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Sunday, 06 December 2015 22:12

Switch’s energy demand at proposed Michigan data center could pose challenges as utilities warn of capacity shortfalls

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Amid tax law challenges, another potential complication with Switch Communications Group LLC’s proposed move to Michigan is how the energy-intensive company would secure a reliable electricity supply.

That’s particularly the case if Switch wants to power its data center with renewable sources, as it does with its Nevada operations.

Energy appears to be top of mind for Switch executives in selecting the Gaines Township site.

[RELATED: Abate, then Switch: Las Vegas tech firm asks legislators to change Michigan tax law to benefit data center industry]

In Senate committee hearing testimony, Jason Mendenhall, executive vice president of the cloud at Switch Communications, said the company had already “established relations” with the “power provider” at the site.

Representatives from Jackson-based utility Consumers Energy, which serves the territory in West Michigan, declined to comment for this report, citing a nondisclosure agreement.

Mendenhall told the Senate committee that Michigan’s climate was one of the reasons the company was attracted to the area, noting it would cost less to cool the data center given the average temperatures in the region.

“Michigan has a built-in advantage because it’s cold,” he said.

Switch’s project would be coming on line at a time when major utilities are closing coal plants and have ramped up warnings of a statewide capacity shortfall unless they build new generation.

The challenge Switch could face: Data centers are known energy hogs.

Switch’s Las Vegas data center reportedly has a 250-megawatt capacity need. By comparison, Consumers Energy is decommissioning its B.C. Cobb Plant in Muskegon, which has a 320-megawatt capacity, enough to provide power to a community of 200,000 people.

In July, Switch reportedly resolved an eight-month disagreement with a Nevada power company because Switch wanted to power its Las Vegas facility with 100-percent renewable sources. It threatened to leave its utility, but was warned it would have unfairly burdened other customers. Switch is among the country’s largest companies to sign a White House climate change initiative to reduce carbon emissions.

According to the Michigan Energy Innovation Business Council, many Michigan companies increasingly are concerned about meeting their renewable energy goals as well. Securing renewable power remains a challenge because of the state’s limited electric choice market. Regulated utilities have to be willing to work with their large customers to meet their renewable needs, said MEIBC President and CEO Dan Scripps.

“Companies used to get whatever power mix they were provided,” he said. “Now a growing number are saying, ‘We want more renewables,’ and we can do that through the choice market or through regulated service, but utilities need to be working with us.”

The Michigan Legislature is crafting new comprehensive energy policy that could likely affect energy choice participation going forward.

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Editor’s Note: This version of the story has been updated to correct the official name of Switch Communications Group LLC.

Read 14263 times Last modified on Wednesday, 16 December 2015 00:02

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