Data-center growth is often framed as a problem of grid scarcity. How can flexible distributed resources help free up capacity for new data centers? 

Ellen Zuckerman: One of the things we're focused on is this concept of investing in distributed energy resources in our communities in exchange for capacity credit.

It's meant to take a more comprehensive view of our energy supply story — not just thinking about what we can do with power plants on the supply side, but how we can activate Google's capital to bring clean energy solutions to the communities where we are based.

If we can figure out ways to make use of the grid so that it is better utilized, that helps us to be more responsible resource stewards. It also helps with affordability and opens up paths for us to invest directly in these communities.

What does Google get in return? Could the investment in batteries and grid flexibility help the company connect its Minnesota data centers faster? 

Ellen Zuckerman: If this concept really scales, it could be a solution for speed — absolutely.

We have a proposal with Xcel Energy in Minnesota that's pending before regulators. As part of it, we've proposed contributing $50 million to its Capacity Connect program. If approved, we would invest those dollars in batteries with commercial and industrial customers on the distribution system. Without approval, it’s likely Xcel wouldn't have this capital available to do that kind of work, and as a result, the amount of distributed energy resources would be diminished.

Some of these proposals sound more like community-benefit investments than solutions to the data-center capacity crunch. How much grid capacity do they actually create?

Ellen Zuckerman: I’d argue they're both.

Demand-side management and energy efficiency are clean capacity resources that are available today. They can show up in demand response, and they can also show up in energy efficiency. We're trying to unlock both.

We have a proposal with NV Energy in Nevada that is pending before regulators. Assuming it’s approved, we would pay for HVAC upgrades and batteries in low- to moderate-income households in a capacity-constrained area. An HVAC upgrade can reduce the cost of home heating and cooling and improve resilience and comfort — but it can also provide grid benefits.

If we're interfacing with a customer and bringing a battery or an HVAC upgrade, we want to take advantage of that touchpoint to deliver as many benefits as possible. It’s about serving the customer more comprehensively while getting as much as possible out of the capacity resource.

How do you make sure other customers aren't subsidizing Google's growth?

Ellen Zuckerman: We’ve been working with Salt River Project in Arizona on long-duration energy-storage pilots. Google is helping to fund testing and integrating these new technologies, defraying the costs of SRP’s program for other ratepayers.

Arizona has very high solar penetration, so it is an important place to test these technologies. The pilots can also generate learnings for the industry more broadly.

Beyond community programs, where can distributed energy contribute at market scale?

Ellen Zuckerman: With Voltus, we’re partnering in PJM to aggregate distributed energy resources, with a big focus expected to be on batteries.

Hopefully, that will enable more than 100 megawatts of virtual power plants for the PJM system, which is severely capacity-constrained. We see this as an important tool where Google can step forward in new, diverse and innovative ways to bring capacity to the system.

Some investors and technology companies see hyperscalers as faster-moving alternatives to utilities for commercializing new grid technologies. Is that expectation realistic? 

Ellen Zuckerman: We want to use this opportunity of load growth to accelerate new technologies onto the grid that the utility would not otherwise have done.

But we absolutely need their partnership. In a lot of ways, the thing holding us back has to do with regulatory policies and paradigms that are not necessarily designed for the type of innovative action we’re trying to enable.

We need to work hand in hand to evolve the system so that we can bring new, innovative things forward.

What's the one thing regulators can do to make distributed capacity move faster?

Ellen Zuckerman: They can take proactive steps to put the foundation in place so that, when Google or another data center shows up, they are ready to go.

That means working out in advance how distributed resources will be credited, how a customer like Google can fund them, and how those investments fit within utilities’ existing revenue requirements, incentives and regulatory targets.

Right now, we are moving very quickly, and often the markets and regulatory regimes have not evolved to match our speed. Otherwise, it takes multiple years for us to design the construct to enable all of these things in the first place.

Until those paths exist, it is very challenging for us to act on them.