In a recent interview with APPA, Nico Procos, director of Silicon Valley Power, the public power utility for Santa Clara, California, discusses misperceptions regarding data centers. He also details the utility's generation mix and discusses load forecasting.
Prior to being named director of the public power utility in July, Procos had been serving in the acting role of director.
He pointed out that the utility has plenty of experience when it comes to data centers. There are currently over 50 data centers located in Santa Clara.
“The landscape is changing. AI is a game changer,” Procos noted in a recent episode of APPA’s Public Power Now podcast.
He said that most of those existing data centers are on the smaller size. “And when I say smaller, I mean 50 to 100 megawatts,” he said.
“A lot of entities are asking us about how do these guys operate? What's the best way to deal with them? How do you charge rates? These are all things and questions that we've dealt with in the past. We have a lot of data. I like to say we have a lot of data on data centers,” Procos said.
“We know how they operate. We have agreements with them. We've gone through growing pains in terms of how do you set up agreements with them to ensure you're able to accommodate them within your service territory. And then also how do you make sure that they pay their fair share?”
Data Centers and Community Engagement
Procos said that community engagement tied to data centers is “really critical, especially because I think this is uncharted territory, not only for us, we already have a lot of data centers, but we also have a lot of demand. I meet with the data centers a lot and one of the common themes that I hear from them is they want more power. And they're proposing to build more data centers in some of our neighboring communities.”
And so “engaging with them I think is really important, especially to get a sense of what's coming down the pipeline. I've been in this business for 25 years and I've never seen things move so fast, whether that be transmission or what's occurring within our service territory -- we're spending $450 million to upgrade our substations and we're building a new transmission line and that's largely driven by the need to replace aging infrastructure and load growth and I think engaging with the community is really important,” Procos said.
“I think there's kind of some misperceptions regarding data centers and we've spent a lot of time trying to deal with those. One of those is what is the value that comes to the community and again this whole subsidy question and so I certainly think that there's a lot of value that comes to the community from data centers and while there are additional costs that come with data centers, the additional revenue is significant and helps put downward pressure on rates," he said.
“It does bring up a whole host of other issues. We do hear a lot about backup generation. I think they've done a much better job in terms of how do they design things, how do they test their backup generators -- they used to look like kind of boxes. Now they look, the buildings look like office buildings,” Procos said.
“So there's been a lot of improvement, but there certainly are those issues that come through the community and also in City Council as well…I think there's strong support for data centers, but there are some that still have some lingering questions in terms of how is this going to play out and what are the impacts on the community?”
Generation Mix
In the interview, Procos also discusses the utility’s current generation resource mix.
“We have a diverse portfolio,” he said, noting that the utility is part of the Northern California Power Agency. “We were one of the founding members and we participate with other members on hydro projects, the Lodi Energy Center, which is natural gas, a geothermal project. We have kind of a smattering of landfill gas projects and some wind projects,” Procos noted.
“We've done a really good job over time in collaborating with other NCPA members and members of public power to get resources, especially for us recognizing that our current peak is 745 megawatts. We're anticipating going to 1,300 within the next 5 to 10 years. So procuring resources to meet that need is very important to us and also we're in California, so there's a focus on renewables and clean energy. We do have several power plants within the city. Donald Von Raesfeld Power plant is natural gas, about 150 megawatts. And then we've got a peaker.”
He noted that Silicon Valley Power has a PPA for a 50 MW battery project within the city “and that's currently being built. And then we have a variety of contracts that we're working on, mostly solar plus battery, but we also have some that are standalone battery. And the value of that is it provides resource adequacy.”
In California, “we have to make a showing that we have enough resources to be able to meet our peak plus a certain amount. So we have a group that spends a significant amount of time -- I would say at any given moment there's five to 10 of these contracts that are underway and it's challenging and one of the biggest challenges is more recent where we run into the supply chain issues and then also tariff issues and we're spending a lot of time in discussions with potential counterparties and trying to deal with some of that uncertainty,” Procos said.
“It's hard enough, there's a lot of competition for resources and then you layer on those issues and it’s a very challenging environment for us. Kudos to the staff here that does a great job. We just took one to council a project and we've got a couple more coming down the pipeline, but you’ve got to keep at it.”
In the interview, Procos also discusses:
• Load forecasting
• Supply chain issues
• His more than 25 years of experience in the electric utility industry, offering an overview of that experience and how his prior roles lay the foundation for his being successful in his current role.
In addition, he also talks about recent news involving Chargescape, an automotive joint venture focused on electric vehicle grid integration, and Nissan announcing the launch of a new vehicle to grid pilot in Silicon Valley Power's territory.
