Reference
Data center power, in plain English
The words that come up in utility large-load contracts and site screening, explained without the jargon. These are general definitions. What a particular utility actually requires is on its own page under coverage.
- Behind the meter
- Power made or stored on the customer's own side of the utility meter. On-site generation or batteries serve the customer directly. Whether a project can run partly or fully behind the meter, and how it must still connect to the grid, depends on state law and the utility.
- Collateral
- Money or a guarantee you post so the utility is protected if you walk away. Usually a letter of credit, a cash deposit or a parent guarantee. It is often sized as a number of months of minimum bills or as a dollar amount per megawatt, and it may be released or reduced as the project proves out.
- Contract capacity
- The amount of power, in MW, the utility agrees to be ready to deliver to you. The figure that minimum bills, collateral and exit fees are usually calculated from. It can be higher than the power you actually draw, which is why overstating it is expensive under a take-or-pay clause.
- Contribution in aid of construction (CIAC)
- A payment from a customer toward the utility's cost of building facilities for them. Instead of spreading the cost of new equipment across all customers, the utility may ask the customer to pay part or all of it up front. Its treatment varies by utility and state.
- Cost causation
- The principle that whoever causes a cost should pay for it. Regulators use it to decide how much of the cost of new generation and grid upgrades should fall on the data center that triggered them instead of on existing customers. Many large-load tariffs are a direct result of it.
- Demand charge
- A price per kilowatt of peak demand, billed monthly, separate from energy used. Energy charges pay for the kilowatt-hours you use. Demand charges pay for the capacity needed to serve your highest draw. For a data center that runs flat out, demand charges are a large part of the bill and the basis for the dollar figures in our estimators.
- Electric service agreement (ESA)
- The contract under which a utility agrees to serve a customer. Where a tariff sets general rules, the service agreement is the signed document for your project. It controls over any summary, including ours.
- Exit fee
- What you owe if you end the contract early. Commonly the remaining minimum bills, or a set number of years of them. It is how a utility protects other customers from paying for equipment built for a customer who left.
- Flexible load / curtailment
- Agreeing to reduce power use at times the grid is stressed. Some utilities and grid operators offer faster connection or lower cost to customers who can cut or shift load on request. It is an active area of policy and is changing quickly.
- Interconnection
- The process and equipment that physically connect your site to the grid. For a load, that usually means a service agreement with the utility and, for big loads, new or upgraded substations and lines. For a power plant it means a separate generator interconnection process with the grid operator.
- Interconnection queue
- The waiting list of projects asking to connect to the grid. Most often used for generators, which line up for studies in the order they apply. A large load can face a similar line for studies and upgrades, depending on the utility and grid operator.
- Kill test
- A quick screen that looks for reasons a site cannot work before money is spent on it. The idea is to find deal-killers early: no available power, a moratorium, flood risk, a protected area or an unworkable timeline. GridPermit's free site check is a lightweight version.
- Large-load tariff
- A utility rate schedule written for very big new customers such as data centers. Most rate schedules assume a customer who uses a modest amount of power. A large-load tariff sets separate rules for customers above a size threshold: how they apply, what they must commit to, what collateral they post and what they owe if they leave early. The threshold, in megawatts, differs by utility.
- Load factor
- Your average power draw divided by your peak draw. A load factor near 100 percent means steady use. Data centers tend to have high load factors, which is one reason utilities want a minimum bill: the load is expected to be constant.
- Load letter / request for service
- Your written request to a utility for a specific amount of power at a specific place. The usual first formal step. It typically states size, location, timing and how the load will ramp, and it starts the utility's review.
- Moratorium
- A pause on approving or connecting a type of project in a given area. Can be set by a city, a county, a state or a utility. A site inside one may be unbuildable for the time it lasts, so it is one of the first things to check.
- MW and MVA
- Two ways to measure the size of a load. Megawatts (MW) measure real power. Megavolt-amperes (MVA) measure the total electrical size, including power that does no work. Some tariffs set their size threshold in MVA and others in MW, so a project near a threshold should check which one applies.
- Point of interconnection (POI)
- The exact place where your facility meets the utility's system. Usually a substation or a transmission line. Distance to the nearest suitable point, and the capacity available there, are among the biggest drivers of time and cost to get power.
- Ramp period
- The build-up time during which your contracted load grows to its full size. Many tariffs let a customer reach full contracted load in steps over a few years instead of on day one. Whether the contract term is counted from the start of the ramp or from its end differs by tariff, so read it closely.
- RTO / ISO
- The grid operator that runs the wholesale power market for a region. Examples include PJM, ERCOT and MISO. Which operator serves a site shapes the market rules, the studies required and often the timing of large-load connections. Some parts of the country are not in an organized market.
- Site control
- Proof that you own, or have the right to buy or lease, the land. Some tariffs and queues require it before a project counts toward the utility's planning, to keep speculative requests from crowding out real ones.
- Substation
- A facility that steps voltage down from the transmission grid so it can be used or distributed. A data center of any real size normally needs its own substation or a dedicated feed from one. Lead times for the major equipment, such as large transformers, can be long.
- Take-or-pay (minimum bill)
- You pay for a minimum amount of capacity whether or not you use it. A minimum bill, often written as a percentage of the capacity you contracted for, that applies each month regardless of actual use. It lets the utility recover the cost of building for you even if your load arrives late or smaller than planned.
- Time to power
- How long from asking for service until the utility can actually deliver it. Often the deciding factor for a data center site. It depends on available capacity, needed upgrades, equipment lead times, studies and approvals. Where a filing or utility states a figure, it appears on that utility's page.
- Transmission and distribution
- High-voltage long-distance lines versus lower-voltage local lines. Large loads usually connect at transmission or high-voltage distribution levels. Which level you connect at affects cost, schedule and which tariff applies.
General information, not legal or engineering advice. A signed agreement and the utility's own filings control.