A South-colorado based upcoming cryptocurrency data center estimated to be worth $100 million has decided to add 50 megawatts of new load for its energy consumption. The news has not gone down well with the clean-energy advocates who believe the decision might hamper the state and local renewable goals further from the reach.
Critics belive the upcoming data center won’t be the first of the kind to benefit from the new state economic development law. They fear that the new state policy would attract several data center operators to the state which would surely have a great impact on the state’s electricity consumption. They believe the state government should focus on curbing such commercial energy use instead of providing incentives for the sake of economic development.
The upcoming data center will be based out in Pueblo and it would be supplied with the demanded 50 megawatts of energy by the Black Hills Energy cooperation. Critics fear that the promised lease of energy might lead to several issues if the Black Hills Energy cannot match the expected demand through its renewable resources.
Pueblo’s Energy Future group wants to form a municipal utility to reach the city’s 100% renewable goal belive that the upcoming data center might wipe out all the renewable gains made by the city in the past. One of the members of the Energy future group David Cockrell said,
“Fifty more megawatts of this largely coal-fired power will essentially wipe out the gains in the renewable generation they boast from their new Busch Ranch II wind farm”
The south-Colorado city of Pueblo is best known for its steel mills and does not boast of a booming economy. The city paints quite a contrasting picture to its neighboring cities like Colorado Springs which are doing much better in terms of the economy due to their knowledge-based state policies. Pueblo currently has high poverty rates and low housing prices. The Pueblo City Council in 2017 set a goal of achieving 100% renewable energy consumption by 2035. The move seemed quite novel and everyone got on-board to achieve it, where Pueblo County commissioners passed a resolution of their own.
Only a few months later after committing to achieving 100% renewable energy use, the then governor John Hickenlooper signed a new state law to test the commitment of the citizens towards that goal. The law allows regulated electric utilities to provide discounted rates to large scale businesses for 10 years. The law is being seen as a move to help stimulate further economic development in Colorado.
Black Hill Energy Becomes First Utility To Get Approval For Discounted Rates
Black Hill Energy which is based out in South-Dakota and serves Pueblo energy needs became the first utility to seek permission from the city council to avail its services at a discounted rate. The firm applied for the approval in January right after the law came into the effect and proposed to sell 50 megawatts of discounted energy to an unknown company. The utility firm assured the city council that the move will deliver $25 million to $40 million worth of community economic benefits in the first five years.
50 megawatts of energy is quite a substantial amount given it accounts for one-tenth of the Black Hill Energy’s peak load. Although the law does not require the utility provider to state the source of their energy procurement, but Black Hill Energy stated that it will buy the required amount from the wholesale energy markets.
There were months of debate over the identity and qualification of the firm to which Black Hill has decided to sell the discounted energy to, which was later revealed to be AX2 Data Center. The Colorado Public Utilities Commission voted 2-1 in favor of allowing Black Hill Energy to provide discounted energy to the said data center.
The critics were mostly irked because of the fact that the council did not impose any renewable requirements to the Black Hill mainly because they believed that the delay in approval might put the economic benefits at risk.
However, the Colorado state law requires Black Hill to manage 30% of its energy from renewable resources by 2020. The company is quite confident in meeting those requirements mainly due to the 60-megawatt Busch Ranch II wind farm which will be completed this fall.
Western Resource Advocates, an environmental advocacy group filled with the utility commission opposed the approval since there is a lack of assurance from the data center operators over the source of electricity. The group demanded the data center to directly tethered to renewable sources.
Gwen Farnsworth, one of the senior energy policy advisor for the environmental advocacy group wrote,
“In order to avoid backsliding from valuable gains on emissions reductions in the transition to clean energy resources, incremental load growth should be served by renewable generation.”
The dissenting commissioner Frances Koncilja shared similar concerns and said that the agreement completely ignores the renewable energy goals set by the commission. Koncilja went onto to accuse her colleagues of making political decisions than the regulatory ones.
A few others came out in support for the economic growth from the current controversial project and stated that the data center won’t be a threat to the city’s renewable goals as most of the electricity produced in the region comes from renewable resources. One of these supporters who are in favor of the current data center includes the current mayor of the city Nick Gradisar. He said,
“I do not think the company’s presence or its energy needs will dramatically impact our vision for renewable energy. I personally believe that the cheapest energy will be from renewables in the very near future.”
One of the officials for the upcoming data center stated that the project would be completed by the end of 2019 and it can be made partially operational by September.