Loudoun County, which comprises ~80% of Northern Virginia’s data center inventory, is evaluating the feasibility of establishing a countywide Community Choice Aggregation (CCA) program to improve its renewable energy mix. Specifically, Loudoun County’s Finance/Government Operations and Economic Development Committee (FGOEDC) is investigating the potential financial and legal benefits – as well as risks – posed by developing Community Choice Aggregation (CCA), which would allow Loudoun County to aggregate its power supply needs and purchase directly from power supply providers, rather than as a bundled customer of an investor-owned utility (IOU) such as Dominion Energy.
Community Choice Aggregation (CCA) – Overview
Under Community Choice Aggregation (CCA), Loudoun County can purchase and manage the county’s electric power supply from a preferred mix of traditional and renewable energy sources. At the same time, the investor-owned utility (IOU) continues to provide distribution, billing services, and outage management.
CCA would allow Loudoun County to aggregate all classes of customers – comprising municipal, residential, commercial (includes data center), and industrial – to decide on the power generation mix that it desires as a county. In turn, CCA would enable Loudoun County to meet its climate and energy goals on a quicker timeline.
Dominion Energy provided historical retail electricity sales in megawatt hours (MWh) in Loudoun County, from 2015 through 2019, by customer type. Additionally, an annual energy load forecast was developed, to determine retail electricity sales in MWh for future years. As shown below, the Commercial customer type, which includes data centers, is forecasted to contribute the vast majority of Loudoun County’s future energy load growth.
Historical and Forecast Energy Load in MWh by Customer Type
Data Centers and CCA – Loudoun County
Given expectations for continued growth of data centers in Loudoun County, these facilities will be the main driver of future Commercial energy consumption in the county. Moreover, the energy consumption of data centers, relative to their floor area, is significantly higher than many other Commercial use types – further reinforcing their significance.
Increasing energy loads from data centers theoretically enables a CCA to provide greater economies of scale towards energy generation purchases on the wholesale market. Specifically, financial benefits include generation rates for CCA customers that could be 15% lower than the comparable Dominion Energy generation rates. This reduced generation rate translates into a 10% reduction in the CCA customer’s total electricity bill.
Due to the absolute size of data center loads, certain data centers / operators have been able to directly negotiate with the incumbent utilities (e.g., Dominion Energy) to provide lower power rates.
To this end, directly negotiated rates by data centers / operators may be lower than rates that could be achieved through CCA wholesale market purchases. Therefore, it may not be economical for data centers with low pre-negotiated rates to participate in a CCA.
If a significant number of data centers / operators opt-out of CCA participation, to preserve already low negotiated rates, then the program’s economies of scale, and hence, negotiating leverage, would be lower in making CCA wholesale market purchases. At the same time, these data centers / operators would be confined to the renewable energy generation portfolio of the incumbent utility (e.g., Dominion Energy).
Overall, CCA participation enables data centers / operators to secure a renewable energy mix that may be more in-line with their corporate or Loudoun County’s renewable energy goals. Therefore, companies opting-out of CCA participation would ultimately hinder the transition towards a greater renewable energy mix in Loudoun County.
Northern Virginia Electric Cooperative (NOVEC)
Separately, a significant number of Loudoun County’s data centers are in the Northern Virginia Electric Cooperative (NOVEC) service area. This means that these data centers would be excluded from any CCA program given that they are not served by an investor-owned utility (IOU).