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Electricity Rate Designs for Large Loads: Evolving Practices and Opportunities

Electricity Rate Designs for Large Loads: Evolving Practices and Opportunities

Full Title: Electricity Rate Designs for Large Loads: Evolving Practices and Opportunities
Author(s): Andrew Satchwell, Natalie Mims Frick, Peter Cappers, Sanem Sergici, Ryan Hledik, Goksin Kavlak, Glenda Oskar
Publisher(s): Berkeley Lab
Publication Date: January 22, 2025
Full Text: Download Resource
Description (excerpt):

Electricity demand from large load customers such as data centers is projected to grow significantly in the near term. While data centers play an important role in advancing technology innovation and economic growth in the United States, data center energy needs present challenges and opportunities for electricity supply and infrastructure. This technical brief serves as a foundation for the discussion of issues and sharing of perspectives among utilities, regulators, large load customers, and other stakeholders. As utilities and regulators explore rate structures to address growing data center electricity demand, several issues have emerged:

– Fair allocation of electricity system costs to large-load customers without unfair shifting of costs to other customers
– Appropriate mitigation of the financial risks associated with stranded assets from underutilized utility system investments
– Mitigation of operational and resource adequacy risks if electricity demand exceeds supply
– Appropriate risk-sharing in commercializing newer electricity technologies such as advanced geothermal, small modular reactors, and long duration energy storage
– Accommodating the diverse needs of large-load customers, such as having the option to match electricity consumption with output from carbon-free resources or using onsite generation to provide system capacity

The technical brief also identifies key design elements that aim to address these issues and uses leading examples from pending and approved rate structures, agreements, and special contracts to ground the elements in practice.

All statements and/or propositions in discussion prompts are meant exclusively to stimulate discussion and do not represent the views of OurEnergyPolicy.org, its Partners, Topic Directors or Experts, nor of any individual or organization. Comments by and opinions of Expert participants are their own.

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