Why Data Centers Could Be Good For The Grid

Many worry about the impact of data centers on the grid. But with a few technological advances and some clever business planning, data centers could become one of the best friends of the electric power industry.

The potential shift in how data centers are viewed would revolve around the way that uninterruptable power supplies (UPSes) are used today and how they could be used, said Tze Masters, CFO of Ecoult Energy Storage Solutions at the Energy Storage North America conference, which took place this week in San Jose.

UPSes are essentially big, expensive cabinets filled with batteries designed to supply servers and storage systems with electricity in the event of a power failure. All of the electricity flowing into data centers flows through UPSes first, but in general they fulfill the same role as hostage negotiators: they exist to get people through emergencies. Most of the time, UPSes are largely waiting around for the big event.

Now cut to utilities. Utilities often spend inordinate amounts of money on equipment or services for frequency regulation, i.e. technology for fine-tuning power generation.

Why not harness all of the fallow battery capacity sitting inside data centers in a given region and turn it into a virtual resource for frequency regulation? PJM, the grid operator spanning Pennsylvania, Virginia and the upper Midwest, will pay $40 per megawatt per hour for these services. And the greater the number of data centers that participated in frequency regulation, the more the risk that an individual company’s operations would be impacted. Utilities would only be taking a little bit of power from each.

“Anyone putting in a UPS should consider it,” she said.

Technological changes would be necessary. A dual-function UPS would require different batteries: an entire system might cost 30 percent more. Regulators would also have to permit utilities and grid operators to buy these services. PJM has a thriving frequency regulation market. California does not.

But the advantages could be fairly interesting. Electric power can be one the largest operating expenses for data centers: dragooning UPSes for frequency regulations could substantially reduce those costs. Schneider Electric and other electric equipment providers would suddenly be able to advertise their products as revenue generators, rather than a necessary cost that people would rather avoid if possible. Software companies specializing in grid management would be able to extend their applications to take on these tasks.

Best of all, it would help shift the energy storage industry forward. Energy storage has long been held back by high costs. With dual purpose UPSes, storage service providers could dramatically reduce their capital costs. “Dual purpose” in fact was one of the most uttered phrases at the three-day event.

Read the full story on the Forbes website