Know what’s changing even faster than the technology inside data centers?
The rulebook for building and operating one, especially in a way that’s embraced by the community.
Texas Gov. Greg Abbott is the latest to reset the rulebook. His Aug. 3 letter told electric grid operator ERCOT and the Public Utility Commission of Texas (PUCT) to stop all approvals of data center grid connections until the agencies can complete a “comprehensive verification and audit” of every request.
Gov. Abbott’s freeze and New York Gov. Kathy Hochul’s one-year data center moratorium slow the industry down, but both also promise clarity on the other side: a better sense of what’s considered a “good” data center that can proceed. That’s important, since we need good data centers the same way we need good factories. State and federal energy regulators are taking their own steps to set these standards. Here are snapshots of four very recent examples of how policymakers are working to rewrite and clarify the data center rulebook.
Texas’s grid connection freeze, Aug. 3: At its basic level, Gov. Abbott’s directive calls on data centers to provide water and power use reporting and forecasts. He’s also asking the agencies to collect data on how much data centers pay their way vs. getting state support or tax breaks; whether they provide their own power; how they use and conserve water; and how they limit noise, light, and traffic. And he calls for details on ownership and financial strength.
The audit pauses ERCOT’s ‘Batch Zero’ plan, created in June and slated to start in August, which would assess large data centers projects in groups, rather than one-by-one, to assess the full impact on the grid and more fairly allocate the available grid capacity. The new audit review could take that financial assessment even farther, “requiring stronger proof that projects are real, financeable and likely to reach commercial operation before grid planners commit transmission and generation resources,” Data Center Knowledge writes.
Virginia’s transmission bill for data centers, July 31: The Virginia State Corporation Commission ruled that Dominion Energy should assign new transmission infrastructure costs directly to data centers and other big power users driving the need for them, rather than spreading those across all ratepayers. Jennifer Granholm, the former U.S. Energy Secretary and Michigan governor, notes that some companies such as Google and AWS have offered to pay these costs upfront at times. “By forcing the utility's hand to accept upfront private funding for dedicated transmission infrastructure, Virginia is protecting families from massive bill hikes while still ensuring critical grid infrastructure gets built,” she writes on LinkedIn.
New York’s data center moratorium, July 14: Gov. Hochul’s executive order created the country’s first data center moratorium, freezing environmental permit approvals for up to a year for any data center larger than 50 MW. The state will use that year to develop environmental impact criteria around energy demand, water use and quality, and air quality. A year sure feels like a long time in today’s industry. But the state is moving faster on a potentially valuable resource for local governments. It plans to deliver within 60 days a Community Investment Framework to help local entities negotiate the best deal in terms of community benefits when a big data center comes knocking.
FERC’s grid connection review, June 18: The Federal Energy Regulatory Commission told the six regional electric grid operators to justify or rewrite their rules around how data centers and other large power users connect to the grid. FERC wants to keep data centers, including those with on-site power, on the grid and get them integrated quickly, while also protecting existing customers from higher costs. “Historically, grid expansion followed demand growth. Now, these large, concentrated loads are effectively dictating where and how the grid needs to evolve, which is a reversal of the traditional model and inherently more complex to manage,” Intel’s Prithpal Khajuria, segment leader for energy and utilities, tells Data Center Knowledge. FERC Chair Laura Swett expects the right approach to vary by region: “Each region and every grid operator faces unique challenges and opportunities.”
These efforts, and others like them, will likely raise the bar for what a good data center looks like. Clearer standards will not only bring clarity for when a data center should get a green light, they can also give communities more confidence that bad actors will be called out and held accountable. Both elements can help build trust the industry needs to grow and meet the public demand for digital services.