'Powering Data Center Alley' with David Schleicher, President & CEO, Northern Virginia

Summary

In this episode of the Energy Central Power Perspectives Podcast, hosts Jason Price and Matt Chester sit down with David Schleicher, President & CEO of NOVEC, to discuss the booming data center industry in Northern Virginia. The conversation delves into the unique challenges and opportunities presented by the rapid growth of data centers, particularly in NOVEC's service area, dubbed 'Data Center Alley.' From balancing the demands of residential and massive data center customers to leveraging renewable energy sources and advanced technology, the episode provides a comprehensive overview of how NOVEC is navigating these dynamic changes while maintaining its mission as a non-profit cooperative. Schleicher shares insights into operations, infrastructure development, and the importance of building resilient, respectful relationships with data center clients.

Highlights

• Northern Virginia's 'Data Center Alley' is evolving with high data center concentration driven by tech booms and geographical advantages. 🚀
• NOVEC, a non-profit cooperative, serves both residential and expansive data center clients, balancing diverse energy needs. 🔌
• The shift from residential to data center power demands has led NOVEC to innovate and optimize to satisfy both customer types. 🔄
• David Schleicher discusses the integration of renewable energy sources like solar and biomass into NOVEC's operations. 🌞
• The podcast explores how data centers impact local communities' economies and real estate dynamics in Northern Virginia. 🌆

Key Takeaways

• Data centers are expanding rapidly, especially in Northern Virginia's 'Data Center Alley,' presenting both challenges and opportunities for utilities. 🤖
• NOVEC, being a non-profit cooperative, focuses on balancing affordability, reliability, and sustainability for its diverse customer base. ⚖️
• David Schleicher emphasizes the significance of building respectful and personal partnerships with high-demand data center clients. 🙌
• Technological advancements, like advanced metering and satellite imagery, help NOVEC manage and optimize its operations efficiently. 🚀
• The interaction and impact of data centers on local communities vary greatly, depending on proximity and economic benefits. 🏡

Overview

In this engaging episode, Jason Price and Matt Chester explore the world of data centers with David Schleicher from NOVEC. Dubbed 'Data Center Alley,' Northern Virginia is at the epicenter of a data center boom challenged by demands for electricity and infrastructure. This conversation unveils how NOVEC, a non-profit cooperative, is addressing these demands while staying true to its mission of providing reliable and affordable energy.

Schleicher outlines NOVEC’s strategic approach to energy procurement, customer service, and infrastructure development. With advanced metering and a push towards renewables, NOVEC is not just keeping pace but setting the standard in efficient, sustainable operation amidst a tech-savvy clientele. His insights highlight the cooperative’s commitment to resilience in the rapidly transforming energy landscape.

Beyond the technical aspects, the episode sheds light on the human side of NOVEC’s services—nurturing robust relationships with data center clients and community involvement underscores their holistic approach to energy management. This timely dialogue inspires anyone interested in the intersection of technology, energy, and community development.

Chapters

• 00:00 - 03:00: Introduction and Overview of Data Centers Data centers are a booming industry, primarily situated in major urban areas across Virginia, Georgia, Texas, and California. However, due to rising land costs, these centers are increasingly being established in less populated rural areas, spurring coveted economic development. The widespread adoption of AI and cloud-based computing is fueling this expansion. The chapter also discusses the significant power requirements necessary to operate these data centers.
• 03:00 - 07:00: Energy Supply and Challenges for Utilities This chapter discusses the challenges utilities face in balancing increasing energy demands from massive load centers with the need to promote energy efficiency and clean energy. It explores strategies utilities can employ to modernize the grid while maintaining affordability, accessibility, and reliability. The setting for this discussion is Northern Virginia, known for its high concentration of data centers, also referred to as "data. "
• 07:00 - 12:00: Introduction of Dave Schleicher and NOVEC The chapter introduces Dave Schleicher and NOVEC, highlighting NOVEC's role as a local Electric Cooperative. Unlike investor-owned utilities (IOUs) or municipalities, NOVEC focuses on fulfilling its obligation to serve while adhering to its nonprofit mission. The significance of data centers as an increasingly dominant customer base for utilities is discussed as part of a broader shift in the energy sector.
• 12:00 - 20:00: Operations and Responsibilities of NOVEC The chapter discusses the role of data centers in the energy sector, particularly focusing on how they create both challenges and opportunities for the utilities. It highlights the trending impact of data centers on power sectors globally. Furthermore, it emphasizes discussions from the energy community on how utilities can leverage smart technology to address related issues.
• 20:00 - 30:00: Data Center Evolution in Northern Virginia The chapter explores the evolution of data centers in Northern Virginia. It highlights how demand forecasting and partnerships with renewable energy providers are crucial for meeting increasing power demands while ensuring efficiency, sustainability, and reliability. The transition aims to drive both innovation and community development in these emerging data center hubs.
• 30:00 - 40:00: Challenges and Strategies for Balancing Customer Needs The chapter introduces Dave Schleker, President and CEO of Northern Virginia Electric Cooperative, as a guest on the Energy Central Podcast. The hosts are Jason and Matt, based in New York City and Orlando, Florida, respectively. They express excitement in welcoming Dave to discuss strategies and challenges in balancing customer needs in the energy sector.
• 40:00 - 50:00: Data Center Development Process and Challenges Novik is a member-owned, not-for-profit electric distribution cooperative focused on providing safe, reliable, and affordable energy. This organizational structure influences their approach to energy procurement and customer service. Unlike investor-owned utilities, Novik prioritizes the interests of its members, reflecting its cooperative principles in its operations and decision-making processes.
• 50:00 - 60:00: Impact of Data Centers on Local Communities The chapter discusses the role of a distribution cooperative with no bulk electric transmission facilities, highlighting their reliance on a 49 megawatt biomass plant. This plant utilizes renewable forest waste from the lumbering industry, emphasizing sustainability. The cooperative prioritizes high reliability and low costs for its members, achieving a 99.99% reliability rate.
• 60:00 - 70:00: Financial Implications and Stability In this chapter, the financial implications and stability of a not-for-profit electric cooperative in Virginia are discussed. The cooperative is unique as it offers the lowest residential rates among regulated utilities in the state. It operates as a not-for-profit entity, meaning any profits or margins made by the end of the year are allocated back to its members. These members are not just customers but also owners, holding an equity position in the cooperative based on their share of the margins. Governance of the cooperative is a key aspect highlighting how it is structured and operationalized.
• 70:00 - 80:00: Future Challenges and Opportunities for NOVEC In the chapter titled 'Future Challenges and Opportunities for NOVEC', the discussion focuses on the complex task of managing multiple priorities in the energy sector, such as affordability, reliability, and sustainability. A key point is how NOVEC, guided by its member-elected board of directors, is facing these challenges in Northern Virginia. It highlights the intricate balancing act required to meet diverse stakeholder needs in an ever-evolving industry.
• 80:00 - 100:00: Lightning Round: Personal Insights from Dave Schleicher The chapter features insights from Dave Schleicher, focusing on the expectations of affluent and well-educated customers in terms of utility services. Schleicher acknowledges the challenges of balancing reliability and affordability. The discussion highlights the utility's commitment to improvement by targeting outage-prone areas and providing members with access to energy efficiency resources and information on energy savings.
• 100:00 - 114:00: Advice and Closing Remarks The chapter 'Advice and Closing Remarks' highlights sustainable energy initiatives, including the use of forest waste for electricity in Southern Virginia. NOVEC's collaboration with utility-scale solar developers and recent contracts for 40 megawatts of battery storage are emphasized as efforts to manage peak demands. Additionally, the chapter notes that the majority of energy purchases are sourced from the PJM marketplace.

'Powering Data Center Alley' with David Schleicher, President & CEO, Northern Virginia Transcription

• 00:00 - 00:30 data centers are big business most data centers are located in major urban areas in Virginia Georgia Texas and California as land becomes more expensive these data centers are now being located in less populated rural locations leading to coveted Economic Development widespread adoption of AI and cloud-based Computing is driving this grow grow much of the power to run these
• 00:30 - 01:00 massive load centers comes from your local utility how can a utility keep up with a new load demand promote Energy Efficiency drive clean energy and continue to upgrade and modernize the grid while keeping costs affordable accessible and reliable on today's episode we're going to take you to one of the largest concentrations of data centers in the world to Northern Virginia commonly refer ref to as data
• 01:00 - 01:30 center alley and find out how not an IOU or mun but is a local Electric Cooperative that is fulfilling its obligation to serve while staying true to its nonprofit Mission next on energy Central's power perspectives [Music] podcast Matt a massive shift is underway with data centers quickly becoming the dominant customer base for utilities can you share with us what you're seeing about about this trend from the energy
• 01:30 - 02:00 Central Community sure Jason and and on energy Central just like everywhere else in the world of energy the the topic of data centers and their impact to the power sector it's it's been trending for some time now and from what I've gleaned from the energy Central Community data centers and their energy consumption no matter where they are geographically it's creating both challenges and opportunities for the utilities that serve them and so in particular members of our community have been discussing how utilities can leverage smart technology
• 02:00 - 02:30 Aid driven demand forecasting and Partnerships with renewable providers to try to find creative ways to uh meet that Growing Power demand while also pushing for you know overall efficiency sustainability and reliability and this shift it's not just about keeping the lights on it's about driving Innovation and Community Development in these new data center hubs and and those are the types of themes that I'm hoping to learn more about in today's conversation thanks Matt and thank you to West Monroe our sponsor of today's show I'm J price
• 02:30 - 03:00 energy Central Podcast host and director with West Monroe coming to you from New York City and with me as always from Orlando Florida as energy Central producer and Community manager Matt Chester and we are excited to welcome today's guest to the episode Dave schleker president and CEO of novic the northern Virginia electri Cooperative Dave schleker welcome to the energy Central Power prospectives podcast good morning Jason and Matt my pleasure to join you Dave we're thrilled to have you here I want to start by
• 03:00 - 03:30 making sure we're all on the same page about novik's business structure what does it mean to be a distribution Cooperative compared with an investor-owned utility and how does this influence your approach to energy procurement and customer service so as a member owned not for-profit electric distribution Cooperative no is focused on providing safe reliable and affordable energy to our members or our customers
• 03:30 - 04:00 as a distribution Cooperative we have no bulk electric transmission facilities and our only generation is a 49 megawatt biomass plant which burns renewable Forest waste from the lumbering industry the resounding message from our customers our members is to keep the lights on and to keep the bills low nove is very proud of 99.99% reliability and we currently have the
• 04:00 - 04:30 lowest residential rates among regulated Electric utilities in Virginia the not for-profit Cooperative part that you mentioned means that our margins or profits at the end of the year are allocated back to our members who used energy during that year so our customers are our members who are also our owners owning an equity position in the Cooperative based on their allocation of margins and we're governed I'll add by a
• 04:30 - 05:00 member elected board of directors okay and you know in this day and age all stakeholders across the grid seem to be constantly juggling the various priorities that I mentioned earlier of affordability reliability and sustainability among others so what's the novic approach when it comes to striking the right balance here no customers are absolutely no different and Northern Virginia is a
• 05:00 - 05:30 very affluent and well-educated service territory so maybe they rise above even the average customer in terms of expectations of their utility and you are very correct to say it's a balancing act as I noted earlier we feel we check the boxes on reliability and affordability but we're always looking to get better by addressing outage vulnerable areas to make sure our members have access to Energy Efficiency and energy saving information such as
• 05:30 - 06:00 our Advanced metering data our biomass plant is a great example of using Forest waste in Southern Virginia to generate electricity Novac has also contracted with utility scale solar developers and just signed contracts for 40 megawatts of battery storage to help us manage Peak demands most of our energy purchases come from the pjm marketplace so if you
• 06:00 - 06:30 look on the pjm website you'll see solar wind and nuclear are about 35% of their portfolio and it's carbon free while natural gas consistently makes up about 50% of the portfolio while no will look to expand the renewable portion of our portfolio we'll do so in a financially responsible manner we currently do not have any renewable or carbon free mandates from Regulators or state
• 06:30 - 07:00 government and no corporate targets as well okay I want to dig into the data center discussion so as I mentioned in the in the intro novic is in data center alley this region of Greater DC in Northern Virginia has expanded rapidly in the past decade due to the tech boom so talk to us about that Evolution and how and why did it happen so Northern Virginia as as you can tell on the map is directly adjacent to the Washington DC metropolitan area which means we are
• 07:00 - 07:30 always growing and somewhat Recession Proof the Ashburn area of Northern Virginia was one of the original hubs of the internet and between the federal government defense contractors and educational institutions all have critical internet requirements for Speed and redundancy this function has always been here and no had our first AOL data
• 07:30 - 08:00 center served about 20 years ago but with the move to Cloud increased use of digital devices and now ai the growth rate is exponential okay so let's just understand here you were predominantly serving residential and Commercial customers but this growth has forced the market to flip in some respect so that the low demand is now shifted to these amense data centers so can you elaborate
• 08:00 - 08:30 on any of the challenges that arise from balancing the needs of these two vastly different customer groups certainly and you're correct residential subdivisions shopping centers and planned communities have been our growth engine since the 1990s we grew consistently at greater than 5% annually but as available land has become more scarce homes and Tow houses smaller our growth rate has
• 08:30 - 09:00 decreased also homes have become more energy efficient residential sales growth is now closer to one maybe 2% lower than the rate of inflation and with some sensitivity to weather what we're now seeing with data centers our energy sales growth in excess of 15% per year and that load is serve generally via large dedicated substations not underground distribution ution infrastructure to homes data
• 09:00 - 09:30 center reliability is generally not impacted much by storms falling trees motor vehicle accidents or even squirrels so we need to keep a an eye on reliability for our Legacy customers while building out all of this new infrastructure we want to Delight all of our customers which Begins by recognizing they have different drivers of satisfaction I'll also add
• 09:30 - 10:00 that this change has had us pivot our Workforce so the workforce skills needed to serve data centers is somewhat different than the workforce skills to serve residential customers so we've had a Workforce pivot as well yeah I'm sure you did so how about this walk us through the process of getting one of your data center customers online does it look different based on the size location or customer and what's the timeline from Project planning to then fully being on the grid that's a
• 10:00 - 10:30 question we get daily so happy to answer that one nov has taken great strides in the last couple of years to refine and standardize the process for serving data centers data centers have actually been appreciative of the new process and structure we require data centers to have approved zoning site plans and local government approval we require a construction schedule and a load ramp we also require
• 10:30 - 11:00 periodic payments to cover our costs in some cases this separates serious inquiries from speculative inquiries we have a standard template and topology for our substation and in most cases require that substation to be on the data center parcel we've staffed up a project management and construction management team to handle the Cadence of a project
• 11:00 - 11:30 and to keep all parties accountable for making their dates from first submission to substation energization right now it's taking about four to five years that's driven largely by local permitting requirements and procurement of long leadtime material a 150 MVA power transformer takes from 40 to 48 months to order and deliver the Data Center buildings can often be completed in 24 to 30 months so that
• 11:30 - 12:00 mismatch is constantly being worked on to improve our planning and scheduling skills Dave that was really helpful now let's dig a bit further into this describe to us who owns the infrastructure some of the ballpark costs associated with the building of the infrastructure and and how is that infrastructure cost recovered give us an idea of what basically what this all means for a Data Center and noic certainly cly as I indicated in in my
• 12:00 - 12:30 last answer uh we do require data centers to make periodic payments and those payments over the life of Designing planning constructing commissioning the substation we recover contribution and adaa construction from the data center customer that capital investment on behalf of the data center customer means that once they go into service their
• 12:30 - 13:00 rate schedule for service from NOC is largely recovering just operating and maintenance costs because the capital cost has already been funded by the data center ahead of time that methodology helps us drisk the incumbent members of No from taking on such a large capital investment how are the communities with these data centers reacting to these changes you men mentioned the real
• 13:00 - 13:30 estate prices and and such do they welcome them into the area or is there push back from what it might mean to their relations with novic and the wher grid so another great question and the answer clearly depends on who you ask if the data center is 200 feet from your home and now occupies what was an open field you may have one opinion if you just got offered a million dollars an acre for your land your answer might be different so data
• 13:30 - 14:00 centers just like any other land use those sighting decisions rest with local government not the electric utility nove does not actively Market or seek out data center development if local government approves the sighting of data centers as part of its comprehensive land use plan then no V will serve them just like we've served any other load that's a very practical
• 14:00 - 14:30 response and a very human response I mean in here being in Manhattan same thing you got a rundown building tenant doesn't want to move out developer has uh present some options and they um the attitude perhaps could change so we see this all the time everywhere you know I want to ask you about the affordability for For a Moment by you know by taking on such a men's data center power loads and there similarly large monthly utility bills what sort of financial risks does that bring up should the data center end up
• 14:30 - 15:00 going out of business after you've adjusted to that Revenue Source certainly no has always prided itself on being very financially stable with a strong balance sheet but you're correct that customers with monthly bills approaching $5 million do pose a risk we have a very robust risk management plan to make sure we have sufficient protection there are many different kinds of data centers in this industry
• 15:00 - 15:30 and we modify our approach to each one some of the companies we deal with quite honestly the world will end before they go bankrupt but you can never be too careful NOC has also moved some accounts to weekly billing so the traditional 30-day monthly bill has now been reduced to weekly billing to improve cash flow stress on both parties Dave looking ahead what do you see as the biggest
• 15:30 - 16:00 challenges and opportunities for novic in navigating the growing demands of data centers and maintaining service for your residential customers are there any currently unexplored Technologies or strategies that you can see coming into play in the coming years short no has 180,000 customers with almost a billion dollars in equity in our company we need to take great care of both incumbent customers and new customers NOC is implementing an advanced metering
• 16:00 - 16:30 project we're improving call center telepan improving storm management processes addressing pockets of poor reliability no began using satellite imagery last year to better address danger and dying trees we're also adding a drone program to our strategic plan in 2025 as a Cooperative serving our communities is a core value and no is
• 16:30 - 17:00 very involved both financially and volunteer time at food banks military veteran organizations and youth education events it's a remarkable balance that's on your shoulders and it seems like your team is doing a great job a lot of risk and a lot of need and demand going on in your in your jurisdiction and being a Cooperative it's very impressive it's an impressive story and I really appreciate you taking time to share some of this Insight with us I'm sure got a full load of a busy day and and
• 17:00 - 17:30 thank you again for taking time out we Dave we're going to give you the final word but we want to Pivot now to what we call the lightning round which gives us an opportunity to learn a little bit more about you the person rather than you the professional we're gonna throw a bunch of questions at you we ask you for one word response or one quick phrase so Dave are you ready I'm already let me have it all right let's take it away what's your ideal way to spend a day off what a day
• 17:30 - 18:00 off I'm saving that for the near future got it okay best vacation spot you've ever visited uh really have to go with ar Ruba just love the climate love the uh the culture so I'll go with ar Ruba if someone is visiting the DC or Northern Virginia area are there any hidden gems you'd recommend they check out outside of the most popular tourist spots you know the great part of Northern Virginia is you've got monuments and museums to the East and
• 18:00 - 18:30 you've got waterfalls and Hiking to the West uh if you like crowds and traffic you can go to the East and if you like open space and Solitude you can go to the West so lots of hidden gems but the best part of Northern Virginia is you know if you go east you got one part of the world and if you go west you got a completely different part of the world so we sit we sit right on that dividing line it's a beautiful place to live H interesting all right uh Dave we're
• 18:30 - 19:00 collecting lightning round questions from past podcast guests to ask future guests so we recently had Arch Ral of span on the podcast and his question for a future guest was this what is the most impactful thing you did this year to positively impact climate change well it may not be super positively impactful but I selected a Tesla as my company car it makes me a role model to employees
• 19:00 - 19:30 and neighbors and puts the example out there of using a carbon free Transportation Source though I have to admit I'm still getting used to it on longer trips yeah all right now it's your turn what Lightning Run question related to energy or off-the-wall do you want to challenge a future guest to answer I would ask other leaders what have you done or what have they done to p pass on the legacy of their knowledge
• 19:30 - 20:00 and their experience in this most vital industry to the next generation of leaders nice and Dave last question what are you most passionate about I think this is an answer that comes from the people I work with as much as from me but it's showing up each day and never giving up some days and some problems are harder than others but they generally don't get better with time or with
• 20:00 - 20:30 procrastination so you need to muster your smart people and get things done nicely stated all right and as I said Dave we're going to give you the final word so knowing that your audience the audience on energy Central uh Power perspectives are members of your industry and the audience of peers and the SE Suite listening in so what is the one piece of advice for them particularly if the rise in data centers is newer to them compared with what you've had to deal with what would you share share as today's lasting message I
• 20:30 - 21:00 would say to them embrace the challenge there is plenty of room for electric utilities of all sizes and Scopes to be successful in serving this Emerging Market be smart make your people be smart don't be overwhelmed or intimidated by Big Data Center customers instead build respectful personal relationships at all levels lels of the
• 21:00 - 21:30 organization I talk to six or eight data center CEOs on a regular basis we all have each other's phone numbers we stick to CEO topics we let our Engineers stick to engineering topics but we're always just a phone call away so Embrace The Challenge and build respectful relationships with your customer that's great thank you very much for sharing this you know Dave I want to thank you you know for taking
• 21:30 - 22:00 the time I know you're a busy man a lot going on in your territory a lot on your plate thank you for sharing this Insight I'm sure we're going to get a lot of questions and comments and followup and definitely stay engaged with the energy Central Podcast Community where you can keep the conversation going until then though we just want to thank you for sharing your insights and make sure you come back and uh maybe a check in a year from now and find out what else is what else is new and exciting in your territory my pleasure and always happy
• 22:00 - 22:30 to help others climb the learning curve and like I said you can always reach Dave through the energyessential platform we welcomes your questions and comments and we also want to give a shout out of thanks to the podcast sponsors that made today's episode possible thanks to West mono West Monroe is a leading partner for the nation's largest electric gas and water utilities working together to drive grid modernization clean energy and Workforce transformation West M's comprehensive services are designed to support utilities and advancing their digital transformation building resilient
• 22:30 - 23:00 operations securing Federal funding and providing regulatory advisory support with a multi-disciplinary team of experts West Monro offers a holistic approach that addresses the challenges of the grid today and provides innovative solutions for a sustainable future and once again I'm your host Jason price Plug In and stay fully charged in the discussion by hopping into the community at energy central.com and we'll see you next time at the energy Central Power perspectives podcast