They Rent Out Servers You Pay for the Grid Inside California's Data Center Landlords

They Rent Out Servers You Pay for the Grid Inside California's Data Center Landlords
Think of a colocation data center like an apartment building for computers. The company owns the building, supplies the power and cooling, and rents space to tenants who bring their own servers. In California, companies like Digital Realty, Equinix and CoreSite run dozens of these buildings, along with Vantage, Stack Infrastructure, NTT and CyrusOne. It is a profitable business. And it runs on one thing above all else: electricity.

How much power are we talking about?
A single large data center can draw as much electricity as a small city. Facilities in the 50 to 100 megawatt range are now common in California. At full power year-round, a 92-megawatt data center, the average peak demand among the state's largest facilities, uses about 806 million kilowatt-hours. At 8,000 kilowatt-hours per home, that is roughly 100,700 homes' worth of electricity. Statewide, data center developers have asked PG&E for about 15,000 megawatts and Southern California Edison for nearly 5,000 megawatts.

Who pays for the wires?
To serve these facilities, utilities need new transmission lines and substations. California's Public Advocates Office has warned these upgrades could cost billions, and that if projects are withdrawn or fall short of expected revenue, everyday customers could end up covering the costs. Under current federal rules, ratepayers pay for major transmission upgrades. Regulators have responded with some protections, including PG&E's Electric Rule 30, which requires large applicants to pay for certain transmission work upfront. But consumer advocates note it covers only part of the state and does not include every cost. This is not a guarantee that your bill will rise because of a specific data center. It is a real risk, and homeowners should plan for it.

Your side of the meter
Data center landlords secure power for decades. Homeowners can do something similar. Homes that only buy power from the grid are exposed to whatever costs come next. Homes with solar and batteries produce their own power, use stored energy in the evening, and send extra power to the grid for compensation. Some homeowners do not like the idea of supplying a grid that powers server farms. But being on the supply side means you are earning from demand, not paying for it.

Own your power without buying equipment
Through third-party ownership programs, qualifying homeowners can get solar and battery storage without buying or financing equipment. Many agreements offer a rate designed to come in below utility rates, include maintenance and battery replacement for the agreement term, and transfer to a new owner if the home sells.

The takeaway
Data center landlords rent out servers. Homeowners do not have to keep renting their power. Producing and storing your own electricity can bring savings of up to 40 percent compared with utility rates, depending on the home and program.
To find out if your home qualifies for a TPO solar and battery program, visit myhomesolution.org/california_public_utility_commissions