Data centres told to “ride through” grid faults, under proposed new rules to lessen risk of blackouts

Data centres won’t be allowed to jump off the grid to protect their kit during network wobbles, according to new rules proposed by the energy market rule maker, as it seeks to manage the integration of major new loads on increasingly renewable-powered networks.

The draft technical standards, published by the Australian Energy Market Commission (AEMC) on Thursday, mean “large” inverter-based loads wishing to connect to the grid must meet specific disturbance ride-through requirements.

For data centres, this means that facilities with a load of 30 megawatts (MW) and higher must have the technical capability to stay connected during voltage and frequency disturbances, or to recover power within defined timeframes. And the size of a centre will dictate how onerous the rules will be.

But the AEMC is also keen to avoid data centres passing excessive extra costs on to customers, so has proposed to make the process easier and less expensive by aligning the new Australian standards with those in “comparable international jurisdictions.” 

The draft grid access rule comes as the reality of large data centre loads dawns on energy regulators around the world, and at a time of rising awareness that the new industry comes with challenges to the way Australia plans for, and prices, electricity. 

“Data centres aren’t passive loads anymore; they’re active grid participants. When they fail to ride through faults, it has the potential to trigger cascading failures and blackouts,” said Australian Energy Market Commission (AEMC) chair Anna Collyer.

“We have seen this happen overseas, and it can cost consumers billions in lost electricity supply or emergency network upgrades.

“These proposed standards would help prevent that. They are designed to enable investment with certainty, not block it. Data centre operators would know exactly what’s required upfront. Network service providers would be able to apply technical connection standards consistently.”

In July 2024, 60 data centres in the US state of Virginia pulled 1,500 megawatts (MW) off the grid simultaneously during a single fault. 

The AEMC says similar incidents in Ireland and Texas have stopped new data centre connections entirely in some places. 

Ride-through rules

Data centres have long been an industry with huge potential, but it is the AI juggernaut that has transformed the industry into the kind of money maker that has governments – such as Victoria – falling over themselves to invite them in.

The enormous demands for electricity required by servers used to train AI, and to process AI requests, has led many to pitch Australia as the perfect spot – plenty of land and some of the best renewable energy resources in the world. 

But the opportunity, which mammoth and remote projects such as Sun Cable are leaning heavily into, is balanced by risk.

A large-scale, 100 MW data centre tripping off the grid could set off a disastrous chain reaction across the local network, potentially leading to cascading blackouts.

For data centres, meanwhile, the inconvenience of losing power can be considered preferable to the risk of damaging highly sensitive electronic equipment and critical cooling systems.

Major industry players have argued that forcing data centres to “ride through” fluctuating voltage levels rather than disconnecting can shorten the lifespan of their facilities or cause immediate, permanent damage to components.

A big data centre project that requires millions of dollars of grid augmentation, only to go bust, will load those millions of unnecessary costs onto households. 

The AEMC’s proposed rule, which would not be retrospective, starts by creating a new standard for large inverter-based loads, to differentiate data centres from large loads such as mines or refineries that passively consume power from the grid.

Then it slices the industry up by size, lifting the threshold at which the new rules apply from centres with demand of 5 MW to those of 30 MW or more.

The AEMC hopes to fend off grid disconnections with a requirement that data centres “ride-through” voltage wobbles.

Data centres will have to stay connected under specific conditions and the AEMC also wants to limit how much a centre can change its active power consumption during a network disturbance.

The push-back against this particular proposal has already begun.

Last year a coalition of data centre operators including Meta, Google and Amazon forced Texas’ grid operator ERCOT to nix a similar rule.

Amazon, via AWS, has already pushed back on the AEMC’s ride-through requirements.

In a submission in July last year on the broader suite of changes the AEMC is looking at, it said data centres should only have to share limited information about ride-through capabilities, and that protecting its infrastructure must “take precedence” if their are problems in the network.

All of the ideas the AEMC is pitching mimic those already underway or proposed in Texas, Alberta and Finland, a move the rule maker says is meant to streamline the connection process and allow data centre operators to use the same equipment and feasibility studies as they do elsewhere.

The rise of the grid forming inverter?

As for the risk of costs being passed on to consumers, the AEMC has two solutions – one of which is likely to be very interesting to battery operators in particular. 

One is that new technical standards will prevent the cost of managing system security being passed on. The other is that transmission operators will be allowed to contract system strength from other parties, instead of building their own.

“The draft rule allows HVDC operators to contract for system strength from existing providers, such as synchronous condensers or generators, where this meets the required performance standard,” the AEMC’s draft rule says. 

Battery makers are pushing grid-forming inverters as a cheaper, quicker alternative to expensive synchronous condensers, spinning machines that use no fuel but maintain the voltage “heatbeat” of the grid. 

Last year Tesla argued in a white paper that grid forming battery inverters are technically capable of delivering reliable inertial responses.

Even AEMO believes in it, launching a series of trials of islanded 100 MW networks last year, and writing a first of its kind contract with the Koorangie battery to supply system strength in Victoria. The battery, owned by Edify Energy, uses Tesla grid forming battery inverters.

But transmission companies are not yet convinced they can deliver all of these services and instead are spending many billions of dollars on installing dozens of giant synchronous condensers instead.

But the AEMC may have created a pincer move to force those companies to look again, by allowing them to contract that same grid strength while also streamlining data centre connection processes. 

Twitchy regulators

The new rules for data centres come as jurisdictions around the world take a closer look at what the new industry is doing to, and for, energy systems. 

In Australia, the federal and New South Wales (NSW) governments are considering making data centres pay more for accessing the grid, to guard against city-sized demand pushing prices up for households and other energy users. 

That is a move already being implemented by twitchy regulators in the likes of the US, Japan and Malaysia. 

A coalition of organisations is also calling on the federal government to require data centres to build new renewable energy supplies as a condition of playing in Australia.

Upcoming federal data centre principles are expected to create the lower burden of renewable energy targets for data centres if they want fast-tracked planning approvals.

Currently, data centres make up about 2 per cent of Australia energy consumption, according to AEMO estimates. 

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