Microsoft says Georgia may be overestimating data center load growth

When Georgia Power Company filed an updated integrated resource plan last fall, the utility drastically increased its near-term load growth predictions, based in large part on expected growth from data centers. To maintain the state’s ability to “attract and retain businesses,” the IRP said, Georgia power must take “immediate action” to meet capacity needs by the end of 2025.

In late March the utility reached a preliminary agreement with the state’s Public Service Commission to take that action, meeting the immense load gap with three new natural gas turbines, expected to provide up to 1,400 megawatts of power, a 150MW residential demand response program, and a handful of fossil fuel heavy power purchase agreements.

The ensuing debate over that plan of action is currently playing out in the Public Service Commission’s docket, where customers ranging from Big Tech to federal agencies are seeking increased transparency on Georgia Power’s heavily redacted resource planning filings, and criticizing the utility’s approach to load forecasting.

• The top line: In comments filed with the Georgia Public Service Commission early last week, Microsoft challenged GPC’s modeling methods, outlining concerns that they both undervalue renewable energy and overestimate data center load.
• The market grounding: Microsoft owns and operates three data center campuses in Georgia Power’s service territory, and that footprint is growing — the tech giant has additional projects expected to come online near Atlanta in late 2025, and has also identified two new potential campuses in the state. ‍
• The current take: In its Commission filing, Microsoft made it clear that the company doesn’t underestimate the looming growth of data centers — “Microsoft agrees that most of the load growth associated with data centers in the 2023 IRP Update is real and that GPC does require additional capacity,” the company said. “However, Microsoft has concerns with GPC’s approach potentially leading to over-forecasting near-term load (through 2030) and procuring excessive, carbon-intensive generation.”

One of Microsoft’s chief concerns is that Georgia Power’s approach to forecasting near-term data center load growth differs from that of its neighbors Dominion, Duke, and APS in a key way: the utility includes projects that are considering Georgia as a location, but haven’t yet committed any funds or made a final selection. 

As data center customers look to secure power from a utility, they go through different contracting stages, with progressive increases in commitment, Microsoft explained. An initial request for electric service, for example, may have no financial commitment, while requests from system impact studies through to final agreements for energization have significant commitments.

By not constraining resource requirement predictions to projects that have already selected GPC, the update may overestimate demand, Microsoft said.

Other utilities in the region, the company added, base their new load forecasts primarily on “known projects that have made varying levels of financial commitment.”

Georgia Power’s projection of resource requirements between now and 2030 should be based only on “mature projects with firm commitments,” the company added. And, the utility should provide “greater transparency to stakeholders regarding its large load forecasting methodology and the underlying data used to support it.”

Essentially, Microsoft said, it would like to see an aggregation of load from known and potential load, sorted by commitment levels.

The IRP’s expected 7,100 MW of summer load growth by 2031 represents the 95th percentile of modeled outcomes. In other words, as testimony to the Commission from Georgia Interfaith Power & Light put it, GPC modeled more than 100,000 load forecasts, ranked from lowest to highest, and is planning for “more load growth than its model says will be needed in 96,000 out of the 100,000 simulations run.”

Evaluating the 95th percentile in a high-growth environment is reasonable, Microsoft said in its brief, but only one modeled load forecast is included in the updated IRP, and that forecast should use committed loads by large customers.

Undervaluing renewables

Georgia Power’s current capacity mix includes 48% oil and gas and 18% coal. Nuclear accounts for 11%, hydropower for 5%, and the remaining 18% includes renewables like solar, storage, and wind. In its updated IRP, the utility considers solar PV as a resource available in 2027, and wind as an expansion resource in 2032.

But GPCs modeling assumptions “undervalue renewable energy’s contributions to capacity and resource adequacy needs,” Microsoft told the Commission, resulting in requests for additional capacity that are overly carbon-intensive. “Microsoft urges GPC to consider what a net zero or more stringent carbon-constrained scenario would look like.”

First, Microsoft said, the modeling limits the options for battery energy storage systems to four-hour systems and 12-hour medium-duration systems (representative of pumped hydro). Between the 2022 IRP and the updated IRP, eight-hour storage was removed from the list of potential storage candidates without explanation. 

Pumped hydro is more expensive and less efficient than eight-hour BESS, Microsoft said, and it isn’t clear from the IRP whether or how GPC accounted for the application of investment tax credits from the Inflation Reduction Act to battery costs. GPC also doesn’t include any long-duration storage as a generation candidate for the later years of the plan.

“This leaves a crucial operational gap in the ability of intermittent renewables to provide firm capacity and likely contributes to further limiting the buildout of clean resources,” Microsoft said.

GPC’s approach to modeling solar capacity also doesn’t follow best practices — despite researching other approaches to resource accreditation in 2021, the utility uses a less common method of measurement, one that Microsoft said underestimates solar’s potential contributions, in part because it uses average capacity factors.

“Modeling the system in this manner will lead to overbuilding since the higher winter planning reserve margin is employed across the entire year and no capacity accreditation is given to solar,” the company said. “This will artificially favor non-clean technologies to meet the capacity needs since no capacity contribution is given to solar resources.”

Ultimately, the tech giant is seeking more transparency from GPC when it comes to exactly how the utility reached its load growth projections. That includes report assumptions for capital expenditures, build limits, tax credits, effective load carrying capacity, and reserve margins.

The Public Service Commission is set to vote on the tentative agreement to expand Georgia Power’s gas infrastructure April 16.

Georgia Power Company didn’t respond to Latitude Media’s requests for comment. Microsoft declined to comment.