America's expanding data center footprint is driving up electricity demand, forcing utilities to look for creative ways to meet it. Several major residential energy companies want to tap into connected equipment that is already sitting in homes.
That could provide a faster way to support the grid while also lowering energy bills for households that choose to participate.
What's happening?
According to The Arizona Republic, Tesla, Sunrun, and Renew Home have joined forces on a nationwide plan to link home batteries and smart thermostats into a large virtual power plant. By coordinating millions of devices that have already been installed, the companies hope to make 16 gigawatts of grid capacity available.
These networks ease pressure on the grid during high-demand stretches by making small cuts in household electricity use and drawing on stored battery power, avoiding the need for a newly constructed plant. Unlike many earlier virtual power plant programs, which were mostly local and used in emergencies, this one is being built with data centers as the main customers.
"We're the three largest players in residential virtual power plants, and we're coming together," said Chip Silverman, Sunrun's director of grid services. "We can harness what's already out there today."
The Arizona Republic reported that Arizona's installed residential batteries and climate-control devices alone could amount to 572 megawatts of potential capacity.
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Why does it matter?
Rising data center demand is adding heavy pressure to the power system, and the standard ways of responding are often slow, expensive, and more polluting. New generation projects can take years to build, and utilities commonly recover those costs by raising customer rates.
To avoid long waits, some data center companies have turned to fossil fuel generation at their own sites, a strategy critics have said can increase pollution for nearby communities. Virtual power plants are a cleaner and faster option because they mainly make better use of electricity resources that already exist instead of creating a brand-new supply source.
Families may see savings when batteries are charged during lower-demand hours and used during costly peak periods. Participants can also receive compensation: Tesla said some battery owners may earn up to $400 annually, while Sunrun added that some customers may save several hundred dollars on lease fees, depending on the utility and how much power they permit Sunrun to use, according to The Arizona Republic.
Sunrun said the automatic changes are expected to be small enough that most people will not notice them.
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What's being done?
The partnership is focusing on places where data center development is surging, including Virginia, which has the world's largest concentration of data centers. Arizona could also become a later target.
The companies said payments from data center customers will be used to pay for additional smart thermostats and batteries, which could further expand virtual power plant capacity.
Similar ideas are gaining traction elsewhere. The Arizona Republic, citing Canary Media, said that New Jersey passed the Data Center Fair Share Act in early July to encourage data centers to help fund home efficiency improvements in exchange for better standing in utility interconnection queues. California and Colorado are among the other states reportedly considering related proposals.
"This could be a win-win-win for everybody," Silverman said.
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