Big Tech’s Hottest New Energy Fix Doesn’t Generate Any Power

Haley Zaremba

Haley Zaremba is an energy journalist and researcher with more than a decade of professional experience covering global energy systems, land and natural resources, and…

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• Google has signed the first-of-its-kind “bring your own capacity” deal with startup Voltus, using a virtual power plant to unlock 100 MW of energy for its data centers without any new infrastructure.
• U.S. data center energy demand is projected to surge nearly 360% by 2030, reaching 110 GW — forcing tech companies to explore increasingly creative supply solutions.
• A Duke University study found that if data centers limited consumption during peak hours, around 100 GW of new capacity could come online with zero new power plants or transmission equipment — but AI companies are resisting, making virtual power plants the preferred workaround.

The artificial intelligence boom is driving a new wave of energy innovation as the public and private sector scramble to match planned energy capacity additions with projected demand. Experts expect that energy demand from data centers in the United States alone will skyrocket by almost 360% between now and 2030 to reach 110 GW. Meeting this demand while keeping energy affordable and sustainable presents an enormous challenge for world leaders, and will require creative thinking and major technological advancement on the part of the energy sector as well as Big Tech.

“There’s no way to get there without a breakthrough.”

said Sam Altman, founder of ChatGPT firm OpenAI, said at the 2024 World Economic Forum in Davos, Switzerland.

For Altman, the scale of the challenge is a direct argument for more investment into nuclear fusion research, which proponents say could one day soon provide a silver bullet solution for limitless clean energy. Altman, along with Bill Gates and other major players in Silicon Valley, have been pushing for nuclear fusion development for years now, and it’s starting to pay off. Startups are beginning to crowd the field of nuclear fusion research, and as breakthroughs start to pile up, Wall Street is taking notice, providing fresh momentum to energy experiments that had been more or less treading water for decades.

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In addition to furthering investment into nuclear fusion, Big Tech is also pushing investment into a litany of other next-gen clean energy technologies including enhanced geothermal energy and space-based solar power. But the hottest new innovation at the nexus of AI and energy doesn’t involve producing any new energy at all. Instead, it focuses on better and more flexible distribution of existing energy capacity.

Just this week, Google signed a first-of-its-kind deal to create a “virtual power plant” with the startup Voltus. As per the deal, “Google will finance a program for parts of the Mid-Atlantic US grid that will pay other households and businesses to curb their consumption at certain times,” according to reporting from Semafor. The firms claim that this approach will make 100 megawatts of energy available to Google without building any additional infrastructure.

This will make Google the first customer for Voltus’ new “bring your own capacity” program, in which firms that need energy to power their data centers can finance grid flexibility potential in the communities around them. Voltus will group together a broad variety of devices in a virtual network, from electric vehicles to smart thermostats. The startup will pay customers to participate in the program, and in return they will be able to manipulate flows of energy and call upon the energy stored in the devices when needed, and when spare capacity can be diverted to Google.

“Hyperscalers in the program commit to financing a [virtual power plant] program in the region where they need power for a data center, and Voltus delivers that contracted capacity directly to the load-serving entity,” explains a recent report from Latitude media. The bring your own capacity framework is “designed to help data centers bridge the capacity gap between now and the early 2030s,” the report goes on to say.

This pilot program is the largest and first of its kind, and will teach us a lot about the potential of energy flexibility as a solution for the data center energy quagmire. But in addition to capitalizing on flexibility of the community’s energy use, getting data centers to be flexible in their own energy consumption will be another key piece of the puzzle. Last year, Duke University released a study showing that if data centers limited their energy intake during the grid’s peak energy hours, about 100 gigawatts’ worth of new data centers would be able to come online without the addition of any new power plants or transmission equipment.

However, this is a hard sell with AI companies, as it could result in a loss of revenue during those times of lowered capacities. This is why virtual power plants are the new buzzy alternative – with this model, Big Tech can pay other people to lower their energy use instead of diminishing their own.

By Haley Zaremba for Oilprice.com 

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