Behind-the meter generation is scaling up to meet “hyperscale” demand

Electricity demand is here and climbing, and solar generation is being pressed on reliability and affordability like never before. Developers are looking at opportunities pragmatically and investing in generation to meet demand using the most cost-effective solution for the location. Solar is showing that it can still perform on its own merits.

Beyond the availability of fuel sources is the issue of interconnection and grid availability. Large-scale solar projects that pencil in terms of levelized cost of energy over the lifespan of the installation are running into scheduling issues involving grid interconnection queues that may be years long. Delays are not relegated to renewable energy. Developers looking to build combined-cycle gas-fired facilities are reporting similar wait times for delivery of suitable turbines.

Kevin Pratt, chief operation officer of developer Pacifico Energy, told pv magazine USA that the combination of increasing demand, grid interconnection queues and equipment supply chains are making off-grid, behind-the-meter generation on larger scales more attractive. Not all of this can be laid at the door of rising demand from data centers.

“The reason why we’re bullish on private grids, and microgrids generally, is because of the response we’ve seen in the market,” Pratt said. “Even before the big data center push that’s come along, we’ve had clients needing reliable power in a number of different scenarios. We decided that we needed to be forward thinking on this. So, you talk about chicken and egg. The demand wasn’t there yet, but we did think it was coming.”

Pratt cited customer requirements from about three years ago, where modest operations relatively speaking were not able to secure utility access to increased capacity. These included a business park in Southern California, a residential complex in Hawaii and aerospace company in Los Angeles that want to expand its existing operation.

Technologies have advanced to the point where a variety of generating sources such as solar, hydrogen fuel cells and linear generators – like those produced by Mainspring – are available for urban environments and non-attainment areas where environmental regulations and codes are very strict. Combined with storage, Pratt said, these options enable customers to circumvent a lot of permitting and interconnection queues by getting as much of their generation as they can handle behind the meter.

Microgrids no longer imply modest size, with new projects scaling up into the hundreds of megawatts and even gigawatt size. Pacifico is building its GW Ranch project in Pecos County, Texas, as a behind-the-meter generation facility for data centers specializing in artificial intelligence development. This project is building in phases, with 1 GW scheduled to be operational in 2028, and the full facility being online in 2030.

The primary generation sources for GW ranch will be simple-cycle gas turbines, which are not as efficient as combined-cycle turbines but access to natural gas is not an issue in that part of West Texas. Combined-cycle generators, which produce steam, also require more water and the GW Ranch project will not require access to off-site water. Moreover, as indicated previously, combined-cycle turbines are in high demand at present, with long wait times, and Pratt said Pacifico was lucky to have secured the generators earmarked for GW Ranch.

The project will also incorporate 1.8 GW of on-site battery storage. But what about solar?

“For our big GW Ranch project, we do have in our design about a GW worth of solar on site as well,” Pratt said. “We’ve designed it. We’ve planned for it. Solar has kind of been our bread and butter, so that’s very natural to us. But we will leave it up to the customer. And ultimately, what’s driving decision making is speed: speed to reliable power.”

While some advocates view solar and fossil fuels as a zero-sum competition, consumers are more pragmatic. At the same time, renewable energy, particularly photovoltaic solar, has shown that it is not only effective in many applications, it is the only reliable source in many parts of the United States.

“Anything west of El Paso, gas is hard to come by,” Pratt said. “In California and Arizona there’s a lot of demand. In Arizona, they are reshoring manufacturing and bringing semiconductor manufacturing there. People want to put data centers there. They need off-grid power, but situation off grid is pretty challenging because they don’t have the gas availability.”

This is an opportunity for solar plus storage to shine in competition with other sources. For example, the recently announced Pioneer Clean Energy Center in Yuma County, Arizona, under development by BrightNight and Cordelio Power, will supply 300 MW of solar plus 1,200 MWh of storage to bolster local infrastructure for Arizona Public Service. While grid connected, the project demonstrates that large-scale solar remains competitively attractive.

According to Pratt, increasing electricity demand from manufacturers needing to scale up and the new generation of “hyperscale” data centers will make private microgrids and behind-the meter generation, whether paired with grid interconnection or not, more important in the U.S. energy landscape. Quoting a study from the National Center for Energy Analytics, Pratt hundreds of data centers each with power requirements in excess of 300 MW are being planned.

“You talk about the decision to go private grid or utility grid; that’s really the struggle I see,” he said. “It’s not simply generation. It’s how to get the power to where it’s needed. Those lines are overtaxed already. Massive upgrades are required in transmission and substations to deliver the electricity. And new transmission is really slow and hard to get. So, I think microgrids are going to be a big part of the solution going forward.”

Solar developers will have to make their case to customers needing more power that the demonstrable benefits of PV plus storage at the utility scale could be theirs without the need to jump through permitting hoops or wait on interminable interconnection queues. And no wait for gas turbines, either.

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