Black Hills Energy plans another bold backup move with Microsoft
On the heels of two innovative contracts last year between Black Hills Energy and Microsoft, another is in the works at the technology giant’s Cheyenne, Wyoming, data center site that’s served by the utility.
“We are now discussing utilizing natural gas to fire up Microsoft generators rather than using diesel fuel,” Shirley Welte, vice president of Wyoming operations for Black Hills Energy, told Daily Energy Insider on Monday.
Specifically, a pipeline would have to be installed to pump the natural gas that would serve the Microsoft backup electricity generators, Welte explained. It would be a much cleaner energy solution, she said.
At the same time, a natural gas pipeline also would eliminate the need to have 18-wheelers continue to deliver diesel to fuel the generators. Truckers find it challenging to travel on the snowy and icy roads to deliver diesel during Wyoming winters, she said.
The pipeline could provide what is an abundant renewable fuel whenever Microsoft needed it. “The natural gas would be ready and waiting,” Welte said.
Welte added that the project is a work in progress, but the companies hope to complete plans in the next year.
“The pipeline has been proposed to deliver natural gas. The details on cost, timeline, etc., are considered confidential at this time and are not public information,” she said.
Sustained growth
The natural gas pipeline project is part of a bigger plan by Black Hills Energy to help ensure that the Microsoft data center site continues to grow to meet consumer demands for tech services. And that means guaranteed power.
Microsoft always builds a megawatt of onsite backup generation for every megawatt of grid-supplied electricity consumed at its data centers, according to officials, but when discussions began with Black Hills, talks segued into the need for even newer generation plans.
“So even though we have excellent reliability, backup allows zero down time and that’s extremely important,” Welte said. “We want to isolate any impacts to this particular customer.”
In July 2016, the Wyoming Public Service Commission approved a novel tariff between Black Hills Energy and Microsoft that allows the utility to tap the company’s Cheyenne data center’s backup generators. This was good for Black Hills – which didn’t have to build a new power plant and pass on costs to customers – and for Microsoft, which retains more renewable energy resources on hand.
And the agreement means that Black Hills has access to the data center’s backup to meet its peak demand needs. This allows the utility to purchase power from the market on behalf of Microsoft at a firm price to meet their energy needs, Welte said. The tariff is open to any Black Hills retail customer with a load over 13 megawatts that can also deliver generation as utility capacity, though Microsoft is currently the only such customer.
The tariff is good business for Microsoft and for Black Hills because the data center actually becomes “an asset for the local grid, maintaining reliability and reducing costs for ratepayers,” said Christian Belady, general manager of cloud infrastructure strategy and architecture at Microsoft, in a statement.
Wind energy
In addition to a possible natural gas pipeline and the approved tariff, Microsoft and Black Hills Energy have added wind energy to the local power grid in Cheyenne.
They’ve contracted under a long-term agreement for the tech company to purchase 59 megawatts of renewable energy certificates from the Happy Jack and Silver Sage wind projects. Both of the wind farms are adjacent to Microsoft’s Cheyenne data center.
The combined output of the wind projects will produce enough energy on an annual basis to cover the annual energy used at the data center, according to Microsoft. Any excess energy may be used by other customers and if there’s no wind on any given day, then Black Hills will provide electricity from the other backup sources.
“We don’t know of any other utilities providing these types of services or solutions. We think what we’re doing is innovative. We have a strong desire to help our business partners grow, expand and be successful,” Welte said. “We have a long history of working closely in the community with our partners to help them succeed.”
Black Hills Energy, a subsidiary of Black Hills Corp., operates natural gas and electric utilities. It serves 1.2 million customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming.
