In Part 1 of this energy blog, we looked at a new report from Wood Mackenzie, titled, “Breaking the speed limit: Can US data center development outpace grid development?”

The report noted that data centers in the U.S. are having challenges finding enough power from the grid to energize their operations. One option, according to the report, is to wait several years for new transmission. The other is for the data centers to build their own microgrids or accept “conditional grid connections.”

Here, we look at other elements of the report. “With transmission development in all regions moving slower than AI data center ambitions, grid operators have worked to find near-term paths to scale,” said the report.

Their common strategy comprises two elements:

– Allow more load to connect than the grid can firmly serve, under terms that it can be interrupted by the operator when the grid is stressed.

– Allow large-load customers to deploy their own generation near their facility, supporting larger loads than the grid can currently support and providing backup during interruptions.

With few exceptions, data center operators are unlikely to accept interruptions outside of emergencies. “Their businesses rely on service-level agreements that often guarantee less than an hour of downtime per year,” said the report. And, while nearly all data centers install backup diesel generators for contingencies, should restrictions occur with any frequency, the facilities could run up against air permit-imposed diesel runtime limits.

The report also pointed out some important systemic risks, too:

– Interruptions are likely to be imposed on many data centers at once in the case of a regional weather event.

– Securing diesel resupply could be difficult during a multi-day event, not only in terms of the fuel itself, but the trucks to transport it.

– More data center firms availing themselves of conditional interconnections without collocated generation will drive the system closer to shortages in the first place, increasing the frequency of interruption.

– The need to protect against downtime exposes data center companies to significant regulatory risk. Grid operators are fast-tracking the development of rules for conditional interconnections to meet requirements, but their ultimate priority is grid reliability.

Even for developers that see collocation as a viable bridging solution to grid power, the costs and technical challenges are formidable:

– The near-instantaneous changes in AI power demand can damage reciprocating engines and gas turbines.

– Lithium-ion batteries can be used as a shock-absorber to prevent this, but risk burning through their useful lifespan rapidly.

– The battery response time must be extremely short, relying on technology that has not been widely commercialized.

– The irregular manner in which AI cooling and general processing unit (GPU) loads consume power introduces power harmonics, which, if unfiltered, cause equipment to overheat.

– These loads can also cause sub-synchronous oscillations, which pose fundamental stability risk to not only local generators but also to distant ones on the transmission system.