Tag: data centers

In October 2023, the U.S. Department of Energy’s Grid Deployment Office awarded Dominion Energy a grant of $33.7 million to help make the state’s electrical grid more efficient. The funds, provided through the department’s $3.5 billion Grid Resilience and Innovation Partnerships (GRIP) program, will support increasing battery storage capacity in rural communities and facilitating more effective integration of renewable energy sources into the grid, among other upgrades.

Such changes to the grid are a key piece of a large-scale transformation taking place around the country and with particular speed and urgency in Virginia that encompasses both the amount of energy that utilities must produce and how they must produce it.

A Richmond-based Fortune 500 company with 2.7 million customers in Virginia, Dominion is the state’s largest electrical utility, and it’s at the forefront of an effort to ensure that the commonwealth can keep up with fast-growing energy demand from its booming data center industry while also meeting the state government’s ambitious mandate that the utility reach zero carbon emissions within the next 20 years.

Three simultaneous transitions are driving the transformational change in energy production taking place in Virginia and across the country: digitization, electrification and renewable, carbon-free energy.

Digitization is a sweeping societal change that’s well underway, with the digital economy increasingly integrated into consumers’ daily lives. The data storage, cloud computing and artificial intelligence needs driving this transition are power-intensive. Dominion predicts that the data center industry in the state will demand 13 gigawatts of electricity by 2038, a massive jump from the 2.8 gigawatts it used in 2023.

Residential and commercial electrification is also adding to increasing demands. While electricity has been the primary source of energy for homes and businesses for the last century, many consumers also rely on natural gas for some energy needs. But public policy, cost and other factors have been pushing residential and commercial consumers to switch from natural gas appliances to electric. A similar shift is underway in the transportation sector with the increasing popularity of electric vehicles.

Digitization and electrification together account for a large and continuing increase in demand for power in Virginia. Dominion’s latest forecasts show that demand is going to grow by more than 5% per year for the next 15 years in the company’s service territory, an unprecedented increase against a backdrop of 1% per year historical growth. This means that power customers in Virginia are likely to be consuming twice as much electricity 15 years from now as they are today.

Data centers are the largest contributing factor to that growth, with power demand in this sector having doubled in the last five years and expected to at least quadruple over the next 15 years. A typical 100-megawatt data center today can consume as much power as 25,000 homes, and power demand from data centers in Dominion’s service territory is currently equivalent to about 750,000 homes. In 15 years, data centers in Virginia are likely to be consuming as much power as 3 million or more homes.

Dominion and other utilities need to vastly increase their energy generation and distribution capacity to meet this accelerating demand — while they are also being tasked with greening their operations to address the realities of a changing climate.

The Virginia Clean Economy Act, passed by a Democrat-majority General Assembly in 2020, requires Virginia’s utilities to move toward green energy. Under the act, Dominion is mandated to generate electricity in Virginia from 100% renewable sources by 2045. In 2020, Dominion, which is committed to reaching the 2045 goal in Virginia, also announced a goal of reaching net-zero carbon emissions across all its operations nationwide by 2050.

“That’s a monumental, once-in-a-multiple-generation transition that’s occurring,” says Aaron Ruby, Dominion’s director of Virginia and offshore wind media. “What we’re undertaking across the U.S. in terms of the clean energy transition is no less revolutionary than the industrial revolution itself.”

Ruby emphasizes that it took about a century to build the nation’s current power grid, which consists of the power plants, cables, substations and other infrastructure that produce and reliably deliver electricity to millions of Americans around the clock. Greening the electrical sector, he says, means “basically rebuilding all of that” over the next two or three decades.

“It’s not going to occur overnight,” says Ruby. “It’ll take multiple generations to accomplish. It’ll take tens of billions of investment in Virginia alone.”

Doing so requires building large, capital-intensive infrastructure projects such as offshore wind farms, as well as performing extensive work to increase the electrical grid’s resilience.

Dominion lays out annual predictions on changes in energy demand and the utility’s plans to meet that demand, including the infrastructure projects needed to do so, in its 15- to 25-year integrated resource plans (IRP). Each year, Dominion is required under law to provide an updated IRP to the state’s utility regulator, the Virginia State Corporation Commission. Dominion’s most recent plan, submitted in 2023, lays out five build scenarios featuring various mixes of energy generation to meet surging demand and push toward the zero-carbon goal. The next plan update is due in October.

Going carbon-free

The task of simultaneously increasing electricity generation and transitioning to clean sources of energy is an unprecedented challenge for Dominion. But the company plans to address both priorities with the same investments and improvements.

About 90% of the new power generation Dominion is adding to the grid in Virginia will be carbon-free in coming years, delivered by a mix of offshore wind and solar power, battery storage and, potentially, small modular nuclear reactors (SMRs).

“We’re all in on renewables,” notes Ruby.

Dominion is currently building the nation’s largest offshore wind project off the coast of Virginia Beach, which is expected to come online in 2026. The $9.8 billion Coastal Virginia Offshore Wind (CVOW) project will produce 2,600 megawatts of power, enough zero-carbon electricity to power more than 600,000 homes. The wind farm will be the single highest producing “power plant” in Dominion’s network.

In August, Dominion won provisional rights to a 176,505-acre lease adjacent to the CVOW site, where it could develop another 2.1 to 4 gigawatts of offshore power generation. Additionally, Dominion in July acquired a 40,000-acre offshore wind lease off North Carolina’s Outer Banks where it plans to develop CVOW-South, an offshore wind farm expected to generate 800 megawatts.

Dominion also has the largest fleet of solar power plants in the country, which is growing rapidly, and is expanding battery storage across Virginia. The company is pioneering emerging technologies that will allow for longer-duration battery storage for renewable energy, potentially up to 100 hours.

It is also moving forward on developing nuclear energy options. On July 10, Gov. Glenn Youngkin signed a bill aimed at accelerating the path to deploying SMRs. A couple days later, Dominion issued a request for proposals from vendors to help it develop the first SMR in Virginia by the mid-2030s, to be situated at its North Anna nuclear power plant site. SMRs could play a vitally important role in the clean energy mix in the next couple of decades, but that will take more time and investment.

“We continue to make the necessary investments to provide the reliable, affordable and increasingly clean energy that powers our customers every day, and we are 100% focused on execution,” Dominion Chair, President and CEO Bob Blue told investors on a first quarter earnings call in May. “We know we must deliver, and we will.”

Delivering for customers includes ensuring that electricity is consistently reliable, which can be a challenge when relying increasingly on renewable energy sources. Offshore wind installations only produce power 40% to 50% of the time, and solar panels only produce power 20% to 25% of the time. Current battery storage technology is limited to about six hours of storage. The first SMR won’t be in operation for at least a decade.

“As we face unprecedented growth in power demand, renewables alone will not be able to reliably serve that growth,” says Ruby. “The reason is simple: The practical limitations of renewable tech. That’s why our approach in the long-term plan is an all-of-the-above approach that includes energy sources that are increasingly clean but always reliable.”

The “all-of-the-above” phrase is a nod to the fact that Dominion is continuing to rely in part on natural gas during its transition to renewables. Youngkin’s 2022 energy plan, which he dubbed his All-American, All-of-the-Above Energy Plan, explicitly calls for the continued use of natural gas as the state moves to more green energy provision.

Notably, natural gas is “dispatchable,” which means it can quickly produce power for the grid. A natural gas plant can ramp up to significant production within 10 or 20 minutes, a critically important ability when viewed in context of renewables’ potential inconsistency.

As a result, Dominion has been calling for adding more natural gas generation to its operations in Virginia over the next 15 years. Dominion’s proposed Chesterfield Energy Reliability Center (CERC), a 1,000-megawatt natural gas plant that has received some community pushback from Chesterfield County residents over environmental concerns, will be critically important to keeping customers’ power on when renewables aren’t producing, Ruby says, particularly on the hottest and coldest days of the year. Reducing dependency on natural gas, he says, will require significant advances in clean energy technology in coming years.

Transforming the grid

Along with boosting power generation and shifting to renewable energy sources, Dominion must also ensure that the state’s distribution infrastructure can handle these changes. In particular, integrating more renewables requires grid modernization, as renewable sources like wind and solar are more decentralized and intermittent than traditional power plants.

“If our customers are going to be using twice as much electricity over 15 years, we need to be able to transport and deliver twice as much through the grid over the next 15 years,” says Ruby. “That requires a lot of investment in transmission infrastructure to modernize the grid.”

To do so, Dominion is implementing several grid enhancing technologies (GETs), cost-effective technical upgrades that can add grid capacity and optimize the flow of power to improve performance and resiliency. In April, Youngkin signed a bill requiring Dominion to consider grid-enhancing technologies when putting together its annual IRPs.

“Grid modernization is imperative to a reliable and resilient energy grid across the commonwealth,” says Glenn Davis, director of the Virginia Department of Energy. “This administration has identified challenges as we look forward related to our transmission infrastructure and has identified opportunities to harden the grid in various regions.”

To accommodate more power flowing through the grid as demand increases, Dominion is building new stretches of electric lines, as well as “reconductoring” — replacing transmission wires with new ones that can handle greater flow. In many cases, replacing wires allows advanced conductors to handle 50% more electricity on the same tower.

Dominion’s Analytics and Control for Driving Capital (ACDC) project, which is financed by the $33.7 million GRIP award and a matching $33.7 million investment from Dominion, is implementing a particular set of GETs to optimize grid operations and efficiency.  These technologies include:

• dynamic line rating (DLR), which determines the maximum thermal capacity of electric lines in given weather conditions to maximize transmission efficiency;

• a grid forming inverter (GFI), a pilot technology that increases stability and functionality of renewables integrated into the power grid;

• dynamic performance monitoring (DPM), which uses high-tech sensors to track and collect frequency data to measure the impacts of components added to the grid and inform better operational decision-making;

• and grid edge visibility (GEV), which increases the visibility and operability of the distribution grid to help Dominion better plan for intermittent energy production from renewables.

To handle the increase in energy, the grid will also need new substations, which transform high-voltage electricity on transmission lines to lower voltages that can traverse distribution lines to reach homes and businesses. Dominion is also adding many new substations, including a new one for every new data center.

“Governor Youngkin’s All-American, All-Of-The-Above Energy Plan calls for utilizing innovative methods to increase the efficiency of our existing energy infrastructure,” says Skip Estes, Youngkin’s senior policy adviser. “Grid enhancing technologies are a tool, but to serve its booming economy, Virginia must also focus on building more transmission infrastructure.”

According to Davis, the biggest challenge facing transmission infrastructure growth is a four-year backlog on transmission components in the supply chain, “so that is one of the challenges we’re looking to address: how we incent additional manufacturing of transmission components,” he says. “The governor is looking at that, as well as a number of other items as part of the process for his updated all-of-the-above energy plan for Virginia.”

The fast-changing nature of energy technology is an important factor in Virginia’s and Dominion’s efforts to increase energy production, bring in renewable sources and modernize the grid. Dominion’s IRPs must be updated every year because each is intended to serve as a snapshot in time, with explicit acknowledgement that conditions and/or technology may — and likely will — change profoundly in the months after each is published.

Ruby emphasizes that whatever plans Dominion is making now may be laughably outdated in a matter of decades.

“What will the technology mix look like in 25 years?” he asks. “Look in the rearview mirror: 25 years ago, cell phones didn’t exist, [and] the internet barely existed as we know it. Our entire digital economy didn’t exist as it is today. That shows how much can change over a 25-year period.”

Regardless of what the future brings, Ruby says, Dominion’s commitment to meeting demand while reaching net-zero emissions by 2050 “is unwavering.”