Google partners with Voltus to fund virtual power plant for data centres

Google has entered an agreement with energy management firm Voltus to establish a virtual power plant within the PJM Interconnection grid, which covers much of the US East Coast. Scheduled to become operational in 2027, the project aims to aggregate up to 100 megawatts of distributed energy resources annually. Under the arrangement, Voltus will compensate participants, such as owners of electric vehicles and smart thermostats, for reducing power usage during periods of grid stress. The resulting capacity is intended to help power Google’s data centres in the region.

This deal marks a significant shift for Google, which has previously entered agreements with utilities to limit or shift its own energy demand. It represents the first named customer to utilise Voltus’s new “Bring your own capacity” program, allowing data centres to finance flexibility on their local grid rather than relying solely on internal load management. Google’s global head of advanced energy, Michael Terrell, noted that while the company continues to explore avenues for load flexibility, there are limits to how much every facility can ramp down its power demand.

The initiative follows a high-profile study from Duke University suggesting that data centre demand flexibility could defer the need for new power infrastructure. The research indicated that if data centres reduced their energy demand for approximately 40 hours per year, about 100 gigawatts of capacity could come online without requiring new power plants or transmission equipment. This approach leverages the fact that the US power grid is designed for absolute maximum demand, such as hot summer evenings, rather than average use.

Despite the potential for demand-side flexibility, challenges regarding participant uptake remain. A recent study in California on managed electric vehicle charging showed low participation rates, with only 1 per cent enrolling without incentives and 4.6 per cent with a $40 monthly incentive. While the Google-Voltus agreement does not disclose the specific compensation amounts for participants, the California data highlights the difficulty in securing widespread public engagement for grid flexibility programs.

Regulatory frameworks are also evolving to support such flexibility. A US proposal would allow new data centres to come online sooner if they agree to lower demand during peak times, and a new Texas law requires large users to switch to backup power or curtail demand during emergencies. However, public sentiment remains a factor, with recent Gallup polling indicating that approximately 70 per cent of Americans oppose AI data centres in their local areas. As the project moves from concept to implementation in 2027, the success of this model will depend on balancing economic incentives with public acceptance.