How virtual power plants could provide energy for data centers

Google and Voltus have signed a deal to create a virtual power plant (VPP) in PJM’s grid, the largest in the U.S., which will aggregate distributed energy resources like electric vehicles and smart thermostats. Voltus will pay participants to reduce energy use during peak demand, while Google funds the setup to help power its data centers in the region. The project aims to generate up to 100 megawatts annually, with operations expected to begin in 2027. The agreement builds on Voltus’s ‘Bring your own capacity’ program, announced in September, allowing data centers to finance grid flexibility. This approach avoids direct demand curtailment by data centers, which may face revenue losses from delayed AI training or customer demand. Google has previously worked with utilities to adjust its energy use, but limitations exist in how much data centers can scale back consumption. A 2023 Duke University study suggested data centers could collectively reduce demand by 100 gigawatts annually if they cut usage for about 40 hours per year, easing grid stress without new infrastructure. However, incentives remain a challenge, as data centers may prioritize revenue over flexibility. Regulatory proposals, like a U.S. interconnection rule and a Texas law requiring backup power during emergencies, could help enforce demand reduction. Voltus’s VPP will operate within PJM’s grid, covering much of the U.S. East Coast. The company will compensate participants for reducing energy consumption during high-stress periods, ensuring grid stability. While Google’s move is a step toward sustainable energy solutions, broader adoption depends on balancing flexibility with operational demands and regulatory support.