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November 23, 2024

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Data Center Opportunity is Strong, Expanding, PSEG CEO Says

The FERC ruling that blocked the proposed expansion of a data center in Pennsylvania isn’t a hindrance to developing data centers in New Jersey, Public Service Enterprise Group CEO Ralph A. LaRossa said in a third-quarter earnings call Nov. 4. 

LaRossa said PSEG has received a surge in project inquiries and proposals and is well positioned due in part to its spare nuclear generating capacity and a state tax-break program enacted in July. 

On Nov. 1, FERC rejected an amendment to Talen Energy’s interconnection service agreement (ISA) with PJM and PPL for a proposed expansion of Amazon Web Services’ 300-MW data center in Pennsylvania. (See FERC Rejects Expansion of Co-located Data Center at Susquehanna Nuclear Plant.) 

“We are aware of the FERC technical conference and decision on Friday,” LaRossa said, adding that “we will continue to look for clarity on this issue going forward. That said, we believe that data center demand will continue to grow.” 

PSEG is the sole owner and operator of the Hope Creek nuclear plant in Salem, N.J., and the operator and majority co-owner of two adjacent nuclear plants, Salem 1 and Salem 2, with Constellation Energy the minority co-owner. The company considers the three plants key to its ability to meet the future needs of data centers and artificial intelligence development projects, which the state’s economic development planners also are courting. (See PSEG Plans for 80-year Nuclear Generation in NJ.) 

LaRossa called the FERC ruling on the Talen Energy project a “very narrow decision” that was “specific” only to the facts put forward by the parties involved in the Pennsylvania case.  

“It has not slowed us down, and will not slow us down, from trying to help the state of New Jersey meet their economic development goals,” he said. “We continue to pursue contracting of our nuclear output at long-term, attractive pricing with low execution risk that can also help attract new technology-based businesses to New Jersey.” 

The utility’s nuclear fleet has room for expansion and the utility is “pursuing thermal inefficiency upgrades” that could increase the output of the three Salem units by 200 MW, LaRossa said. 

Co-location Factors

LaRossa said the utility recently updated the load study, part of an annual submission to PJM, which reflects the interest in putting data centers in the territory served by the utility. 

“Our existing data center peak load currently stands at approximately 350 MW, and these sites are expected to expand by about 170 MW over the next 10 years,” he said. “We have also received formal applications to initiate nearly 400 MW of new data center load and inquiries over 1,200 MW of data center feasibility studies in new business.  

“These amounts do not represent firm commitments, but they provide an indication of the increase in interest,” he said. He cited the example of an announcement by Roseland, N.J.-based CoreWeave that it had signed a lease to convert a 280,000-square-foot former laboratory and manufacturing building into a $1.25 billion data center. 

“New Jersey has numerous locations that can be re-utilized in a similar fashion, and the state’s economic development efforts are focused on replicating this activity throughout the state,” he said. Potential developers are likely to be swayed in varying amounts by three factors, he said: to what extent a project represents “additionality,” or the creation of new renewable energy; the time it will take to get the project up and running; and the reliability of the energy source. 

“We believe we’re in pretty good shape on all three of those factors,” he said. “And that’s why we haven’t indicated at all that we’re backing down.” 

He said the utility is open to co-locating a data center next to one of the nuclear plants, for which potential clients typically would look at factors such as how much the utility charges for the energy and the transmission, and at the level of taxes. Those factors will determine whether the state can attract a “hyperscaler,” or large-scale data center, to the area, he said, noting that Gov. Phil Murphy (D) in July signed a law that would allocate $500 million a year in tax breaks to artificial intelligence data centers.   

In a separate issue, LaRossa said PSEG has submitted a proposal to the New Jersey Board of Public Utilities (BPU) offshore infrastructure solicitation, the results of which are expected to be released by the end of 2024. (See NJ Offshore Infrastructure Plans Spark Electromagnetic Fears.)  

The utility also submitted bids to PJM’s 2024 Regional Transmission Expansion Plan Window 1, LaRossa said. The solicitation seeks proposals to meet the RTO’s needs stemming from ongoing load growth.  

PSEG’s third-quarter results for 2024 exceeded those in 2023. The company reported net income of $520 million ($1.04/share), compared with $139 million ($0.27/share). Non-GAAP operating earnings for Q3 2024 were $448 million ($0.90/share), compared with $425 million ($0.85/share) in the same period in 2023. 

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NYISO Management Committee Passes 2024 Reliability Needs Assessment

The NYISO Management Committee on Oct. 31 passed the draft Reliability Needs Assessment and recommended that the Board of Directors approve it at its next meeting.

The assessment has identified a reliability need in New York City starting in summer 2033 and “continues to demonstrate a very concerning decline in statewide resources margins such that by 2034 no surplus power would remain without further resource development,” according to the executive summary.

The committee passed the assessment unanimously via secret, emailed ballot. Some stakeholders abstained from the motion, according to the final writeup of the results.

The New York City need is driven by increased peak demand, limited additional supply and the assumed retirement of the New York Power Authority’s small gas plants based on compliance with state climate legislation, NYISO found. Additional generators were also assumed to be unavailable because of the Department of Environmental Conservation’s peaker rule.

Consolidated Edison, the transmission owner and local utility, also identified reliability violations in the 138-kV Greenwood transmission load area, but because these reliability violations occur on the non-bulk power transmission facilities, they are not actionable under NYISO’s assessment. The ISO wrote that these issues are being brought up so that developers can address both needs holistically.

NYISO was facing a statewide reliability need until it revised some of the incoming large loads, representing about 1,200 MW of cryptocurrency miners and hydrogen plants, to be “flexible.” (See NYISO: Large Load Flexibility Eliminates 2034 Shortfall Concern.)

Stakeholders raised concerns about this finding similar to those in prior meetings.

“There’s no requirement that’s imposed on these [crypto miners]. There’s no certification from a CEO, as we have in many other instances. There’s no filings. There’s no commitments. There’s nothing in writing at all. It’s simply that we don’t think they’re going to be there” said Kevin Lang, representing New York City. “If Bitcoin goes through the roof, and now it’s cost-justified to be running those cryptocurrency mining operations 24/7, what is going to prevent them from doing that? Nothing.”

Lang went on to say that he knew this wasn’t going to change how the RNA would go, or how the vote would go, but that he wanted to register a large concern. He wasn’t the only stakeholder to voice this concern. Others mentioned the potential for cryptocurrency miners to pivot to AI.

“Yes, we are making an assumption here,” NYISO’s Zach Smith said. “We think it’s based on a good amount of information that we’ve gotten directly from these loads. … Without question this is an assumption we’re going to continue to revisit time and time again.”

Other Committee Actions

National Grid’s Transmission Control Center director, Matthew Antonio, was elected vice chair of the committee.

The committee also unanimously passed a motion to ask the board to approve the proposed $1.306/MWh Rate Schedule 1 for the 2025 budget year. The recommendations include a 2025 revenue requirement of $202 million. The committee further recommended that spending underruns and overcollections of RS1 be used to pay down debt or reduce anticipated debt.

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Constellation Pushes Ahead on Co-located Data Centers

Constellation Energy remains bullish on data centers co-located with nuclear power plants despite FERC rejecting terms for the expansion of one such agreement in a high-profile ruling. 

Data centers are critical to the economy and national security of the United States, and co-location is among the best ways to get them built quickly, CEO Joe Dominguez said Nov. 4 during a call with financial analysts. 

The nation’s largest nuclear power plant operator is working to restart the reactor it owns at the former Three Mile Island station to help meet the projected rise in power demand. 

Constellation already has signed a power purchase agreement with Microsoft for the zero-carbon output from the reactor, which has been renamed the Crane Clean Energy Center. 

Dominguez noted the company could boost its nuclear generation an additional 1 GW or more through uprating the facilities and said customers have expressed interest in contracting for that output. 

The Nov. 4 conference call was intended to provide details and take questions on Constellation’s third-quarter financials, but Dominguez immediately launched into his thoughts on FERC rejecting terms of the deal to expand Amazon’s data center co-located at Talen’s nuclear plant (ER24-2172) after a Nov. 1 technical conference. (See related stories, FERC Dives into Data Center Co-location Debate at Technical Conference and FERC Rejects Expansion of Co-located Data Center at Susquehanna Nuclear Plant.) 

Nearly 10 minutes into the call, Dominguez switched to Constellation’s quarterly financials, which once again were strong: GAAP net income was $3.82 per share and adjusted operating earnings were $2.74 per share, up from $2.26 and $2.13 respectively in the third quarter of 2023. 

The company again bumped its 2024 earnings projection higher and said it would grow its earnings per share by at least 13% through 2030. 

Despite this, Constellation Energy stock closed 12.5% lower in heavy trading Nov. 4, a plunge widely presented as fallout from the FERC ruling. 

Dominguez downplayed the significance of the ruling in his opening remarks and again during the Q&A with financial analysts. 

It was a very narrow decision on the proposed interconnection service agreement, he noted. 

“In Constellation’s view, the 2-1 ruling rejecting Talen’s ISA by a fraction of the commission is not the final word from FERC on co-location,” Dominguez said. “We believe that all of the commissioners, including the two who recused themselves from Friday’s decision, understand the critical importance of providing additional guidance.” 

The steps that will allow for co-location could come from FERC, from RTOs or from the private sector parties pursuing the deals, he said. 

Dominguez rejected criticism that co-located behind-the-meter data centers would not pay their share of costs to build and maintain grid capacity and would create capacity problems by diverting so much generation off the grid. 

The data centers still would pay to support the grid, he said, and the nuclear reactors would switch their output back to the grid in times of emergency. Also, he said, if a co-located load had backup power, it could offer that power to the grid. 

“These issues should be brought together and advanced at FERC,” Dominguez said. “Frankly, I think part of the issue with the ISA proceeding is that it did not bring these issues together, and understandably, some of the commissioners want to see the complete package. We will pursue this regulatory clarity while simultaneously pursuing commercial strategies for co-location that are permitted under existing rules.” 

An analyst asked whether Constellation is broadening its strategy in the wake of the ruling. 

“Our foot is on the accelerator, pressed all the way down on deals, whether they’re front- or behind-the-meter,” Dominguez replied. “Speed to market is very clearly the most important thing for customers, and so that’s going to depend on the transmission configuration in different places, and certain places are going to be, frankly, more attractive [than] others for the data economy customers, and we’re going to follow where they need to go.” 

An analyst asked what sort of timeline Dominguez expects for gaining regulatory clarity on co-located loads. 

Dominguez did not know — the FERC decision was not yet 72 hours old by that point, and most of those hours were weekend days.  

“I probably would agree with you that there’s not a quick fix,” he said. “It’s not going to happen tomorrow, but there are a lot of parties interested in moving this forward.” 

Dominguez added: “I think a bigger development wasn’t the ISA, which was a narrow thing, but how do we deal with the comments that came out of the tech conference and craft something globally that addresses those comments?” 

Another analyst asked whether hyperscalers would vote with their feet and look to build their facilities elsewhere, given slow movement in PJM. 

“Where are they going to go? Right? It’s not like it’s a lot better anywhere else than PJM,” Dominguez replied. “They’re not slowing the pace of their investment, but what they’re seeing is that there’s no nirvana out there. There’s no place where you could easily hook up the amount of energy that they’re looking to hook up.” 

He added: “I’ll tell you what won’t be the solution, and I know this with absolute certainty: They’re not going to wait around for 10 years until somebody builds a power plant, transmission lines, to power the data economy. If that’s the U.S. plan, then we’ve got bigger problems than picking the right RTO.” 

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New York DPS Recommends New Method for Determining Peak Hours

The New York Department of Public Service presented a proposal for updating the method by which NYISO determines peak load hours to the ISO’s Installed Capacity Working Group on Oct. 29.

The change would not affect the capacity market load forecast or installed reserve margin and is only being proposed for transmission owners’ capacity obligations to load-serving entities.

Chris Graves, chief of utility programs for the DPS Office of Regulatory Economics, explained that the department was recommending using the top 10 New York Control Area coincident peak load hours on non-holiday weekdays in July and August. This approach would provide a better allocation of capacity costs to LSEs and a more representative rate for retail customers, he argued.

“I want the demand side of the market to understand what hours are important so they can make decisions on how much capacity they want to be buying,” Graves said.

In most years, based on historic data, the top 10 hours will occur on three or more days. In situations where the top 10 hours occur in two days, all zones tend to peak at the same time. Graves said that if the ISO is forced to always use the top three days, rather than just the top 10 hours, the weight of the peak would be diluted, and the peak hours might not be representative.

The effort to identify more peak load hours dates back to at least 2021 when NYISO was considering expanding to more peak load hours so that TOs could use the information when allocating load obligations to generators and other LSEs in the capacity market.

Current practice only identifies the peak hour using reconstituted load data. This means that capacity resources that are not visible to NYISO in the real-time market are added back into the peak load hour as part of the load forecasting process.

Graves said that there is currently no adjustment to add back generation from resources not participating in the wholesale market, like rooftop solar or municipal generators.

In July 2021, NYISO recommended using the coincident peak load from the highest hour of the top three unique peak load days on non-holiday weekdays in July and August using actual load data.

Stakeholders, squinting at dense slides, voiced some skepticism. One stakeholder asked whether this was just making determination of peak hours more complex than necessary.

“Wouldn’t incentives be better if we set capacity accreditation factors in advance so people know what they are? If we set the weighting factors in advance, wouldn’t that improve incentives for load?” they asked.

Graves said it could improve incentives, but he wasn’t sure if it was cost-causative because the weightings change depending on the load shape.

Amanda De Vito Trinsey of Couch White, representing the large customer association Multiple Intervenors, said the group was “fiercely opposed” to the proposal.

Another stakeholder said that a straight average of 10 hours of load would “destroy the incentive to care about the actual peak” because averaging of that length of time would dilute the load.

“We got this yesterday morning, and we’ve been talking a bit, trying to noodle through this … but it seems like more work needs to be done,” they said.

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NYISO Updates Stakeholders on Budget, 2025 Goals

NYISO on Oct. 28 presented additional data to the Budget and Priorities Working Group explaining its reasoning for rolling the remaining funds from this year’s budget cycle into a Rate Schedule 1 carryover. (See “Proposed RS1 Carryover for 2025 Increases,” NYISO Working Group Meeting Briefs: Oct. 1-2, 2024.)

CFO Cheryl Hussey explained that paying down NYISO’s fixed interest debt would incur significant fees that would “potentially outweigh the benefit of early repayment.”

“2024 is the next budget facility year that we could make earlier payments on, and the $7.35 million that we have left is essentially the maximum that we could pay down on the 2024 budget facility,” said Hussey. “And then we have about $150,000 in interest savings in 2027.”

Hussey said that because the payment would occur in 2025, it would also represent “a little over half a million dollars” in interest savings that were not currently estimated in the budget.

Analysis of the potential disposition of funds | NYISO

In a separate presentation, Hussey reviewed updates to NYISO’s draft 2025 Corporate Incentive Goals. Whether the ISO meets the goals affects employee compensation, incentivizing them to be completed, with bonuses for earlier completion. Most of the goals were unchanged from 2024, with some exceptions.

Goal 6B, “Key Project Initiatives,” identified eight projects that NYISO believes are critical to complete in 2025:

    • investigating whether changes are needed to the capacity market;
    • upgrading the hardware that NYISO software runs on;
    • developing design specifications and tariff changes needed for the Champlain Hudson Power Express transmission line with Hydro-Quebec;
    • developing the software specifications for integrating dynamic reserves;
    • developing the software design specifications for FERC Order 2222 compliance;
    • finishing the market design for the Winter Reliability Enhancements project;
    • migrating off-the-shelf and internally developed applications to the cloud; and
    • improving the interconnection study process by upgrading SalesForce software to implement an “interconnection portal” and meeting a FERC order to implement a heatmap.
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Dominion Reports More Data Center Growth, Offshore Wind Progress

Dominion Energy reported net income of $953 million in the third quarter this year as it continued to see load growth from data centers, made progress on its offshore wind project and repaired damage from Hurricane Helene. 

The storm caused significant destruction of the company’s infrastructure, knocking out power to nearly 450,000 customers, including nearly half of those Dominion serves in South Carolina, CEO Robert Blue told investors. 

“The restoration involved replacing over 1,000 transformers, 2,300 poles and 7,000 spans of wire,” Blue said. “Although we’ve not completed our final accounting, our preliminary estimate of restoration costs, including capital expenditures, is in the range of $100 (million) to $200 million.” 

Dominion’s Coastal Virginia Offshore Wind (CVOW) is 43% complete and remains on schedule and on budget, Blue said. The firm just completed a season of monopile installations, having installed 78 for the project’s turbines and an additional four pin piles for related transmission substations. 

“Additionally, we’ve laid the first two of nine marine deep water export cables ahead of schedule,” Blue said. “I’m very pleased with our progress during this first season. Not only did we achieve our installations target, we also gained invaluable experience and process expertise that will make the next installation season even more productive.” 

The rest of the monopiles are being produced and delivered to Portsmouth, Va., while Dominion expects nacelle and blade production to start in the first quarter of next year. 

To help with offshore wind construction, Dominion is building a ship called Charybdis, which will be compliant with the Jones Act, a law that limits shipments inside U.S. waters to domestic vessels. The ship is 93% complete and should be operational by early 2025, Blue said. 

“The project’s expected LCOE [levelized cost of energy] has improved to approximately $56 per megawatt hour,” Blue said. “The primary driver being forecasted REC [renewable energy certificate] prices, which have increased in value considerably.” 

Dominion serves the largest data center market in the world, and so far this year, it has interconnected 14 of the facilities, with two more expected to come online before the end of 2024, Blue said. 

“We’re currently studying approximately 8 GW of data center demand within the substation engineering letters of authorization stage, which means a customer has requested the company to begin the necessary engineering for new distribution and substation infrastructure required to serve the customer,” Blue said. “There are also about 6 GW of data center demand that have executed construction letters of authorization, which are contracts that enable construction of the required distribution and substation electric infrastructure to begin.” 

In total, the firm had about 21 GW of data centers in the more advanced stages of its planning process as of July, which was up from 16 GW a year earlier, he added. 

“These contracted amounts do not contemplate the many data center projects that are in development phase and have not yet reached a point in the service connection process where a contract is executed,” Blue said. 

Dominion owns the Millstone nuclear plant in Connecticut, which could benefit clean energy legislation in New England, as neighboring Massachusetts is considering legislation that would authorize long-term contracts with it. (See Mass. Clean Energy Permitting, Gas Reform Bill Back on Track.) 

“We’ve continued to engage with multiple parties there to find the best value for Millstone. In addition to state-sponsored procurement, we’re exploring the idea of supporting incremental data center activity as well,” Blue said. “We feel strongly that any data center option needs to be pursued in a collaborative fashion with stakeholders in Connecticut. At this point, we don’t have a timeline for any potential announcements, but this remains top of mind for us.” 

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FERC Dives into Data Center Co-location Debate at Technical Conference

A common refrain at FERC’s technical conference on the co-location of data centers held Nov. 1 was that the issue is just part of the broader problem of how to meet growing demand as older power plants retire and new ones are often delayed from coming online (AD24-11). 

While many speakers made that argument, co-location itself could either help or hinder the industry’s efforts to ensure resource adequacy. 

Chair Willie Phillips opened the conference by laying out how ensuring data centers are built in the U.S. is a major policy priority, alongside reshoring manufacturing. 

“In my opinion, data centers, artificial intelligence [and], indeed, the full panoply of information-related technologies that are transforming the world are national resources with generational significance and vast national security and national economic consequences,” Phillips said. “They belong in the United States, and I believe that the federal government, including this agency, should be doing the very best it can to nurture and foster their development.” 

Large data centers are willing and able to pay for the new capacity needed to integrate them reliably, he added. The sector could help anchor the infrastructure that the grid needs to maintain reliability, he argued. 

But they are coming online on a grid with a shrinking reserve margin, with Commissioner Mark Christie noting that PJM has warned it could be short on supply by 2030. 

“One of the big issues here, of course, is resource adequacy,” Christie said. “And one of the questions to be asked is, if you’re taking dispatchable resources — and when we talk nukes, we clearly are talking dispatchable resources — if you’re taking them out of the supply stack, what does that do to resource adequacy? That’s a huge issue that needs to be explored.” 

Another issue is fairness to consumers, such as whether they will pay the non-bypassable charges all retail customers face if they are behind the meter at a nuclear plant, Christie said. 

Pulling resources off the generation stack to serve data center load can have major cost impacts on the rest of the market, Maryland Sen. Katie Fry Hester (D) said. She quoted an analysis from PJM’s Independent Market Monitor estimating the cost of redirecting 1,000 MW from the Calvert Cliffs plant to serve a data center. 

“They found that removing 1,000 MW of power from Calvert Cliffs, which was their approximation for a co-located data center, would increase the cost to Maryland in the 2025/26 [capacity auction] by $332 million,” Hester said. “I mean, that is a shocking number. And when the companies sit up here and say they’re paying their fair share, they may be paying for their immediate energies, but they’re not taking into account what it’s going to cost us to build the transmission for everybody else who’s no longer served by this power.” 

Google: Speed to Market the Main Reason for Co-location

Google is not trying to avoid the costs of plugging into the grid with its exploration of co-location deals, said Brian George, the company’s U.S. federal lead on global energy market development. 

“Co-location in the context that we’re talking about right now is really just a response to a market inadequacy, right?” George said. “We’re trying to figure out how we can get new loads onto the system in a way that meets our growth objectives. And so, I think that is important because it’s driven by the need to access the market.” 

Google is not trying to avoid transmission and distribution costs by locating data centers behind the meter at power plants, he added. 

“It is really kind of our preference to see the grid planned in a way that meets our needs, in collaboration with our utility partners, with our RTO partners; that it’s baked into forecasts. We’re sending resource adequacy signals,” George said. “That is where we want to go.” 

Constellation Energy, the owner of Calvert Cliffs and the largest fleet of nuclear plants in the U.S., sees the growth in data centers and co-location as a way to ensure those assets stay profitable and producing power for decades, said Mason Emnett, senior vice president for public policy. It was only recently that nuclear plants were starting to retire because of low wholesale power prices. 

“That led to a number of state programs and then ultimately a federal program that will be rolling off right as 40% of our fleet is turning over their 20-year licenses,” Emnett said. “So, from our perspective, the opportunity to serve this critically important load creates a long-term commercial pathway to relicensing.” 

The kind of long-term deals that data center clients are interested in could help provide the financial backing to eventually add new nuclear plants to the grid, he added. 

Constellation wants to serve more customers through traditional power purchase agreements as well, and Emnett said co-located load should pay its fair share. 

“What does ‘fair’ mean for a load that has no ability to pull power from the grid?” he said. “It’s not gross load. … We can have a conversation about that, but when you have litigation positions that are so far apart, then it makes it difficult, and ultimately, it’s the job of the regulator to call balls and strikes.” 

That litigation involves the firm that Constellation was spun off from in 2022, Exelon, with the two and other generators and utilities lining up on opposite sides of pending FERC cases on co-location. (See Exelon, Constellation at Loggerheads over Data Center Co-location.) 

Co-location’s Impacts on Resource Adequacy

Exelon supports co-location, which is not a new process, said Vice President of Transmission Strategies David Weaver. 

But the issue is that the recent deals Constellation has pursued in Exelon utility territories have not followed the rules in their tariffs. 

Proposed data centers can range in demand up to 1 GW, while each of Exelon’s utilities on average serve about 6.4 GW of load. 

“There’s a number of potential reliability impacts and reliability studies that have to be performed, right?” Weaver asked. “You’ve got not only the thermal flow issue that the protection is in place for, but you’ve got stability issues … short-circuit issues, and all those things that have to be considered.” 

Ultimately, even resources behind the meter at a nuclear plant rely on the grid, and Weaver argued they should have to pay their fair share of its costs. 

PJM Monitor Joe Bowring also said co-location does not mean the plants are off the grid and agreed that the issue is a sideshow to the main issue facing the RTO now. 

“The issue is reliability,” Bowring said. “At the moment, PJM is right on the edge and talking about … adding 10 [thousand MW] or 20,000 MW of load on a system that is already very tight.” 

PJM is working on rules to help get more supply onto the system, including a process to get power plants that can increase reliability to the front of the queue. (See Stakeholders Divided on PJM Proposal to Expedite High-capacity Generation.) 

“It makes sense to think really hard and try to be effective about getting new resources online,” Bowring said. “But from a static perspective, it does not make sense to add 10,000 MW of load behind some of the most critical generators on the system, the nuclear power plants.” 

Adding 20 GW of data centers would represent most of PJM’s nuclear capacity, which are important facilities around which the entire grid has been planned, he added. 

Co-located load brings up questions such as whether the customer is using the transmission system, how much the facility benefits from ancillary services and whether a retail sale is involved, said Copper Monarch Principal Vincent Duane, former general counsel for PJM. But that misses the bigger question of what impacts such deals are having. 

“Whether we have a data center connecting in front of the meter, or whether we’re connecting that data center behind the meter, we are going to see more or less similar impacts and consequences on the system, whether we’re talking about reliability impacts or the supply-and-demand impacts, or the system needs, including the need for new transmission upgrades,” Duane said. 

Data center load growth in Virginia and power plant retirements in Maryland led to billions of dollars of need for new transmission in PJM’s most recent regional plan. The impact of taking capacity from an existing plant to serve a data center is functionally equivalent to a retirement, Duane said. 

Independent Consultant Mike Kormos, who wrote a paper for Constellation filed in one of the dockets noticed in the technical conference, said co-location deals already take many of those issues into account. 

“The risk is on the generator in the data center,” said Kormos, former COO of PJM and senior vice president for Exelon. “They are obligated to pay for network service upgrades.” 

PJM has been clear that it will turn down co-location arrangements if they do not deal with reliability issues on the power grid, he added. For data centers that plug into a utility’s distribution system, the RTO has no such power. 

Co-location’s Impact on Grid Operations

Some have questioned whether data center load can truly be isolated from the grid; Talen Energy Executive Vice President Cole Muller said that was certainly possible.  

His firm’s Susquehanna nuclear plant has a co-located data center owned by Amazon, the expansion of which brought the debate before FERC. (See Talen Energy Deal with Data Center Leads to Cost Shifting Debate at FERC.) 

Before Muller was at Talen, he worked on nuclear submarines for the U.S. Navy. 

“We had protective relays in place to protect the reactor in case extraordinary circumstances happen and really high-consequence scenarios,” Muller said. “And so, if we are able to rely on relay schemes for a national security asset like a ballistic missile submarine, we should be able to rely on these kind of schemes for protecting the grid from co-located load.” 

Even if the data centers are only taking power from the nuclear plants, they can still have operational impacts on the grid, said Howard Gugel, NERC vice president of regulatory oversight. 

“What happens if you lose the load, that generation is now over-generating on the system?” Gugel said. “What do you do then? Do you back down the generation? Do you trip the generator? How do you restore from that? So there’s other scenarios I think that need to be taken into account here.” 

Large data center loads operate very differently than other kinds of load, Gugel said. He compared them to inverter-based resources, which NERC has been dealing with for years and can have cascading events where many go offline at once, exacerbating grid disturbances. This summer, a single line-to-ground fault on a 230-kV transmission line took out 1,550 MW of nearby data centers. 

“It was interrupted normally on the line, at 1/28 of a second the breakers operated; the line was taken out,” Gugel said. “But because of that voltage perturbation that occurred, you had a significant amount … of load, over 25 substations and about 60 different providers, that saw the impact from that. All the interruptions occurred behind the meter. It wasn’t any action that was taken by any utility or any ISO.” 

Until the industry gets better modeling and more experience operating the grid with more data center load, it is going to be difficult to understand their impact on reliability, he added. 

Figuring out how data centers are going to impact the grid is more difficult because the facilities differ significantly. 

“I think one of the things that I’m very concerned about is each one of these data centers is going to be a snowflake,” MISO Vice President of System and Resource Planning Aubrey Johnson said. “And so, they’re going to have their own design, their own issues, their own concerns, their own configuration that they’d like to meet.” 

Most have backup generation, even those behind the meter at a nuclear plant, but that comes with questions on how long that can run under state air permits. The design of an interface between a co-located data center and the grid can have a major impact too, such as whether it just blocks power from serving the load or whether it can also let power flow out in a demand response situation, Johnson said. 

“So, if we want to think about a set of rules, I think they either need to be very, very specific and start creating a formulaic approach to how you work behind the meter, and/or you have to think about making them broad enough to be simply a set of guidelines we should already be paying attention to,” Johnson said. “I think fundamentally we ought to lean in on reliability and have that be the basis upon which we build off.” 

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WINDPOWER: Industry Brainstorms on Beating Back Misinformation

ATLANTIC CITY, N.J. — Did anyone really expect the opposition to skip an offshore wind industry conference on the Jersey Shore, a focal point for protest and opposition?

If so, they haven’t been paying attention.

A cluster of protesters carrying signs and chanting slogans greeted nearly 2,000 attendees as they arrived at Offshore WINDPOWER 2024 on Oct. 29.

“Go home!” one woman screamed.

Later that morning, a chief commercial officer drew a laugh from her audience as she recalled the comments directed at her: “I apparently have sold my soul.”

Opposition to offshore wind is much more widespread than the two dozen or so protesters outside the Atlantic City Convention Center.

Countering opponents’ messages and building public support was one of the central themes of the conference.

Many speakers said getting steel in the water and electricity flowing to land would be the best countermeasure, because open-minded skeptics will recognize the economic and environmental benefits.

But amid industry struggles, such tangible progress has been slow to materialize. Until it does, most agreed, the best strategy is to get ahead of the curve, countering misinformation early rather than reacting after it festers.

Speakers at multiple panels explained how they are trying to do this.

Dan Fatton, clean energy partnerships director at the New Jersey Economic Development Authority, said: “The reality is that there is a vocal minority who have concerns. Some of those concerns are legitimate and some of those concerns are based on misinformation. And so part of the state’s approach has been to share factual information and try to dispel some of the misinformation that’s been purposefully spread.”

Just in the past few weeks, a website has been established to serve as an information hub for the various state agencies involved in offshore wind development; their datasets had been dispersed and could be hard to find.

But as many others noted, Fatton said promises kept are more convincing than promises made.

“I think for years — and myself, I’m guilty of this as well, as an advocate — we’ve promised to deliver jobs through offshore wind, and we need to make that a reality and not just a talking point or rhetoric.”

Megan Daly, chief commerce officer at the Port of Albany, N.Y., recounted a similar experience with the wind tower factory that was planned and then canceled on the riverfront. The site is sandwiched between one of the most affluent communities in the region and one of the least affluent. Opposition came mainly from the wealthier side.

“It was interesting to us what the different priorities were,” Daly said. “First, we received feedback related to traffic mitigation and transportation and really very basic concerns for people that live there, in addition to job opportunities, and just in addition to, ‘What does this mean for us, what does this mean for our community?’”

From left: Frank Macchiarola of the American Clean Power Association, Megan Daly of the Port of Albany, Dan Fatton of the New Jersey Economic Development Authority and Sid Nathan of Rise Light & Power discuss ways to change hearts and minds in the community during Offshore WINDPOWER on Oct. 29. | © RTO Insider LLC 

Sarah Salati of National Grid Ventures, the chief commercial officer heckled outside the convention hall, said her company recently introduced Doorstep, an app that customizes information about energy infrastructure projects to the community level, so people can see exactly what is planned near them and can actively participate.

It also has developed WhaleWatch, which allows the public to track migration of whales and see that the company’s offshore efforts are designed to minimize impact on the leviathans.

High technology is not just for the generation and transmission sectors of the power industry, Salati said. It can foster a better connection to communities and stakeholders: “There’s a lot of room to leverage that digital marketplace and digital forum for the benefit of our industry.”

For the record, there actually were two demonstrations outside the convention on opening day: offshore wind opponents shouting from a distance (police kept them on the far side of the driveway) and smiling proponents handing out bright green T-shirts at a table right outside the front door.

Frank Macchiarola, chief policy officer of the American Clean Power Association, looked at this as a good sign for the wind power industry.

“If you don’t have people either standing up or asking questions, then your projects and whatever it is you’re doing, you’re not relevant to the people,” he said.

Sid Nathan, vice president of external affairs at Rise Light and Power, described the company’s efforts to engage the community near its Ravenswood Generating Station — which, as the largest fossil fuel plant in New York City, is not popular with many neighbors.

For its first 60 years, Nathan said, Ravenswood was a wall and a barbed-wire fence to outsiders. Then Rise began bringing the public and stakeholders inside to see the operation, and started sharing redevelopment plans, which notably include retiring the fossil generation and using the waterfront site as a point of interconnection and logistics hub for offshore wind.

These efforts had a reset when an offshore wind proposal was withdrawn in mid-October, but they did not end. “We had the community basically on speed dial to ensure that they understood the steps that we’re going to take to move forward,” Nathan said.

Stephanie McClellan, executive director of Turn Forward, suggested “giving people the facts and not just trying to persuade them and sort of bulldoze over their concerns.”

The message matters, she added:

“The audience is persuadable based on exposure to both positive and negative messaging. We know that we can move an audience from opposition to support, 20 points to the good, with the right messages, we see that in our polling and message setting, but we also see that they go right back [with a] negative message.”

From left: Rosanna Maietta of the American Clean Power Association, Stephanie McClellan of Turn Forward, Michael Muller of Muller Public Strategies and Julie Tighe of the New York League of Conservation Voters discuss influencing public support for offshore wind during Offshore WINDPOWER on Oct. 30. | © RTO Insider LLC 

Julie Tighe, president of the New York League of Conservation Voters, pointed to health effects as an influencer.

“We’ve actually found the public health messaging is super effective. People really respond to that. That’s true across all environmental issues,” she said.

Cost also is persuasive, Tighe said: “You have no idea what gas is going to cost tomorrow, needless to say five years from now; you know what offshore wind is going to cost you 10 to 20 years from now, because they have locked in contracts.”

Equity for disadvantaged communities — a tandem goal of many policymakers pushing offshore wind development — is not a goal that wins over many people, Tighe added. Pursue equity, she urged, but do not count on it to be an opinion-maker.

Longtime New Jersey political strategist Michael Muller, president of Muller Public Strategies, said the conference was being held in the “epicenter of noisy activism” against offshore wind.

Donald Trump himself joined a boardwalk rally against the giant turbines earlier this year, near the southern tip of the Jersey Shore.

“One of the more important things is that just because there’s a noisy opposition doesn’t mean that they’re winning the day, but that is one of the challenges we’ve had,” Muller said.

Jobs and energy affordability are important kitchen-table issues, he added, but they can be countered by images of dead dolphins on New Jersey beaches.

“We sometimes have a little bit of a harder argument on the support side, because we do have to explain some of the benefits,” Muller said.

Rosanna Maietta, American Clean Power’s chief communications officer, summed up in a sentence what Muller and many other speakers explained at much greater length:

“If you’re on defense, you’re losing — you’ve got to be on offense all the time.”

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WINDPOWER: Looking for Common Ground in the Water

ATLANTIC CITY, N.J. — The friction between the fishing and offshore wind industries was a recurring topic at Offshore WINDPOWER 2024, where multiple discussions examined approaches that have sought to smooth the relationship. 

One panel featured representatives of the two sectors along the southern New England coast. 

Moderator Ed Anthes-Washburn of Coast Line Transfers said the work of all four panelists intersected in New Bedford. He is a former director of the city’s port, which calls itself America’s most lucrative fishing center but also has become an important offshore wind hub. 

“Over the course of our tenure, I think we sort of stumbled into a really good model that we think really needs to be told,” he said. “It’s a great model of really early engagement, understanding the science and commercial opportunities for commercial fishermen.” 

In summary, the relationship eases some of fishers’ economic concerns by putting them to work at offshore wind construction sites as supporting players. 

These crews, with their extensive knowledge of local waters and the local maritime industries, are a great asset for solving or preventing problems. 

“It’s added value, because you have that local knowledge,” said Crista Bank, fisheries liaison for Vineyard Wind. “I can’t talk about how many times our scout vessel in Massachusetts was really key in our cable installation going off without a hitch, and it wouldn’t have happened without that.” 

Fishers can fish legally only so many days a year, and the extra income when their boats otherwise would be idle helps keep the fleet and workforce intact, panelists said. 

There are benefits on land, too. Panelist Michael Quinn of Shoreline Offshore is a second-generation scallop fisherman but also operates two onshore facilities with about 50 employees. He saw the increasing activity around offshore wind around 2018 and decided to be part of it. 

Several years later, his company fabricated a fender for the first crew transfer vessel at the Vineyard Wind work zone two weeks before cable work started. It is a small example, but one that can be replicated extensively. 

“In a lot of ways, local content is just content when you’re local, but engaging and knowing who that person is that can actually deliver something on time and quickly and high quality is really important,” Anthes-Washburn said. “And there’s a lot of folks in a lot of these ports up and down the East Coast that can be helpful.” 

James A. Morris Jr., NOAA | © RTO Insider LLC

New London, Conn., fisherman Mike Theiler said in the 2000s he visited a Northern Ireland port that had suffered the collapse of its fishing industry and diversified to other marine commerce in response. 

Theiler still fishes, but now also is managing director of Quintham, a software company focusing on fishing safety. 

“I lived through a fisheries disaster with the collapse of lobster stock in southern New England and the die-off of ’99 and it was a great opportunity for these fishermen to diversify,” he said. 

Bank said Vineyard has paid for 179 fishermen to go through the safety training or boat captain certification needed to operate at an offshore wind project and has paid for any safety upgrades needed to lift their boats above the standards for fishing vessels.  

Forty-five separate local vessels have worked on the projects, and they are not in competition, Bank said: They are put on a rotating schedule and paid equally. 

Vineyard Wind’s high-profile blade failure this summer gave an example of the economic and personal relationship that had formed between the developer and the local fishers. 

“When we all of a sudden needed some extra vessels on the waterfront to help to pick up some marine debris, our fishing vessels were the first ones out there,” Bank said. “Then I had phone calls from multiple other fishermen with different-sized vessels, like, ‘What do you need? Can I get out there? How can I help?’” 

“Crista is so well known on the waterfront,” Anthes-Washburn said. 

Then he turned to the elephant not in the room: Not every fisher has such a good relationship with offshore wind. Some are fighting it tooth and nail.  

Anthes-Washburn asked the panel: “Are fishermen who support offshore wind seen as traitors by other fishermen?” 

“That’s definitely something that you have to deal with,” Quinn said. “I would say I got a lot more flack in the beginning, before I was getting contracted out there and people working, because it’s easy to put something down that you’ve never seen happen.” 

He added: “I want to have a seat at the table and say, ‘How can we do this the right way together, and come up with a process that works for both sides, where we can all benefit long term?’” 

Gulf of Maine

Another panel looked farther north in New England, to the Gulf of Maine, where a lengthy process culminated in exclusion of key fishing areas for offshore wind leasing consideration, including Lobster Management Area 1. 

James A. Morris Jr., a NOAA ecologist, said the agency did something it had considered previously in other regions: It drew a model excluding every area where one stakeholder or another objected to wind power development. 

The entire Gulf map was colored red when they were done. 

“The point is that ultimately there will always be compromise, there’ll always be some, because there is no space in our coastal ocean that is free of conflict,” he said. “We’ve looked — that really doesn’t exist.” 

Close engagement, however, drills down on the motives and thinking behind opposition to wind turbines at particular sites. It can range from nowhere-no how-never to “just not where we fish,” Morris said. 

“Those are challenging conversations, and they’re not conversations that can happen fast. There’s a certain level of relationships that can be built, and trust has to be built.” 

windpower

Celina Cunningham, Maine Governor’s Energy Office | © RTO Insider LLC

Celina Cunningham, deputy director of the Maine Governor’s Energy Office, said those conversations and relationships can produce results. 

“There are plenty of people in the Gulf of Maine region who will never support offshore wind,” she said. “That’s fine; we expect that. There are a lot of people who do. And what I have learned from our work is that when you take the time and you share the data and you have those conversations, you can actually, I think, get some respect for the process.” 

Morris said a lingering problem is creating an accurate model of impacts to present to the fishing industry and other maritime stakeholders — regulatory and scientific agencies are using past data, hindcasting instead of forecasting. 

“We do not have available, accurate, defensible, high-quality data for future ocean conditions,” he said. “We have to invest more into future-casting of ocean conditions, ocean characteristics.” 

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FERC Rejects Expansion of Co-located Data Center at Susquehanna Nuclear Plant

FERC on Nov. 1 rejected a proposed amendment to Talen Energy’s interconnection service agreement (ISA) with PJM and PPL that would have allowed for the expansion of co-located load at its Susquehanna nuclear plant in Pennsylvania (ER24-2172).

The amendment would have let a 300-MW data center owned by Amazon Web Services — already operating behind the fence at the nuclear plant — expand from 300 MW to 480 MW. Controversy around the proposed expansion contributed to FERC hosting a technical conference on co-located load Nov. 1. (See related story, FERC Dives into Data Center Co-Location Debate at Technical Conference.)

The order was approved by only Commissioners Mark Christie and Lindsay See: Chair Willie Phillips dissented, while Commissioners David Rosner and Judy Chang did not participate. The majority found that the changes would have led to reliability concerns and novel legal issues. FERC can accept ISAs that do not conform with Order 2003, but parties filing such deals face a high legal burden to justify and explain that the changes are necessary, they said.

Many of the nonconforming provisions of the proposal relied heavily on the generally applicable PJM Guidance Document, which is not part of the RTO’s tariff, so FERC has not approved it, the majority said. In a footnote, the commissioners said they made no determination on whether the document is just and reasonable.

“This raises questions regarding whether PJM intends to offer these terms to all similarly situated interconnection customers,” FERC said. “We conclude that these provisions demonstrate that PJM has not met its burden to show that these provisions are necessary for any interest unique to the interconnection of the Susquehanna customer facility.”

The record indicates other data centers are considering similar deals with other nuclear plants, which shows the provisions from the document do not meet FERC’s standards for alternatives to Order 2003.

“This filing leaves multiple important questions unresolved,” FERC said. “Nevertheless, given that we have already found that PJM has failed to meet its burden, as described above, we need not further opine on whether PJM has met that burden with regard to the proposed nonconforming provisions herein, or otherwise address the amended ISA.”

Phillips argued that because the ISA is the first of its kind, it presents the sort of specific reliability concerns and novel legal issues that justify its acceptance.

“In failing to accept the agreement, we are rejecting protections that the interconnected transmission owner says will enhance reliability while also creating unnecessary roadblocks to an industry that is necessary for our national security,” Phillips wrote.

PJM showed that the extra 180 MW of demand would not require any transmission upgrades and the provisions included “several important, reliability-based belts and suspenders,” Phillips said. Those provisions would have ensured that no power flowed from the grid to the data center, provided generator shutdown and automatic tripping data to PPL, and notified PJM and PPL of equipment malfunctions.

Phillips also argued that failing to approve the amended deal puts national security at risk, as there is a clear bipartisan consensus that maintaining leadership in artificial intelligence is vital to the national interest.

“Maintaining our nation’s leadership in this ‘era-defining’ technology will require a massive and unprecedented investment in the data centers necessary to develop and operate those AI models,” Phillips wrote. “And make no mistake: Access to reliable electricity is the lifeblood of those data centers. I am deeply concerned that in failing to demonstrate regulatory leadership and flexibility, we are putting at risk our country’s pole position on this critically important issue. That is simply unacceptable.”

Data center co-location brings up a host of challenging, multifaceted issues that FERC will have to wrestle with, which is why it held the technical conference, Phillips wrote. “But the technical conference casts a far wider net than the matter that is before us today and was never intended to defer judgment on this application, which I believe has thoughtfully and creatively addressed the factors that justify approval of these nonconforming provisions. …

“We are on the cusp of a new phase in the energy transition, one that is characterized as much by soaring energy demand, due in large part to AI, as it is by rapid changes in the resource mix. Ensuring reliable and affordable supplies of electricity throughout the coming period of increasing demand and changing supply will require pragmatic leadership that facilitates that transition. If we instead throw up roadblocks to that transition, as I am concerned today’s order does, we will only deprive our country of the resources needed to ensure our continued economic prosperity and national security.”

In a concurrence, Commissioner Christie emphasized the rejection was without prejudice and that Phillips’ arguments about national security are unproven by the record before FERC.

He agreed that co-location arrangements present complicated issues that could have huge impacts on reliability and consumer costs, which is why FERC held its technical conference.

“Given these ramifications, the commission truly needs to ‘get it right’ when it comes to evaluating co-location issues,” Christie said. “And make no mistake. Were we to approve this proposal at this time, as the dissent advocates, we would be setting a precedent that would be used to justify identical or similar arrangements in future cases.”