Data center companies can buy electric utility companies and add renewable generation in the United States, says Simon Mahan, executive director of the Southern Renewable Energy Association, which represents the wind, solar, storage and transmission sectors sectors.
PV Magazine: Why would a data center company consider buying an electric utility?
Simon Mahan: Of course this concept is hypothetical. But if you look at artificial intelligence and growth of data centers, access to significant amounts of energy begins to become a bottleneck for many of these large companies – the Amazons, the Meta’s, the Googles of the World. If you look at a large electric utility, such as an Entergy, that might be a $ 40 billion company. And some of these data center companies are companies with several trillion dollars. For them, the market capitalization of a use is a kind of completion error.
And the data center companies insist on more and more generation, almost without hesitation with regard to the price. So maybe there is a company that would consider buying an electrical utility. They can get control of their energy supply and create certainty in the long term.
I mentioned Entergy as a $ 40 billion company, but there are many electric utilities or subsidiaries with a value of only a few billion dollars. Southern Company has taken out Gulf Power and sold to Florida Power and Light for around $ 7 billion in 2019. Dominion bought Scana in South Carolina for around $ 15 billion, also in 2019. There are also cooperative utilities that may be interested in a public-private partnership and smaller municipal.
So there are smaller electrical utilities that data center companies can buy to make it easier for them to build generation and to secure their energy supply.
PV Magazine: How can the purchase of a data center company of an electrical utility speed solar and wind implementation?
Simon Mahan: A data center company that has an electric utility can request proposals or build their own generation sources, including wind and solar energy.
Also a large part of the time it needs to plan a tool to plan a new generation source to identify a customer and to negotiate a tariff plan with the customer. A utility must also show a regulating committee of the State that a proposed power plant will be used and useful.
In the concept of a data center company that acquires a utility, you can solve many of those questions for the discussion, because the data center company creates the load and get direct wholesale prices for the energy that a new power plant would generate, especially if the cargo pays for the new generation. That makes it a lot easier for a state committee of the public service to approve that generation and to show that they do not charge other ratepayers the costs of building this new infrastructure.
So there are a number of things that streamline all generation of sources if you effectively link a buyer and a seller in one company.
PV Magazine: You have said that the interest of data center companies for generating and loading co-locks is related to your concept. Can you say more about that?
Simon Mahan: This discussion comes very close to the discussions about co-location of generation and tax. As a good example, there is interest in effectively placing a nuclear reactor behind the meter for a large -scale data center in PJM, the largest schedule region in the country, and if someone had suggested that it would not have been seen as a possibility ten years ago. But now people are trying to find out how much generation we can get behind the meter on these large loads.
In some regions such as the Southeast, where you have territorial actions, according to the law, the only electricity retail customers can have the electricity features, and you cannot therefore close a co-location deal, for example, where a developer of renewable energy sources serves a data center facility directly in South Carolina. But if the data center company bought the utility company, it can contain the generation together with its load and sell the electricity from its utilities to its data center department.
PV Magazine: Would the purchase of a data center of an electrical approval utility require?
Simon Mahan: Yes, absolutely, or for any regulation with a municipal utility or a cooperative use, which would require approval from its administrative body.
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