Why Should Delaware Care?
Proposals to build at least five data centers in New Castle County have raised concerns that the subsequent energy demand could overwhelm a regional power grid that is already straining from a supply crunch. Over the past year, those concerns have also sparked one of the biggest political mobilizations in the state.
Last month, Spotlight Delaware held its “Spotlight On: Data Centers” event at Wilmington University in Dover. It featured local and regional experts speaking about the impacts of those energy-hungry facilities on local economic development, energy infrastructure and environmental sustainability.
One panel discussion, led by land-use reporter Olivia Marble, focused on the infrastructure needs of the massive facilities, and how that will impact the supply and demand of electricity.
The panelists were Delaware Public Advocate Jameson Tweedie, who is responsible for representing the public in state decisions about energy policy; former-Virginia Energy Director Glenn Davis, who now leads Davis Energy & Infrastructure Strategy Group, and Jeffrey Sturla, vice president of critical facilities at Wohlsen Construction.
Below is a transcript of Olivia’s conversation with the panelists. It has been condensed and edited for clarity.
Jameson, what did you find in your research about how data centers in Delaware would affect power bills compared to data centers that are located in other parts of the PJM grid?
Tweedie: The best way I can think about trying to categorize them is that data centers can have potential impacts on reliability — will your lights turn on when you need them to turn on; transmission, those are the big power lines that move power within the region; distribution, those are the local power power lines and infrastructure in Delaware; and then energy costs …
Reliability is the first thing, if there is enough transmission and distribution assets. That’s basically a regional problem. So whether the data center is here or somewhere else doesn’t really matter… The problem is, if there’s not that infrastructure to be able to do that, it becomes a local problem.
Transmission costs are socialized. Now, what does that mean? That means they’re spread across the region, but the costs are concentrated in the places that benefit … So if a data center is located in Delaware and transmission investments are needed, then the costs are going to be concentrated in Delaware and surrounding zones …
On the distribution side, that’s the local power lines and infrastructure … We’re in the midst of a large load tariff docket that will determine how Delmarva handles the interconnection of large loads. And what Delmarva has proposed is that … any distribution infrastructure would be the responsibility of the data center itself. And therefore those costs, fingers crossed, would not get socialized across to other Delawareans…
We are seeing cost increases in real time. It’s largely a regional cost, but you can get hyper-localized impacts, especially if the infrastructure isn’t there. So those are reflected in what are called locational marginal prices of energy. That is the price of energy in a particular place at a particular point in time, and in the joint comments that we submitted last week [to the Public Service Commission], the expert consultants had looked at this. This is not a prediction, but this is an analysis trying to identify the scope of risk. And those comments indicated that, at a 1.2 gigawatt scale of data center development in Delaware, you could get a 9% increase above baseline in locational marginal prices across the state. At 2.4 gigawatts, which is roughly what Delmarva is studying… that would be an 82% increase in energy costs above the baseline.
At 2.4 gigawatts, which is roughly what Delmarva is studying … that would be an 82% increase in energy costs
Jameson tweedie
We touched on, during our last panel, the fights between the union members who really, really want these jobs to come in, and people who were worried about the environment and energy impacts. [Jeff Sturla,] is that something you saw in Lancaster City?
Sturla: We developed a community benefits agreement, which both my developer and the city signed. It was very transparent … I will say, transparency is a two-way street. You can’t be a government official and say, “Well, if you give me information, I’m going to use it against you,” because they won’t give you any more information. So it was a very transparent collaborative process that happened.
My developer is giving a $20 million fund to Lancaster City to use for both economic development, workforce development, education and sustainability. We signed a community benefits agreement that uses 100% clean power. I’m not allowed to have any of the noise … that leaves the site at anything greater than what the ambient is.
Right now, I’m down at 43 decibels, which is quite quiet. I use no water. Of the 700 mergawatts that we’re using — it’s distributed between four buildings — each one of those buildings uses about the same amount of water as a restaurant. It’s about the same as an Olive Garden. So the bottom line on it is, yes, you can make these work.
To any of you, is it a concern you have, in terms of potential emissions, that data centers may need to use backup generators more often?
Davis: When you start looking at backup generators, historically, those backup generators hardly run at all during the year. They get checked once a quarter, just make sure they work, and then maybe a handful of hours a year if they come on during a storm.
And what you’re seeing now also is some transition from the diesel generators to batteries. But I would say that, looking at the backup generators, they hardly run today. The reason why you hear more talk about them maybe running in the future, is because of the warnings from PJM [the regional electric grid operator] that if PJM does not fix the situation we’re having, you can see rolling blackouts through PJM, but it’s going to be fixed.
If you look at what PJM is doing today, what the governors are doing, the support from the White House … It’s being fixed. We’re going to be OK, and we shouldn’t have that problem.
So your prediction is just that the backup generator issue, in terms of emissions, is just not going to be an issue.
Davis: If you have a problem with it running a few hours a year, then you have a problem with it going forward, but you’re not going to see it running more than a few hours a year, plus every quarter to test them.
Tweedie: If reliability gets worse, then you may need to run these more often, the more often you need to run them, the more impact there is. In addition, there is contemplation of potentially trying to require these to run not only for reliability purposes, but if prices spike. So if in particular moments during the year, the cost of energy skyrockets, one option would be to require data centers to use their backup generators instead of pulling power from the grid, so that you can shift that supply demand balance a little bit and push down costs.
But the consequence of that would be running these much more often and resulting in the emissions that these backup generators would have. I will say, not all data center developers are choosing to go the route that Jeff [Sturla] is in terms of using tier four backup generators. So if you’re using a less efficient backup generator, then the emissions are going to be worse. If you’re running an enormous data center, then you could have hundreds of these backup generators all coming on at once.
If you had a natural gas power plant, that would have a smokestack that would emit those emissions, you know, high into the air, hopefully, where they’re going to get dispersed, they’re not going to be a local impact. These are not that, right? These are on the ground backup generators, so that, if they are all running at once, you have the potential to get a ton of local air emissions. And if that could be quite consequential if this is in a neighborhood or is near residential areas.
Sturla: But it’s not data centers’ choice to run them or not. It’s not at their discretion. They can’t just decide to turn them on. We are bound by the federal DEP … I’m limited to run those generators like 50 hours. Each generator can only run 50 hours a year, unless there is a catastrophic event where they need to turn on, in what is deemed by DEP as a catastrophic event … So understand that it’s not my decision to go out and say to the power company, ‘I’m going to provide you with power.’ If the power company can’t provide me with power, and it’s not a catastrophic event, I’m not allowed to turn them on.
Tweedie: That will depend on regulations that any particular data center is under. There are examples of data centers across the country where they have been running much more than originally anticipated on their backup generation with all the consequences… When we had really severe power demands over the winter, the Department of Energy had actually issued an order that could have required data centers to switch to backup generation to alleviate constraints on the grid. So it could cut both ways of data centers needing to go or being told to use backup generation with whatever the consequences of that might be.
Davis: But the alternative is a rolling blackout. And if you look at Texas, what happened in the winter storm, people died. If you have a huge catastrophic event, and you’ve got two choices, does your grandparents’ heat stay on? Or does it not stay on? And we get the impacts that we had in Texas, you make a decision. I will also mention that state legislatures also need to be careful, because sometimes legislators — and look, I was legislator for 10 years, city councilman for five years. We don’t know everything at the time we’re doing things. Sometimes they talk about demand response [reducing or shifting power usage during periods of high demand], and they’re like, data centers should have a certain amount of demand response during these hours. And what they don’t realize is it forces them on the backup generation, which then forces them onto their generators, which is not the desired outcome. So legislators all need to be careful of doing things that force that type of outcome to occur.
Tweedie: I don’t disagree with any of that, other than that, it’s not a binary choice, right? We can shape policy in a way that decides what the backup for these systems should be, how much on site generation they have. Should it include batteries? Should it include technologies that aren’t heavy local emitters? There are lots of policy options we can choose. So it is not a binary choice between power at your grandparents versus heavy emissions.
