Greentech MediaJuly 27, 2020575
Data center operator Switch plans to buy power for its record-breaking Citadel facility from an adjacent project developed and owned by Capital Dynamics. A 60 megawatt/240 megawatt-hour Tesla Megapack installation will turn 127 megawatts of solar capacity into a nearly 24-7 power source.
This marks one entry in a broader effort by Switch founder and CEO Rob Roy to meet his company’s energy needs with clean energy investment in its home base of Nevada. But while plenty of tech companies have purchased clean energy to account for their power consumption, and some have required clean energy produced in the regions where it is consumed, none have produced it at their own facilities at this scale.
The largest behind-the-meter battery title previously went to Convergent Energy + Power for 10 megawatt solar power systems to help industrial companies dodge demand charges in Ontario, Canada. The Switch battery, integrated by Con Edison’s commercial solutions arm, would be six times larger than Convergent systems when it comes online in a couple years.
The solar power side of the equation also breaks ground, by accessing the economies of scale normally reserved for remote utility-scale solar projects, but using them to satisfy the consumption of one giant customer.
The mere existence of such a project raises the question of whether this presages a new market for enormous behind-the-meter clean energy, or simply amounts to a highly compelling one-off.
“I hope it inspires others to try and do projects of this size, or even bigger, that will continue to promote sustainability,” Adam Kramer, who oversees energy procurement as EVP for strategy at Switch, told Greentech Media. “When you do it, you can create great cost savings and create a truly sustainable vision.”
When the necessary pieces align, Capital Dynamics is ready to build.
“We see ourselves doing more,” said Benoit Allehaut, managing director for clean energy infrastructure at Capital Dynamics. But, he added, “We have to have scale, and it’s a custom job. The replicability is feasible, but with limitations.”
The task for Capital Dynamics was to develop solar projects that would deliver enough clean electricity for Switch’s massive and growing consumption, at the lowest price possible.
Distributed generation tends to impose a higher unit cost for energy than utility-scale plants; working rooftop by rooftop costs more than laying out the same capacity across a wide-open strip of desert. But the Switch project will operate at utility scale, gaining the economic benefits of that scale while benefitting from the attributes of a distributed project.
“The advantage for the behind-the-meter project is there are no transmission and distribution charges for using the public grid,” Kramer said. “That provides a cost savings for us on our energy procurement.”
Data centers have a generally flat demand profile, which influenced the choice to add a battery to the solar panel facility. The battery sizing turns the roughly 130 megawatts of solar capacity into 30 megawatts of “quasi-baseload” renewables, Allehaut said.
“The principal interest in the battery is you have to convert a bell-shaped dispatch curve into something that can dispatch deep into the night,” he explained.
This roughly matches the solar-to-battery ratio at California's Eland project, which Capital Dynamics recently bought from developer 8minute Solar Energy. It reflects a tension between cost and value for customers who need power after the sun sets.
“If you build too much battery, the battery starts to destroy value,” Allehaut said. “If your battery is too small, then you have all that excess solar midday that you have to resell in the market — then you have merchant risk.”
Switch was able to subscribe to this project thanks to a Nevada law allowing large industrial customers to source their own power.
Casino company MGM famously used this Direct Access rule to exit utility NV Energy in 2016, with the goal of doubling its share of clean energy while cutting energy costs. The state initially rejected Switch’s request to leave the utility, but later granted it in 2016.
NV Energy is now working toward a statewide goal of 50 percent clean energy by 2030. But Switch has already achieved 100 percent clean energy by buying on its own.
“Direct access is significantly cheaper than going through the utility, and more sustainable,” Kramer said.
The challenge in replicating this is finding customers operating in place with similarly liberalized rules for corporate power procurement.
Market dynamics play a role, too. The ERCOT market in Texas has power prices that are “so ridiculously low” that data centers don’t need to build their own power plants to get a good deal, Allehaut noted.
Front-of-the-meter developers can move at their own pace, grabbing land where they spot opportunities and lining up deals at the choice moment. Going behind the meter constrains that room to maneuver.
“You’re embedded with a customer in order to do that work,” Allehaut said.
The developer needs to work with sites that the customer already has, or work with them on acquiring new ones.
Part of what made the new project possible is that Roy factored clean energy siting into his search for the location to build Citadel back in 2014, Kramer said. This ensured there was room for adjoining solar fields.
“You have to have a vision to be able to tie these pieces together to pull this off,” Kramer said of his CEO.
It helps that the company is proudly rooted in Nevada, which is also home to a phenomenal solar resource and a lot of open space. Something at this scale would be hard to replicate in the dense data center hub of Virginia, for instance. Even a Switch facility in southern Nevada couldn’t host onsite solar because of surrounding highways and developments.
The Reno industrial center location for Citadel also came with a unique advantage for sourcing high-quality batteries. Tesla’s Gigafactory is a neighbor.
“The batteries for the project are literally being manufactured across the street from the data center,” Kramer said.
The battery evaluation looked at all the top tier suppliers. Tesla stood out for technological superiority, cost efficiency and local economic impact, Allehaut said. He particularly liked Tesla’s use of liquid cooling, which Allehaut said is more reliable than fan cooling and draws less parasitic load.
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