
“As we add new large loads to our system,it is critical that we partner with our customers to effectively manage the generation and transmission resources necessary to serve them.Google’s ability to leverage load flexibility will be a highly valuable tool to meet their future energy needs,”said Steve Baker,president and chief operating officer of I&M.
The program is similar to those currently available to residential and commercial and industrial(C&I)customers.If approved by the IURC,the utility says this agreement will reduce I&M’s long-term generation requirements and financial commitments to benefit all of its customers.
In April 2024,AWS announced an$11 billion investment in a data center campus west of New Carlisle,Indiana,and Google announced a$2 billion data center in Fort Wayne,where I&M is headquartered.Those investments are among the most significant economic development projects in the state’s history,and they’re expected to deliver substantial benefits to local communities.
“As AI growth accelerates,we recognize the need to expand our demand response toolkit and develop capabilities specifically for machine learning workloads.Working closely with I&M to include load flexibility as part of the overall supply plan,we can support future power needs even where power generation and transmission are constrained.We want to be thoughtful about how we can continue to be a good grid citizen and see this as a vital tool for enabling responsible data center growth,”added Amanda Peterson Corio,global head of data center energy at Google.
More than 85%of the energy delivered by I&M in 2023 was emission-free.The utility’s portfolio includes 2,278 megawatts(MW)of nuclear generation in Michigan,450 MW of purchased wind generation from Indiana,more than 22 MW of hydro generation in both states,and approximately 35 MW of large-scale solar generation in both states.The company’s generation portfolio also includes 1,497 MW of coal-fueled generation.
A Little Flexibility Goes a Long Way
Electricity demand is increasing across the United States,particularly in the Midwest,a hot region for data center development.Such intensive computing operations,which can draw as much power as a small city,are straining the grid,demanding new generation and transmission infrastructure development.
But as much as data centers can be a problem for grid reliability,there are good reasons to believe they can be part of a solution.A recent study out of Duke University indicated that 76 gigawatts(GW)of new load could be added if those customers could curtail 0.25%of their maximum uptime.
“Our study demonstrates that existing US power system capacity—intentionally designed to handle extreme peak demand swings—could accommodate significant load additions with modest flexibility measures,”explained lead author Tyler Norris,a Ph.D student at the Nicholas School of the Environment.“Overall,the findings suggest that load flexibility offers a promising near-term strategy for regulators and market participants to more quickly integrate new loads,reduce the cost of capacity expansion,and enable greater focus on the highest-value investments in the electric power system.”
According to the study,the average duration of load curtailment would be relatively short,around 1.7 hours if limited to 0.25%,2.1 hours at a 0.5%limit,and 2.5 hours at a 1.0%limit.
Will other hyperscalers follow suit and find a couple of hours each year to support the grid in collaboration with local utilities?It sounds like a win-win,and now there’s a roadmap to follow.
