Google has reached agreements with Indiana Michigan Power (I&M) and the Tennessee Valley Authority to reduce power use by its data centers during critical periods. 

The company said Aug. 4 that it has been working to bring demand flexibility to its data center fleet but the new demand response agreements are the first time it is targeting machine-learning workloads to accomplish this. 

In a demonstration project with Omaha Public Power District, Google reduced the power demands of its machine-learning workloads during three grid events in 2024. This set the stage for similar efforts in other regions. 

The rise of data centers, with their 24/7 demand for large amounts of electricity, has left the electricity sector and policymakers excited about the lucrative potential they represent and anxious about the challenge of realizing that potential: There appears not to be enough capacity to meet the highest projections of peak demand and no way to add capacity quickly and inexpensively. 

A Duke University study released earlier in 2025 addressed this quandary by looking at the kind of arrangement Google is announcing with the two utilities: temporary curtailment of load. 

As much as 126 GW of new demand could be handled with existing generation, the authors concluded, if data centers cut their energy use by as little as 1% during peak periods. (See US Grid Has Flexible ‘Headroom’ for Data Center Demand Growth.) 

Google said it is working to develop this ability to reduce or shift power demand during certain hours and certain times of the year. 

Along with the benefits to the grid and to grid operators, DR has the advantage of speeding up the interconnection process and bridging the gap to long-term clean energy solutions, Google said. 

The company said its first such efforts involved shifting non-urgent computing tasks such as processing videos for YouTube, and it sees significant further opportunity through development of DR for machine-learning workloads. This will let it grow artificial intelligence capabilities even in regions where generation and transmission are constrained, it said. 

Google said demand flexibility will be possible only in certain locations in these early stages and faces a finite potential, given the high level of reliability the company needs for some of its services. It expects DR to be part of a portfolio of solutions that includes new generation and transmission. 

Contract Details

I&M submitted the Google contract to the Indiana Utility Regulatory Commission on July 30 (46276). 

It pertains to Google’s new data center in Fort Wayne and is similar to programs currently available to the utility’s residential and commercial/industrial customers, I&M President Steve Baker said in a news release. Google announced the $2 billion Fort Wayne project in April 2024; I&M energized it seven months later. 

“Google’s ability to leverage load flexibility will be a highly valuable tool to meet their future energy needs,” Baker said. 

It would also help I&M. The utility said that if the IURC approves the contract, “this agreement will reduce I&M’s long-term generation requirements and financial commitments to benefit all I&M customers.” 

In its petition to the IURC, I&M said the contract has two key aspects: a clean capacity agreement by which Google will transfer to I&M long-term accredited capacity from clean energy resources that the utility will use to meet a portion of its state retail capacity obligations as part of its PJM fixed resource requirement plan, and “a custom demand response offering” to reduce I&M’s peak load in times of high demand, thereby reducing the utility’s capacity obligation and transmission requirements to serve its customers.  

Because the clean capacity agreement will be used to meet its load obligation for all Indiana customers, I&M proposes to recover associated costs in the same way it recovers capacity-related purchase costs: through its Resource Adequacy Rider. It also proposes to recover through the rider any demand response credits provided to Google. 

Two days after I&M submitted the petition, the Citizens Action Coalition of Indiana petitioned to intervene, citing the potential impact on rates charged to residential customers and services provided to them.