Google is building a large virtual power plant that encourages households and businesses to use less electricity to secure power needed for new data centers. The New York Times reported on October 22, local time, that Google had signed a contract with virtual power plant operator Voltus for up to 1,070 megawatts (MW) on PJM, a large power grid in the U.S. Mid-Atlantic region. That is comparable to the output of a large nuclear reactor.
Reducing demand instead of building new power plants
According to New York Times reporter Brad Plumer, Google announced the Voltus contract on October 22. Voltus will provide Google with up to 1,070MW of power capacity when needed. This electricity will not come from new power plants. Instead, Voltus will recruit households and businesses and offer financial incentives to reduce consumption when local electricity demand is high or the grid is under strain.
Much of this reduction can be automated. Examples include smart thermostats that reduce air conditioning during summer peak hours and batteries that temporarily supply power on site. Each individual adjustment frees up only a small amount of electricity, but Voltus says aggregating thousands of businesses and households can reliably provide substantial capacity when it is most needed, and that this can be achieved within a few years.
Plumer noted that technology companies would probably eventually need to build conventional power plants if they continued constructing large data centers, but virtual power plants could offer a faster, cheaper and less polluting alternative in the meantime. Ellen Zuckerman, Google’s head of energy market development for the Americas, called virtual power plants “an important near-term solution.” Zuckerman said they offered a way to secure power capacity at the required speed and scale while investing in communities and strengthening clean energy goals. Google did not disclose the contract’s financial terms but said it was among the largest instances of a major technology company paying for power capacity in this way.
Higher PJM electricity bills and opposition to data centers
To obtain electricity for AI data centers, technology companies have explored options ranging from restarting old nuclear plants to connecting gas engines that operate separately from the grid. New data centers face opposition from voters across the country, partly because of concerns that the energy-intensive facilities could overwhelm local grids or push up electricity bills. In PJM, which supplies electricity to 67 million people across 13 states, electricity bills have risen sharply since 2024 as data center growth has outpaced power plant construction.
A shortage of reliable power plants has added tens of billions of dollars to electricity costs in PJM in recent years, while data centers continue to proliferate, particularly in Northern Virginia. The article suggests that virtual power plants could be attractive in this region. Over the past year, the Trump administration and governors from both major parties have urged technology companies to directly support construction of new generation in the region so that costs are not passed on to households.
A peak-demand solution: Voltus already manages 9,500MW
Most power grids can generate more electricity than needed for most of the year, but have little spare capacity during peak periods, such as hot summer days or winter storms, when power plants are operating at maximum output. Connecting a large data center to the grid requires deciding how to manage these periods. One option, building new gas-fired plants, is expensive, and turbine waiting times extend for years.
Virtual power plants instead shift electricity demand across large numbers of households and businesses to reduce peak consumption. Smart thermostats can reduce cooling by 1 or 2 degrees, electric vehicles can charge during off-peak hours, and some businesses can reduce machinery use or dim lights in exchange for compensation. Households can also store daytime solar generation in batteries for use when needed.
San Francisco-based Voltus already manages approximately 9,500MW of virtual power plants nationwide, comparable at full capacity to the electricity used simultaneously by 7 million households. In June, the company agreed to provide Google with a 100MW virtual power plant in the Mid-Atlantic region. Voltus CEO Dana Guernsey said customers seeking to participate had made the program oversubscribed, prompting the company to expand it. Guernsey said the company was extensively testing whether it could deliver the promised capacity and that the program had performed well during 2 grid emergencies in the Mid-Atlantic region in mid-October.
Obstacles remain
Similar programs are emerging in Arizona, California and Texas, but experts see substantial untapped potential. A 2024 U.S. Department of Energy study estimated that virtual power plant deployment could triple by 2030, reducing the need to build conventional power plants and saving U.S. electricity customers approximately $13 billion annually.
There are also barriers. Recruiting households takes considerable effort, and regulations in some areas make it difficult for virtual power plants to participate in electricity markets or access customer meter data. Some grid operators and utilities remain cautious, questioning whether households and businesses will actually reduce consumption when needed. Experts point out that utilities have had financial incentives to build profitable new infrastructure rather than use existing grids efficiently. Ryan Hledik of consulting firm Brattle Group, who recently co-authored a report on virtual power plants, described it as “a different approach” and said the remaining challenge was earning operational confidence that the resources would perform as required.
Effect on public perceptions remains uncertain
The New York Times noted that it remained to be seen whether programs paying customers to adjust electricity use and reduce bill burdens could improve public perceptions of data centers. In a recent Gallup survey, nearly half of Americans said they “strongly opposed” a new data center in their neighborhood, with many citing noise, pollution, and energy and water use. According to Data Center Watch, a project of AI research company 10a Labs, local opposition delayed or halted at least 45 data center projects worth approximately $68 billion in the second quarter alone.
Original Korean article: Today Energy
English brief by Korea Wind Intelligence, koreawindintel.com
