Utility regulators gave a green light to AEP Ohio to install onsite power generators at two large data centers. It will allow the centers to expand with a secondary power source that doesn't take its electricity from the grid.
The decision comes at a time of growing concerns that big energy consumers will eat up a shrinking pool of energy.
The members of the Public Utilities Commission of Ohio voted to approve the projects with Amazon Web Services and Cologix.
Both companies have plans to spend billions on data centers in central Ohio in the coming years.
But, regional grid PJM is predicting the rise of data centers and manufacturing will limit the availability of megawatts. PJM is predicting shortages could be on the horizon if demand continues to rise and generating sources of electricity aren't available soon.
AEP expects it will take 7 to 10 years before the transmission infrastructure can meet the full demand.
AEP Ohio even put a moratorium on new data centers from coming online in its territory while it sorts out with the PUCO how to charge data centers for power. Hearings were held about the issue earlier this year. A decision hasn't been made yet.
PUCO's decision Wednesday allows the utility to build onsite power generators for the data centers that use solid oxide fuel cells and natural gas to generate electricity, instead of relying only on the grid. The systems use chemical reactions instead of combustion.
The utility would source the natural gas from the market, and contract with Bloom Energy to build and maintain the oxide fuel cell system.
The systems will be paid for by the utility and data centers over the course of a six-year contract with Amazon Web Services and a 15-year contract with Cologix.
The utility redacted the financial terms of the proposed agreements. The PUCO granted an order to keep the information secret under a rule allowing companies to protect their trade secrets.
AEP Ohio’s application states existing contracts with the data center companies for power from the grid will be honored, at their maximum capacity, but the centers are expected to need more energy than that.
“These agreements with our data center customers allow us to provide a bridge solution for data centers’ energy needs so the electric grid can be built out without compromising service to any of our customers,” reads a statement issued by AEP Ohio earlier this year. “With existing contract capacity of grid power and an additional capacity of the fuel cell system, the customer will be able to expand its data center facilities at the site."
AEP Ohio says there will be fail safes, so the centers don’t take more power from the grid than they’re supposed to.
“However, the fuel cell system will be designed with appropriate systems and technology so that even if the system unexpectedly fails, the customer will either curtail load or dispatch onsite generation resources virtually instantaneously. This ensures that the customer will be limited to its existing contract capacity from the grid after deployment of the fuel cell system,” the application states.
The application states other AEP Ohio customers will never have to pay toward the systems.
“It’s important to note that the costs of the projects will be borne solely by AWS and Cologix and will never be included in our rates that other customers pay,” the company stated.
Amazon's data center arm built more than $6 billion worth of data centers in Ohio between 2018 and 2023. The company plans on spending an additional $8 billion on data centers in central Ohio by 2029.
