No Power Plant, No Problem: Google & Voltus to Unlock 100MW

While Google is first and foremost a technology company, it has become more and more embedded in the energy sector in recent years.

As one of the world's largest, most ubiquitous enterprises, its consumption of energy is almost unfathomably large.

In fact, according to a 2024 analysis by journalist Michael Thomas, Google's annual power consumption is higher than more than half the world's countries.

As such, the US-based company has made energy a central part of its business, often tussling with Amazon to be the global economy's largest corporate buyer of renewable energy.

But power purchase agreements (PPAs) aren't the only involvement Google has with the energy sector. Lately, the firm has become increasingly involved in modernising power grids.

It has just agreed terms to one such project with US-based energy supplier, Voltus. The initiative will see the two companies work together to improve the efficiency of the PJM Interconnection grid, which spans 13 US states from the mid-Atlantic coast to the Midwest.

Google's plan for the US's largest power grid

The PJM grid is the largest electricity system in the US, serving around 67 million people today.

However, like most power systems the world over, it is currently straining under the weight of increased electrification and digitalisation.

In an effort to ease the burden on the grid and unlock more energy, Google has signed a three-year agreement with Voltus in what the latter calls a 'Bring Your Own Capacity' (BYOC) arrangement.

According to Olivia Wang, a Research Analyst at Sightline Climate, BYOC is "a way to allow data centres to leverage existing flexibility on the grid to meet their power needs faster".

"Rather than waiting years for new generation, transmission or substation upgrades," she says, "BYOC allows data centres to source accredited capacity from a virtual power plant composed of flexible loads that already exist on the system."

Essentially, Google is paying to aggregate what already exists in local communities.

It is the extra power that comes from domestic back-up batteries, smart thermostats and other controllable loads. When orchestrated at scale, though, these energy sources can replicate the output of a conventional power asset.

Google and Voltus believe that their deal will unlock around 100MW of additional energy, which could help facilitate the former's data centre drive.

What is a virtual power plant?

Voltus' BYOC offering makes use of what is known in the energy sector as a "virtual power plant", which is a network of small-scale energy resources that together can function similarly to a power plant.

They are connected by the Internet of Things, or IoT, and are controlled by an advanced piece of software.

This connectedness means that when the demand for electricity spikes, these systems are able to automatically orchestrate thousands of devices at the same moment. This can manifest as discharging local batteries or slightly adjusting smart thermostats.

The individual adjustments are imperceptible to end users, but their combined effect frees up meaningful capacity at the grid level. Google is hoping that its data centres can draw on that capacity without requiring a single new power line to be built.

This kind of system has helped Voltus make its name since its founding in 2016. Today, it is the US's most widely recognised VPP aggregator, managing more than 7GW of capacity across its platform.

The commercial logic

Historically, meeting massive new energy demand has required an asset-heavy approach, spending years and billions of dollars expanding the grid to handle short periods of peak demand. These expenses have been one of the main reasons for rises in the cost of electricity in recent years.

When you build enough infrastructure to cater for moments of peak demand, however, a large amount of that system does not see much use.

The BYOC structure inverts that logic. Here is essentially how it works:

1. Google funds the aggregation of third-party assets
2. Voltus orchestrates them and pays participating homes and businesses for their flexibility
3. When Google needs electricity, Voltus will evaluate how much the PJM grid is able to contribute

It is, in theory, a very simple and effective process. That said, Google is the first hyperscaler to sign onto the BYOC product with Voltus, marking a huge moment for the company and a huge vote of confidence for the technology.

"This initial phase of our Google partnership is pioneering a model that large load customers can follow, and we expect it to accelerate the role of distributed energy resources as a capacity solution at scale," says Dana Guernsey, Voltus' CEO.

The broader context in the data centre sector

The deal between the two firms comes at a time when the price of electricity is rising, reserve margins are shrinking and demand (especially from data centres) is skyrocketing. This is especially the case for the PJM grid.

Google is not alone in facing these pressures, though. Microsoft, Amazon and Meta are all up against the same interconnection bottlenecks and the same public pressure to reduce strain on the grid.

As such, initiatives that focus on improving efficiency and unlocking wasted energy are huge priorities for companies right now.

Google has already done similar things with its own infrastructure. To date, the company's independent utility agreements have unlocked approximately 1GW of demand response capacity across various US power systems.

The deal with Voltus partnership extends that philosophy, pulling in community-level assets that sit well beyond the data centre fence.

The broader opportunity

The notion of making the most of the energy in the grid is very attractive to consumers and companies alike.

A Brattle Group analysis, cited by both Google and Voltus, found that US consumers could save more than US$100bn over the next decade by better utilising the grid's existing resources through solutions like VPPs.

Kate Brandt, Chief Sustainability Officer at Google, sees the potential of virtual power plants as a huge opportunity for communities, as well as her company.

"This is a transformative model because it creates new, clean capacity for the system and channels investment directly into local communities by paying participating homes and businesses for their energy flexibility," she wrote recently on LinkedIn.

At 100MW per year, the deal is modest relative to hyperscale demand. However, should the three-year contract yield positive results, Google and the other hyperscalers will doubtless be ready to double down on VPPs.