Indiana creates nation’s first utility to provide electricity only to data centers; reaction is mixed among stakeholders

   

Power grids across rural America are facing the challenge
of serving data centers. (Andrew Metelev via Unsplash)

Rural Northwest Indiana has given the nod to what some think may be a solution to the power generation problem associated with data centers — a dedicated utility provider. Circle of Blue reports via RuralNewsNetwork.org that the idea is to “simultaneously protect ratepayers while continuing to embrace the industry’s growth.”

Christian Thorsberg writes about the boom of data centers in the region, “where nearly a dozen hyperscale data centers are planned, under construction or already operating.” Reaction to the first-of-its-kind utility has been mixed.

The region’s largest power producer, and the one with the highest rates, announced two years ago that because of inquiries from data center projects its power load was likely to quadruple over the next decade. That led to the company’s idea of creating a subsidiary to serve only data centers. Thorsberg explains that the proposal “was drawn up to shield regular ratepayers from extra costs of adding mega-users … to [the] network.” The subsidiary “would generate and sell electricity” wholesale to the parent company, “its only customer,” which would then sell it to data centers. “The buffer for resident’s rates would come from the mathematical accounting of these transactions, which in theory would remain separate from household bills.”

The plan received unanimous regulatory commission approval last fall, and it included exemptions for the subsidiary that speeds up the process. For example, the regulatory commission “does not need to approve all aspects of financing for projects,” and the subsidiary can “pick and choose” its customers.

The region appears to be bracing itself for the impact of this plan. Critics and experts are expressing concern about the effect on the environment, the grid’s efficiency, and whether the network can support the volume of electricity expected. “I’m not against the business model,” Jaoa Ferreira, acting director of the Center for Economic and Policy Studies at the University of Virginia, told Thorsberg. “One important thing for me is that this actually results in adding production to the grid, and not just splitting electricity from everyone else to just satisfy data centers.”