Renewable Microgrids Can Provide Multiple Benefits for Virginia Data Centers

Environmentalists and microgrid advocates are calling for more use of renewable energy and renewable microgrids to serve Virginia’s energy-hungry data centers, which now gobble up 22% of the electricity provided by the state’s largest utility.

The call for more renewables comes as Dominion Energy puts forward plans to build large fossil fuel plants to serve the growing demand for electricity by data centers in the northern part of the state, considered the nation’s largest data center hub and among the five largest internationally.

But should renewable microgrids be getting more consideration?

Renewable microgrids can cut carbon emissions by replacing diesel-powered backup generators used by data centers and utilities and ease mounting strain on the grid, said Allan Schurr, chief commercial officer for Enchanted Rock, whose microgrids are increasingly powered by renewable natural gas.

Data centers alone drive new demand

The growing demand for electricity to meet the needs of data centers is especially acute in Virginia, where a single facility can require 100 MW to 300 MW of electricity.

In Dominion Energy’s Virginia territory, electricity sales to data centers in 2023 amounted to 18,767 GWh, representing 22.2% of all sales that year, according to William Shobe, director of the University of Virginia's Center for Economic and Policy Studies.

While sales of electricity to meet demand from data centers is growing rapidly for Dominion Energy, its residential, commercial and industrial sales aren’t increasing, he said.

Dominion Energy filed an integrated resource plan with state regulators showing that data center demand rose from 462 MW in 2013 to 2,767 MW in 2022.

The company said in its plan that it will need new gas-fired plants to meet this demand.

The Sierra Club recently protested the expansion of data centers in the state – and the energy it will require. The group argued that the rapid increase in electric demand, if not accompanied by new grid infrastructure, strains existing infrastructure, increases pollution and raises rates, said Ivy Main, renewable energy co-chair, Virginia Chapter of the Sierra Club.

Policies that support microgrids could help Virginian solve its data center energy challenges, say microgrid advocates.

Destressing the grid with microgrids

“Microgrid deployment within data center campuses will inevitably enable onsite power generation integrating renewable energy technologies,” said Dean Richards, president and CEO of Piller Power Systems. The microgrids will be built to evolve as technology advances and as greener fuels become more viable, he added.

“Data center microgrids can help balance demand from the existing aged grid, either working integrated or islanded to manage power and peaking capacity. This will destress the grid infrastructure and embrace greener energy generation at the local community level,” he said.

Microsoft’s microgrid plan

One example of a renewable data center microgrid is the Enchanted Rock microgrid at Microsoft's San Jose data center.

The microgrid will be part of a Microsoft data center being constructed in San Jose. Power for the microgrid will be supplied by net-zero carbon renewable natural gas injected upstream into the gas pipeline to offset fossil gas use.

Plans call for a 100-MW microgrid with 224 natural gas generators, each with a 0.45 MW capacity.

The microgrid will also run on 100% renewable energy acquired through San Jose Clean Energy, a community choice aggregation. and will provide grid services, said Schurr.

This project can be a model for other data centers, he added.

To achieve 100% renewables, many data centers can sign power purchase agreements (PPA) for 100% clean energy and build an on-site microgrid for resiliency. (It’s generally not realistic to site solar plants along with data centers because siting solar for such power-hungry facilities would require too much land, Schurr said.)

Like the Microsoft project, the onsite microgrids can serve as backup to the grid and provide grid services that offset the microgrids' cost. The grid services support the local community by helping avoid blackouts or brownouts, lowering costs and providing cleaner energy during peak hours, Schurr said. They can also help utilities avoid building new power plants or transmission lines.

The Sierra Club is upset that Dominion Energy is focusing on building natural gas plants and because the state provides subsidies to attract large data centers. According to the organization, taxpayers and ratepayers are paying for efforts that lead to an unstable grid and pollution.

In the Virginia Clean Economy Act, that state established a renewable energy portfolio standard mandating that utilities produce 100% renewable electricity by 2050, said Paige Wesselink, the staff lead for data centers at the Virginia chapter of the Sierra Club.

“It’s impossible to get to that goal if we continue to invest in data centers run by fossil fuels. We need to hold local policymakers accountable to implement stricter rules and regulations,” she said.

Shobe agreed, arguing that policymakers – not utilities – should be establishing guidelines for addressing the effects of growing data center energy demand.

“For Virginia, this is an interesting policy question,” Shobe said. “We are exporting data to the rest of the world. It’s a real challenge to meet demand for electricity and meet the provisions of the Virginia Clean Economy Act.”

“It makes sense not to leave such an important policy question to our utility.” The state needs to be a partner, he said.

Crawl, walk, sprint

And microgrid companies need to partner with utilities to offset their demand, said Carsten Baumann, director, strategic initiatives at Schneider Electric.

“It is not just about grid reliability and cost, it’s also about constraints – not having enough capacity to keep pace with demand. I don’t expect that demand to slow, so I expect we’ll see more onsite power generation in the future,” he said.

With onsite power generation, data centers aren’t just energy consumers; they also are energy producers for the surrounding community, Baumann said.

He added that the data center industry will eventually move toward using renewable microgrids.

“We must crawl before we can walk, and as microgrids become more widely accessible, I expect more data centers will replace diesel generators with sustainable power generation, bringing us to a full sprint towards a more sustainable and resilient future. It’s a natural progression in our evolution to transitioning to sustainable power,” said Baumann.

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