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Data center disconnections threaten grid stability,

regulator

says

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Grid operators face resistance from data centers on

proposals

for a fix

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Texas incidents highlight risks of sudden disconnections

by

crypto miners

By Tim McLaughlin

BOSTON, March 19 (Reuters) - Data Center Alley, a

30-square-mile stretch outside Washington D.C. and home to more

than 200 data centers, consumes roughly the same electricity as

Boston. So power company officials were alarmed when a big chunk

of those centers - 60 of them - suddenly dropped off the grid

one day last summer and switched to on-site generators.

The mass reaction was triggered by a standard safety

mechanism across the data center industry, intended to protect

computer chips and electronic equipment from damage caused by

voltage fluctuations. But it caused a huge surge in excess

electricity, according to federal regulators and utility

executives.

The magnitude of the imbalance forced grid operator PJM and

local utility Dominion Energy ( D ) to scale back output from

power plants to protect grid infrastructure and avoid a

worst-case scenario of cascading power outages across the

region.

The near-miss - reported here in detail for the first time -

forced federal regulators to recognize a new vulnerability of

America's electrical grid: unannounced disconnections by data

centers.

"As these data centers get bigger and consume more energy,

the grid is not designed to withstand the loss of 1,500-megawatt

data centers," John Moura, Director of Reliability Assessment

and System Analysis for NERC, told Reuters in an interview. "At

some level it becomes too large to withstand unless more grid

resources are added."

Historically, grid operators have planned for large power plants

tripping offline. But the rapid expansion of data centers

processing the vast amounts of information used for AI and

crypto mining is forcing grid operators to plan for new

contingencies and complicating the already difficult task of

balancing the country's supply and demand of electricity.

"What it tells us is that the behavior of data centers has

the potential to cause cascading power outages for an entire

region," said Alison Silverstein, a former senior adviser to

the chairman of the U.S. Federal Energy Regulatory Commission.

The event last July 10 occurred near the D.C. suburb of

Fairfax, Virginia, an area known as Data Center Alley for its

concentration of facilities serving Microsoft ( MSFT ), Google and

Amazon ( AMZN ). About 70% of the world's internet traffic flows through

the area.

A month after the incident, the North American Electric

Reliability Corporation (NERC), the federal regulator for grid

reliability, founded a taskforce to study en masse

disconnections by data centers and crypto miners.

For this story, Reuters examined thousands of pages of

regulatory documents and interviewed about a dozen industry

executives to determine the origins of the fault - a failed

surge protector on Dominion's Ox-Possum 230-kilovolt line near

Fairfax, Virginia - and its spread across the area.

NERC reviewed the incident in a report in January but did not

disclose the exact location of the fault, the number of data

centers involved, or how PJM and Dominion worked to rebalance

the grid's supply and demand of electricity.

NEAR-MISS EVENTS INCREASING

The number of near-miss events like the one in Data Center

Alley has grown rapidly over the last five years as more data

centers come online.

The amount of power used by data centers has tripled over

the past decade and could triple again by 2028, according to a

report produced by the Lawrence Berkeley National Laboratory for

the Department of Energy in December.

A Reuters review of disclosure filings by the Electric

Reliability Council of Texas (ERCOT), the state's main grid

operator, identified more than 30 near-miss incidents since

2020, triggered by big energy users like data centers and crypto

miners switching offline.

In December 2022, a failed transformer at a substation in

west Texas caused nearly 400 crypto miners, data centers and oil

and gas production facilities to unplug without warning.

The mass exodus produced an oversupply of nearly 1,700

megawatts of electricity - equivalent to about about 5% of the

grid's total demand - and forced 112 megawatts of power

generation to shut down, according to ERCOT.

The risk of power outages will only grow as new data centers

come online, the NERC forecast in a December report. Nearly all

of the United States will face higher risks of energy shortfalls

over the next 5 to 10 years, the report said.

The regulator urged utilities to consider updating federal

reliability standards for data centers and crypto miners.

A CONTROVERSIAL FIX

Many data centers are engineered by their operators to

switch to local generators at the smallest hint of a problem on

the grid to minimize the risk of an interruption to services

like Google search or crypto mining, according to NERC.

Some grid operators have proposed requiring data centers to

"ride through" routine voltage dips without disconnecting. But

data center operators are opposed because of the risk of

damaging electronic equipment and cooling systems.

ERCOT last year withdrew a proposal that would have imposed

ride-through restrictions on data centers and crypto miners

after facing pushback from an industry group, the Data Center

Coalition.

The group, whose members include Amazon ( AMZN ), Google, and Meta,

cited costs and the risk of damaging computer chips and cooling

systems exposed to fluctuating voltage levels.

"Data center hardware and power supplies, similar to other

electronics, are very sensitive to power supply stability," the

coalition said in January 2024 comments filed with ERCOT.

"Deviating from this range will deteriorate the optimal

performance, reduce longevity, or damage the components beyond

repair."

The coalition declined to comment for this story. Amazon ( AMZN ),

Google and Meta did not return messages seeking comment. ERCOT

did not return messages seeking comment.

There is "high potential" for the magnitude of these

disconnection events to grow as larger operations plug into the

Texas grid, ERCOT operations engineer Patrick Gravois said in a

December presentation to NERC's Large Load Task Force.

Gravois said the grid operator is still working to determine

exactly what prompts big users of electricity to unplug from the

grid, so that it can avoid surprises.

Ari Peskoe, director of the Electricity Law Initiative at

Harvard Law School, said regulators could require data centers

to ride through voltage dips - but that could risk Big Tech

decamping for states with more relaxed rules.

Jim Simonelli, chief technology officer for Schneider

Electric's secure power division, said utilities and the data

center industry have a lot of lessons to be learned from what

happened outside Washington DC this past July.

"One thing that doesn't exist yet for the data center

industry is how to be grid-friendly," Simonelli said.