News

Duke Energy, tech giants announce agreements to drive clean energy deployments

,
Duke Energy, tech giants announce agreements to drive clean energy deployments
A Microsoft data center in Wyoming (Credit: Microsoft)

Duke Energy announced agreements with Amazon, Google, Microsoft and Nucor to significantly accelerate clean energy deployments in the Carolinas.

In memorandums of understanding (MOUs) signed this month, the companies proposed developing new rate structures, or “tariffs,” designed specifically to lower the long-term costs of investing in clean energy technologies like new nuclear and long-duration energy storage through early commitments. The announcement was made at the White House Summit on Domestic Nuclear Deployment as the White House is also announcing new steps to bolster the U.S. nuclear industry.

The proposed Accelerating Clean Energy (ACE) tariffs would enable large customers like Amazon, Google, Microsoft and Nucor to directly support carbon-free energy generation investments through financing structures and contributions that address project risk to lower costs of emerging technologies. ACE tariffs would facilitate onsite generation at customer facilities, participation in load flexibility programs and investments in clean energy assets.

The ACE framework also would include a Clean Transition Tariff (CTT) – a feature enabling Duke Energy to provide individualized portfolios of new carbon-free energy to commercial and industrial customers. The CTT would match clean-energy generation and customer load. This would be a voluntary program for larger customers seeking to advance their clean energy goals, and it would include protections for non-participating customers, Duke Energy said.

The ACE tariffs would represent new, voluntary pricing structures for Duke Energy’s large commercial and industrial customers. Duke Energy’s five-year capital plan will continue as planned and these tariffs would be subject to regulatory approvals in North Carolina and South Carolina.

“With the help of companies like Amazon, Google, Microsoft and Nucor, we can accelerate our service of large customer needs and the transition to cleaner energy, while reducing financial risks and supporting economic development in our communities,” said Lon Huber, Duke Energy, SVP Pricing and Customer Solutions.

Join us at GridTECH Connect California, June 24-26, 2024, in Newport Beach, CA! With some of the most ambitious sustainability and clean energy goals in the country, California is at the cutting edge of the energy transition while confronting its most cumbersome roadblocks. From electric vehicles to battery storage, microgrids, community solar, and everything in between, attendees will collaborate to advance interconnection procedures and policies in California.

Technology giants like Microsoft, Google and Amazon are significantly driving electricity demand, primarily through extensive and rapidly expanding data center operations. These data centers are essential for supporting cloud services, AI development and other digital operations. The facilities require vast amounts of power to run servers, cooling systems and other infrastructure needed to store and process massive amounts of data.

According to a new study released by EPRI, data centers could consume up to 9% of U.S. electricity generation by 2030 — more than double the amount currently used. This could create regional supply challenges, among other issues.

AI queries require approximately ten times the electricity of traditional internet searches and the generation of original music, photos, and videos requires much more. With 5.3 billion internet users, rapid adoption of these new tools could increase power demands substantially. At the same time, computing facilities are becoming more concentrated, with single facilities now requesting power consumption that can range from the equivalent of 80,000 to 800,000 homes, exacerbating power delivery challenges.

Drawing on public information about existing data centers, estimates of industry growth, and private electricity demand forecasts by industry experts, EPRI outlined four scenarios of potential annual electricity consumption in U.S. data centers from 2023 to 2030, with annual growth rates ranging from 3.7% to 15%. The lowest scenario assumed limited public uptake of AI tools, coupled with high gains in data center efficiency, and the highest scenario combined rapid expansion of AI applications with fewer efficiency gains. These scenarios placed data center power ranges from 4.6%-9.1%.

“The U.S. electricity sector is working hard to meet the growing demands of data centers, transportation electrification, crypto-mining, and industrial onshoring, while balancing decarbonization efforts,” said EPRI Vice President of Electrification and Sustainable Energy Strategy David Porter. “The data center boom requires closer collaboration between large data center owners and developers, utilities, government, and other stakeholders to ensure that we can power the needs of AI while maintaining reliable, affordable power to all customers.”

The analysis also looked at regional impacts of increased AI power demand. An estimated 80% of the national data center load in 2023 was concentrated in 15 states, led by Virginia and Texas. Demands for highly reliable power, requests for power from new, non-emitting generation sources, and short lead times for connection—of two years or less—can create local and regional electricity supply challenges.

To overcome these challenges, the analysis suggested three essential strategies:

  • Improve data center efficiency and flexibility.
  • Coordinate closely between data center developers and utilities regarding power needs, timing, flexibility, and delivery constraints.
  • Develop better modeling tools to anticipate and accommodate data center growth without affecting grid reliability.

Anticipating this demand from data centers, major utilities are updating their load growth forecasts accordingly. Some are already feeling the squeeze.

Dominion Energy has connected 94 data centers totaling over four GW of capacity over the last approximately five years, its CEO recently told investors. The utility’s territory includes Northern Virginia, which is the largest and most dynamic data center market in the world.

According to the company’s annual report filed with regulators earlier this year, data centers represented 24% and 21% of Dominion’s electricity sales in 2023 and 2022, respectively.

Demand isn’t limited to historically strong data center markets, either. Because Ohio is seeing unprecedented demand from data center customers, American Electric Power (AEP) recently filed a proposal with state regulators requiring new data centers with loads greater than 25 MW to agree to meet certain requirements before infrastructure is constructed to serve them.

Under AEP’s proposal, data centers would be required to make a 10-year commitment to pay for a minimum of 90% of the energy they say they need each month – even if they use less.

Another trend is the growing size of each data center. It’s no longer uncommon to see these companies asking for 500 MW of power for a single campus. Dominion noted it is receiving requests to power larger data center campuses that require total capacity ranging from 300 MW to as many as “several gigawatts.”