Big Loads, Bigger Opportunities

Last month, NEEP kicked off its annual Summit in Baltimore, MD against a backdrop of growing concerns around energy affordability, load growth, and pressures on energy efficiency program funding. One of the first sessions, “Big Loads, Big Opportunities,” wove all three themes together in a discussion of how energy efficiency, demand flexibility, and virtual power plants can enable new large load development in a timely, efficient, and affordable way.  

Moderated by Annie Gilleo, Vice President at the Ad Hoc Group, who recently supported the Alliance to Save Energy in developing, “Bridging the Load Gap: A Collaborative Path for Utilities, Hyperscalers and Customers”, panelists included Emily Orvis of Voltus, Brendon Baatz of Google, and Senator Katie Fry Hester of the Maryland State Senate.  

The panel discussed the challenges and opportunities associated with new large load customers, particularly data centers, seeking to interconnect to the grid. The conversation mostly focused on the Mid-Atlantic region of NEEP’s footprint that is served by PJM, the regional transmission organization (RTO). The panel also discussed the Maryland Utility RELIEF (Reducing Energy Load Inflation for Everyday Families) Act, the practical realities of accessing and aggregating distributed energy resources, the relationship between growing load in the PJM region and affordability, and ways that new hyperscalers can benefit the communities where they are being built.
 

Speed

One clear message from the discussion was that energy efficiency and demand response can bring capacity much more quickly than building new generation, making it critical for companies hoping to build and interconnect new data centers. While new generation to support load growth brought on both by artificial intelligence and broader electrification will be necessary, that will not happen overnight. In key data center markets, new generation typically takes three years to come online, and in some places, up to seven years.
 

Demand Flexibility

Another strategy to address the grid and price implications of current load growth is for large load customers to bring their own distributed capacity.  For example, the day before Summit, Google and Voltus, a leading distributed energy resource aggregator, announced a three-year partnership in which Voltus agreed to aggregate up to 100 MW each year from batteries, industrial demand response, and residential demand response in PJM for Google. It is the first deal of its kind between a hyperscaler and an aggregator/virtual power plant operator in a U.S. wholesale market. Voltus will provide Google with tradeable capacity credits and pay customers who participate in the demand response.

This kind of new partnership will benefit hyperscalers that want to site data centers, especially in states like Maryland, where the recently passed RELEIF Act allows the state to favor large load proposals where the customer brings their own clean capacity. It will also benefit the grid and customers by easing the strain and meeting some of the immediate needs for new capacity.
 

Community Investments in Energy Efficiency

Some hyperscalers are also investing in residential and commercial energy efficiency around their data centers to help offset their load and improve affordability for local communities. Google has done this nationwide, including:

• Texas with the $30 million Texas Energy Impact Fund,
• Virginia, with the $15 million Energy Impact Fund and funding for the electrical training ALLIANCE.  

In Oregon, regulators have issued an order under the state’s POWER Act, creating a new rate class for large industrial energy customers.  Portland General Electric is the state’s first utility to implement new, higher rates for these customers, instituting a 29 percent increase. This change will shift costs for data center load from residential and commercial customers and will put money back into ratepayer-funded programs.
 

Federal Pressure

On June 18, the Federal Energy Regulatory Commission (FERC) weighed in with show cause orders to each of the RTOs, directing them to provide justification of why their current tariffs are “just and reasonable in the absence of clear and consistent provisions for large load customers,” or propose changes along five categories for reform. These orders follow the U.S. Secretary of Energy’s 2025 DOE Section 403 proposal for FERC to consider an Advance Notice of Proposed Rulemaking on the topic of timely and orderly interconnection of large loads. Federal priorities around artificial intelligence and the build out of data centers are coming into conflict with concerns about grid reliability and energy affordability, further complicating the picture.
 

Looking Ahead

Much work remains to accommodate growing electricity demand and address affordability concerns, but energy efficiency and demand flexibility offer promising solutions, such as low-cost virtual power plants that are faster to deploy than building new capacity.

With pressures coming from all sides, it will take thoughtful collaboration to achieve large load interconnection across the region in a way that is efficient, low-cost, and serves communities.