Generate Capital urges data centers to pay for their own power and cooling

In short: More companies are looking at on-site, modular power and cooling for data centers, so they can grow faster and avoid pushing grid upgrade costs onto households.

What's going on

David Crane, the CEO of Generate Capital, says data centers should cover the cost of the extra power and cooling they need. Data centers are large buildings full of computers, and they use a lot of electricity and water to keep those computers running and cool.

Crane is arguing against the usual approach, which often involves waiting for local utilities to upgrade the electricity grid. He warns that these upgrades can take time and may raise bills for other customers, also called ratepayers, which usually means local homes and small businesses.

Generate Capital is working with Vertiv, a company that sells equipment for data centers. Together, they are offering “Bring Your Own Power & Cooling” packages. These are modular systems (like pre-built building blocks) that can include engines, turbines, fuel cells, batteries, and other energy options. The idea is to bring power and cooling to places where the grid is “constrained,” meaning it cannot easily add new capacity.

Crane says this model is meant to help customers build faster, pay over time through financing, and keep options open for switching back to more grid power later. He also points to long delays in “interconnection,” which is the process of getting permission and hardware to connect a new big user or generator to the grid.

What to watch

Rising electricity bills are pushing politicians to look for ways to stop data center costs from being passed to residents. Oklahoma has discussed rules that would require data centers to fund their own supporting infrastructure. If more states follow, on-site power and battery projects for data centers could become more common, although the long-term business models are still being tested.

Source: Financial Times