Summary Report: Data Center Connections Workshop: Powering the Data Revolution
This workshop explored strategies to integrate data centers into the Transmission & Distribution (T&D) system in ways that minimize grid strain while upholding long-term reliability and resilience. Discussions centered around both immediate planning and long-range infrastructure needs, framed through the Integrated System Planning (ISP) approach.
Participants shared experiences and strategies to address accelerating data center interconnection requests, grid modernization challenges, and the risks of misalignment between developers and utilities.
KEY FINDINGS:
T&D Infrastructure Lag: Data centers can be planned and built in a fraction of the time it takes to expand utility infrastructure. In many regions, grid capacity may need to double within the next decade, far outpacing the development timelines for new transmission lines and substations.
Planning Uncertainty & Risk Exposure: Utilities often carry the burden of upfront costs for feasibility studies, system design, and application review, all of which are at risk if projected demand doesn’t materialize. This creates pressure to balance responsiveness with prudent investment.
Varied Readiness Across Utilities: While some utilities (e.g., in Virginia and Texas) have years of experience integrating hyperscalers, others are only beginning to confront the scale and pace of these requests, driven by AI, cloud computing, and sustainability commitments from tech firms.
Capacity & Resource Constraints: Internal bandwidth is often strained, with utilities citing shortages in skilled engineers, planners, and grid operators to manage fast-moving, high-stakes interconnection demands.
Financial Strategies in Development: Cost recovery mechanisms such as milestone-based payments, tiered pricing models, application fees, and long-term usage guarantees are emerging. Some utilities are evaluating the creation of a dedicated “data center asset class” to better structure funding and manage financial exposure.
Grid Impacts & Power Quality: As high-performance computing becomes more prevalent, non-linear loads from data centers can introduce harmonic distortions and reliability concerns. Utilities must stay informed on evolving technologies and incorporate these factors into interconnection and operations planning.
Geographic Clustering & Load Distribution: Data centers tend to cluster where affordable land, fiber connectivity, energy incentives, and tax benefits align. This uneven growth places significant strain on local infrastructure in certain regions while bypassing others.
Environmental & Regional Advantage: Cold climates offer natural cooling efficiencies, reducing data center energy consumption. Utilities can encourage cleaner integration through tools like clean energy tariffs, co-location with renewable energy sources, and targeted infrastructure development (e.g., fiber optics) to enhance regional competitiveness.