4 things data center providers must do
For decades, the data center industry operated by a simple playbook: Find fiber, find a cluster, call the utility last. Energy was an afterthought. The prolonged contraction of U.S. industry left surplus power that our sector absorbed on favorable terms, without owing much in return. Today, energy is both the most critical and most constrained variable in our business. Speed to power has become…
In the data center industry, a shift in approach is crucial for success. Traditionally, the industry focused on finding fiber and clusters, with energy being an afterthought. However, as the economy contracts, energy has become both critical and constrained. Speed to power now determines whether a project gets built and how quickly it can operate.
To succeed in the next decade, data center providers must make a fundamental change in how they engage with the grid. Here are four key actions data center providers must take to earn their place on the grid:
1. Only enter a market if you truly plan to build. The trend of premature power bets has negative consequences, with five to ten interconnection requests filed for every data center that actually gets built. These phantom positions hinder utilities' ability to plan investments responsibly and delay or cancel real projects. To show genuine intent, developers should have purchase orders for long-lead equipment with procurement timelines of 12 to 24 months.
2. Treat utilities as partners, not vendors. Utilities have traditionally been among the last to know when a data center is coming. However, with increasing electricity demand driven by digitization and electrification, utilities are seeking strategic collaborators who can address grid constraints and benefit the entire ecosystem.
To collaborate effectively, data center providers should demonstrate grid stability importance, be transparent about development plans, understand the utility's business model, and structure proposals to create mutual benefits.
3. Invest in energy solutions for both the project and the grid. Data center providers that invest in innovative energy solutions contribute to a data center being a genuine community asset. For example, a battery energy storage system in the Pacific Northwest increased utility efficiency for the entire community. Similarly, Project Caprock in Texas, which funds energy costs and dedicated electrical infrastructure, benefits local ratepayers by protecting them from cost impacts.
Data center providers must lead with transparency, treat utilities as partners in solving shared challenges, and invest in community-focused energy solutions.
4. Show up as a long-term partner in the community. Regulatory objections and community pushback have become the norm. Operators who will define the next decade will lead with accountability in every decision, from engaging with local government to interacting with neighbors and protecting local ratepayers. Data centers, now the largest corporate purchasers of renewable power in the U.S., must match their commitment with investments in the communities they enter.
For instance, in Illinois, investments are being made in energy commitments and infrastructure, while Project Caprock in Texas is expected to bring $5 billion into a rural regional economy, creating jobs and preserving a long-term tax base. By committing to a community for decades, data center providers can make better decisions, earn the ability to build, and unlock the capacity needed for the critical industry.
Written by urgent.news from Fast Company's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
