Guest Contributor Matt Brakey: Ohio’s Data Centers Can Unleash the Potential of Demand-Side Electricity Management

October 10, 2023

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CHAGRIN FALLS, Ohio — In an age when digital innovation drives progress, data centers represent the backbone of modern technology fueling our interconnected world. Ohio, a pivotal hub for these critical centers poised to secure massive investments through leading-edge chip factories, needs to be energy-conscious now more than ever.

Data centers — power-intensive entities that house all the components that make our digital world possible — require a large supply of electricity to support their operations and are being established throughout Ohio due to the state’s competitive electric rates and favorable business climate. However, the traditional energy model, which treats electricity consumption as a static constant, is evolving.

Electricity must be produced and consumed in synchronicity. There is currently no cost-effective way to store it in large quantities. This means distribution, transmission, and generation infrastructure must be overbuilt to satisfy a few momentary periods of peak electric demand or risk grid failure.

Demand-side management flips the script by allowing data centers – and other consumers – to dynamically adjust their power consumption in response to grid conditions, pricing fluctuations, and peak demand periods. This approach enables these customers to reduce electricity usage during periods of high prices and grid congestion, thereby aiding the grid in avoiding overloads. Given Ohio’s competitive energy market and the availability of the price signals within rates and regulations, these large data centers can lead the way in pioneering optimized modern electricity usage.

Ohio’s competitive energy landscape offers several advantages, which encourage large power consumers to adjust their electricity consumption during peak demand periods. These advantages include: (1) access to hourly spot markets, (2) pricing for capacity and transmission based on power consumption during times of grid peaks, and (3) different local and regional demand response programs.

Demand-side management proves particularly valuable when surging power consumption, such as during heat waves and winter storms, strains the electric grid. In extreme weather conditions, the loss of power can mean the loss of life.

For example, on Dec. 23 and Dec. 24 last year, Winter Storm Elliott rapidly plunged Ohio and many surrounding states into sub-zero temperatures. Surging electric demand and generation failures produced emergency grid conditions that led many of Ohio’s data centers and largest energy users to respond to available price signals or interruption notices and come offline. Absent their actions, the outcome invariably would have been disastrous. And while we survived last winter, many are rightly concerned about what future winters will hold.

Embracing demand-side management also does not just mean reduced consumption when it is most needed, but critically, reduced costs. Ohio’s data centers are no strangers to the substantial expenses associated with electricity consumption. For many, it is their largest operating cost by a wide margin, and as a result, they are highly sensitive to regional pricing when selecting a place to locate.

To capitalize on the full potential of competitive retail energy, policymakers, utilities, and stakeholders must collaborate to design and implement effective demand-side management opportunities, foster greater competition in the market, and increase awareness of the options available.

The latest reporting on Ohio’s competitive market states that “supplier access to customer data could help with designing innovative retail products that enable customer usage timing and control.” A lack of customer data limits the market’s ability to strengthen demand-side management. As such, strengthening our market and prioritizing transparency can pave the way for more cost-effective and innovative energy solutions.

The path forward is clear: Ohio’s data centers and other large energy consumers have an extraordinary opportunity to revolutionize their energy consumption patterns and grid stability through demand-side management. By responding to available price signals, these facilities can unlock unprecedented cost savings and enhance grid reliability. The result? Data centers that not only power the digital age, but also stand as beacons of efficiency, innovation, and progress in the heart of Ohio.

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