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[1. Call General Session to Order]
ORDER.UM, AND, UH, JUST QUICKLY, UH, NOTING THE RESIGNATION OF CARLOS AGUILAR, WHO WAS A MEMBER OF THIS COMMITTEE.
UM, THE, UH, THIS IS THE, UH, TECHNOLOGY AND SECURITY COMMITTEE.
I'M JOHN SWENSON, THE COMMITTEE CHAIR.
WELCOME TO OUR APRIL 7TH MEETING.
UH, THE MEETING'S CALLED TO ORDER.
IT'S BEING WEBCAST LIVE TO THE PUBLIC.
ON THE WEBSITE, THERE IS A QUORUM PRESENT.
UM, I SEE ONE PUC MEMBER AND NO CHAIRMAN.
SO I'M ASSUMING THAT THERE IS NO QUORUM OF THE PUC AND THEREFORE NO QUORUM NEEDS TO BE CALLED, OR NO OPEN MEETING NEEDS TO BE CALLED, I SHOULD SAY.
UM, BEFORE MOVING ON, I'D LIKE TO DRAW YOUR ATTENTION TO THE ANTITRUST ADMONITION THAT'S ON THE SCREEN IN FRONT OF YOU.
UM, THE FIRST ORDER OF BUSINESS, UH, ON TODAY'S AGENDA IS ITEM TWO, UH, NOTICE OF PUBLIC COMMENT.
UM, AND TODAY'S MEETING AGENDA WAS POSTED ON THE 31ST OF MARCH AND PROVIDED INSTRUCTIONS TO THE PUBLIC ON HOW TO COMMENT.
UH, I ASSUME THERE HAS NOT BEEN ANY SHANNON.
[3. February 3, 2025 General Session Meeting Minutes]
PROCEED WITH THE NEXT AGENDA ITEM, WHICH IS THE MINUTES FROM THE PRIOR MEETING, FEBRUARY 3RD.UM, ANY COMMENTS ON THE MINUTES? NO COMMENTS IF I CAN HAVE A MOTION TO APPROVE.
UM, ANY OPPOSED? ALL IN FAVOR, MOTIONS CARRIED.
[4. Guest Presentation: Data Center Coalition – Powering the Internet and our Modern Economy]
FIRST SPEAKER.UM, I'M VERY PLEASED TO INTRODUCE, UM, REPRESENTATIVES OF THE DATA CENTER COALITION.
UM, THEY'RE HERE TO TALK TO US ABOUT, UM, THE RECENT UPSWING IN DATA CENTER CONSTRUCTION ACROSS THE COUNTRY, AND PARTICULARLY HERE IN TEXAS.
THE DATA CENTER COALITION IS A MEMBERSHIP ORGANIZATION THAT'S MADE UP OF, UH, DATA CENTER OPERATORS WHOSE MEMBERS COMPRISE OWNERS AND OPERATORS OF DATA CENTER POWERING APPLICATIONS SUCH AS CLOUD COMPUTING, ARTIFICIAL INTELLIGENCE, AND CYBER.
UM, THEY'RE HEADQUARTERED IN VIRGINIA AND ITS MEMBERS MAINTAIN A DATA CENTER INFRASTRUCTURE, UM, AND TEAMS ACROSS THE COUNTRY.
WE'D LIKE TO INVITE OR THANK AARON T JIM AND JOSH LEVY FROM THE DATA CENTER COALITION FOR JOINING US TODAY AND INVITE THEM TO GIVE THEIR PRESENTATION.
BEFORE THAT MEETING CALLED
YOU HAVE ALL, YOU HAVE ALL THREE OF US IN HERE, RIGHT? OH, WE DO.
THIS MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS WILL COME TO ORDER TO CONSIDER MATTERS THAT HAVE DULY POSTED WITH THE SECRETARY OF STATE FOR TODAY, APRIL 7TH, 2025.
OKAY, AARON AND JOSH, OVER TO YOU.
REALLY DELIGHTED TO BE HERE TODAY WITH YOU ALL.
UH, TEXAS IS AN INCREDIBLY IMPORTANT MARKET FOR THE DATA CENTER INDUSTRY.
ERCOT IS AN INCREDIBLY IMPORTANT ORGANIZATION, UH, BOTH MYSELF, UH, I'M THE PRESIDENT OF THE DATA CENTER COALITION.
UH, AARON IS OUR VICE PRESIDENT OF ENERGY.
WE WANTED TO BOTH BE HERE TODAY AND MAKE SURE THAT, UH, WE WERE AVAILABLE TO ANSWER ANY QUESTIONS THAT YOU ALL HAVE.
SO, AGAIN, JUST WANNA THANK YOU ALL FOR THE OPPORTUNITY.
UH, DATA CENTER COALITION IS A MEMBERSHIP ASSOCIATION.
UH, WE SERVE AS THE VOICE OF THE DATA CENTER INDUSTRY.
WE ADVOCATE FOR BUSINESS CLIMATE POLICIES AND INVESTMENTS THAT SUPPORT THE GROWTH AND COMPETITIVENESS OF THE INDUSTRY, AND REALLY PRIDE OURSELVES ON BEING AN INFORMATION RESOURCE FOR ELECTED OFFICIALS, REGULATORS, UTILITIES, GRID OPERATORS, COMMUNITY LEADERS, AND OTHER STAKEHOLDERS.
OUR MEMBERS ARE LEADING DATA CENTER OWNERS AND OPERATORS, AS WELL AS COMPANIES THAT LEASE LARGE AMOUNTS OF DATA CENTER CAPACITY.
WE HAVE 38 MEMBERS, UH, WHO HAVE INFRASTRUCTURE AND TEAMS ACROSS, UH, THE UNITED STATES.
UH, MOST OF OUR MEMBERS ARE EITHER CURRENTLY IN TEXAS OR HAVE ANNOUNCED, UH, FACILITIES AND INVESTMENTS IN TEXAS.
OUR MEMBERS BUILD, OWN AND OPERATE DATA CENTERS.
THEY DO SO FOR THEIR OWN OPERATIONS.
THEY MAY DO SO FOR ONE CLIENT, THEY MAY DO SO FOR MANY CLIENTS IN A SINGLE BUILDING.
WE HAVE MEMBERS THAT COULD HAVE UPWARDS OF A HUNDRED TENANTS WITHIN, WITHIN A FACILITY.
UH, WE ALSO HAVE MEMBERS THAT MAY HAVE A FACILITY OR AN ENTIRE CAMPUS FOR ONE OCCUPANT OR TENANT.
WHEN YOU LOOK AT A DATA CENTER, UH, GENERALLY THE FUNCTION OF THE FACILITY IS TO SECURELY HOST DATA STORAGE, PROCESSING AND DISTRIBUTION EQUIPMENT, AND TO DO SO, UH, WHILE MAINTAINING IDEAL OPERATING CONDITIONS, WHICH INCLUDE, UH, MAINTAINING TEMPERATURE, HUMIDITY, AND, AND OTHER, UH, QUALITY CONTROLS.
TYPICAL DATA CENTER WOULD INCLUDE A BUILDING SHELL, UH, INTERIOR SPACE.
UH, IMPORTANTLY THE INTERIOR SPACE WOULD INCLUDE,
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UH, NOT ONLY THE SERVER HALLS, WELL, YOU'LL FIND THE SERVERS, BUT ALSO THE TYPES OF OFFICE SPACE AND AMENITIES YOU'D FIND IN OTHER, UH, COMMERCIAL FACILITIES, CONFERENCE ROOMS, OFFICES, UH, KITCHENS, FOOSBALL AREAS.UH, FROM SECURITY PERSPECTIVE, UH, THERE'S A, A BIG FOCUS ON EXTERIOR, INTERIOR AND CYBERSECURITY.
UH, YOU WILL FIND ROOMS FULL OF SERVERS WHERE THE DATA PROCESSING TAKES PLACE, UH, FIBER NETWORKING, CONNECTIVITY, UH, RELIABLE POWER 24 7, UH, INCLUDING, UH, GRID AND BACKUP GENERATION, AND ALSO, UH, HVAC AND COOLING INFRASTRUCTURE.
THERE ARE REALLY TWO MAIN TYPES OF DATA CENTERS.
GENERALLY, THOUGH, YOU CAN DRILL DOWN AND PROBABLY HAVE A TAXONOMY OF 25 DIFFERENT BUSINESS MODELS.
UH, WE HAVE SELF PERFORMERS OR ENTERPRISE DATA CENTERS WHERE A BUSINESS WILL OWN OR CONTROL, UH, SERVERS AND PERIPHERALS THEMSELVES AND MAY OWN A FACILITY.
AND THEN WE HAVE, UH, DATA CENTERS THAT ARE EITHER BUILT TO SUIT FOR A SPECIFIC TENANT OR, UH, BUILT TO HAVE MULTIPLE TENANTS INSIDE.
SO, I DO WANNA QUICKLY TALK ABOUT WHY DATA CENTERS, BECAUSE WE ARE SEEING A GREAT DEAL OF EMPHASIS ON DATA CENTERS, UH, INTERNATIONALLY, BUT CERTAINLY WITHIN THIS COUNTRY.
VARIOUS STATES, VARIOUS LOCALITIES, JURISDICTIONS, DATA CENTERS ARE A SUBSTANTIAL DRIVER OF THE ECONOMY.
PRICEWATERHOUSECOOPERS TELLS US ABOUT $52.6 BILLION GDP IN 2023, UH, DUE TO THE DATA CENTER INDUSTRY, WHICH WAS A 9% YEAR OVER YEAR INCREASE, UH, 60 1060 DIRECT JOBS IN THE STATE, UH, INSIDE THE DATA CENTERS, AND ADDITIONAL 363,000, UH, TOTAL JOBS.
WHEN YOU LOOK AT THE INDIRECT AND INDUCED JOBS THAT SUPPORT THE INDUSTRY, DATA CENTERS ENABLED WITH DIGITAL INFRASTRUCTURE THAT SUPPORTS OUR DAILY LIVES AND OUR MODERN ECONOMY, UH, WE'RE ALSO HEARING QUITE A BIT THESE DAYS NOT ONLY ABOUT THE ROLE OF DATA CENTERS AND ENSURING OUR INTERNATIONAL COMPETITIVENESS, BUT ALSO OUR COLLECTIVE NATIONAL SECURITY.
GIVEN THE WORKLOADS THAT OCCUR WITHIN THE DATA CENTERS, AND THE NEED FOR THE DIGITAL INFRASTRUCTURE TO SUPPORT NOT ONLY CLOUD SERVICES, BUT ALSO AI AND OTHER ESSENTIAL TECHNOLOGIES.
DATA CENTERS ALSO REPRESENT HUGE CAPITAL INVESTMENTS, AND I KNOW WE'VE ALL SEEN HEADLINES.
UH, I THINK WE'RE IN THE HUNDREDS OF BILLIONS OF DOLLARS THIS YEAR ALONE AT THE CAPITAL INFRASTRUCTURE.
UH, ANNOUNCEMENTS THAT HAVE BEEN ANNOUNCED, UH, IN A STATE LIKE VIRGINIA DATA CENTERS ARE NOW 83% OF ALL ANNOUNCED, UH, CAPEX.
UH, WITHIN THAT STATE, AS AN EXAMPLE, DATA CENTERS ALSO GENERATE SUBSTANTIAL, UH, TAX REVENUE.
UH, PRICEWATERHOUSECOOPERS TELLS US $3.5 BILLION IN DIRECT, INDIRECT AND INDUCED STATE AND LOCAL TAXES IN TEXAS IN 2023.
ABOUT HALF OF THAT IS STATE, AND ABOUT HALF OF THAT IS LOCAL TAXES.
AND THEN DATA CENTERS BUILD AND SUPPORT LARGER ECOSYSTEMS OF SUPPLIERS, SERVICE PROVIDERS, AND OTHER SECTORS OF THE ECONOMY.
PWC TELLS US THAT EVERY DIRECT JOB IN THE DATA CENTER INDUSTRY SUPPORTS MORE THAN SIX ADDITIONAL JOBS, UH, THAT NOT ONLY INCLUDES CONSTRUCTION, BUT WE'RE SEEING TREMENDOUS UPTAKE IN SUPPLY CHAIN MANUFACTURING AND, AND OTHER, UH, SERVICE PROVIDERS COMING IN TO SUPPORT THE DATA CENTER INDUSTRY WHERE IT CLUSTERS.
AS, AS JOSH MENTIONED, I AM, UH, THE DATA CENTER COALITION'S VICE PRESIDENT OF ENERGY, AND, UH, AS A PROUD PRODUCT OF THE LBJ SCHOOL HERE AT, AT UT, IT'S, IT'S ALWAYS GREAT TO BE BACK IN AUSTIN AND, AND GOOD TO BE HERE WITH YOU.
UM, A BIG QUESTION RELATED TO DATA CENTER DEVELOPMENT, AND JOSH ALREADY TOUCHED ON THIS SPECIFIC TO TEXAS, IS, IS WHAT ARE THE BENEFITS FROM AN ECONOMIC PERSPECTIVE OF, OF SERVING THE DATA CENTER INDUSTRY WITHIN OUR LOCAL COMMUNITIES AND WITHIN OUR STATES? UH, WE ENGAGED PWC, UH, LAST YEAR TO PRODUCE AN UPDATE, UH, TO OUR, OUR ECONOMIC AND SOCIAL IMPACT STUDY.
AND IN FEBRUARY RELEASED THE LATEST ITERATION, WHICH GIVES YOU A SENSE OF, OF HOW THE INDUSTRY IS GROWING FROM AN ECONOMIC PERSPECTIVE.
UH, LOOKING AT 2023 ALONE, THIS IS AN INDUSTRY NOW WITH MORE THAN 600,000 JOBS NATIONALLY.
UH, AND IT'S, IT'S REALLY THE GROWTH RATE THERE THAT, THAT UNDERSCORES HOW, HOW QUICKLY THE INDUSTRY IS GROWING.
IT WAS A 51% INCREASE FROM 2017.
SO, UH, SIX YEARS, OUR, OUR INDUSTRY HAS GROWN 51%, UH, IN TERMS OF GDP IMPACT, UH, THIS HAS BECOME A, A BOON, UH, TO U-S-G-D-P WITH A $3.5 TRILLION IMPACT BETWEEN THAT 2017 TO 2023 PERIOD.
AND THEN FINALLY, IT'S, IT IS, AS JOSH ALLUDED, IS IT'S A SIGNIFICANT DRIVER OF TAX REVENUE GENERATING 162.7 BILLION IN 2023 ALONE, WHICH WAS 146% INCREASE OVER 2019, UNDERSTANDABLY, YOU KNOW, IN, IN ENERGY CIRCLES.
AND, UH, JUST IN OUR NATIONAL DIALOGUE RIGHT NOW, A LOT OF THE COVERAGE IS BOTH AROUND THE INDUSTRY'S
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GROWTH RATE AS, AS WELL AS THE, UH, AMOUNT OF ELECTRICITY AT CONSUMPTION OCCURRING AT DATA CENTERS.UH, WE DO LIKE TO EMPHASIZE THOUGH, THAT THIS IS AN INDUSTRY THAT CONSUMES ELECTRICITY, UH, HIGHLY EFFICIENTLY.
SO WHILE THE, THE CONSUMPTION IS SIGNIFICANT, IT'S DONE IN AN EFFICIENT MANNER WHEN YOU CONSIDER THE COMPUTING OUTPUT.
UM, THE STORY OF DATA CENTERS IS REALLY ONE AROUND SECURITY OF COMPUTING AND EFFICIENCY OF COMPUTING.
IF YOU TAKE THE PERIOD FROM 2010 TO 2018, UH, ACROSS THE COUNTRY, WE SAW A MASSIVE SHIFT FROM ON-PREMISE COMPUTING.
SO IF YOU WOULD THINK BACK TO THE OLDER DAYS OF YOUR OFFICE BUILDING OR YOUR UNIVERSITY OR SCHOOL, YOU WOULD HAVE COMPUTER SERVER ROOMS, UH, AT THAT FACILITY, UH, BETWEEN 2010 AND 2018 IS THAT TIME PERIOD WHERE WE SAW IMMENSE SHIFT TO OFFSITE COMPUTING.
AND BY 20 18, 80 9% OF, OF, OF DATA CENTER COMPUTING TOOK PLACE IN THE LARGER UTILITY STYLE CLOUD DATA CENTERS THAT WE'RE TALKING ABOUT TODAY.
THE BIG TAKEAWAY FROM THAT IS ELECTRICITY CONSUMPTION ASSOCIATED WITH OUR COMPUTING INCREASED 6% DURING THAT TIME, BUT OUR COMPUTING OUTPUT JUMPED 550%.
UH, THESE FACILITIES CAN LEVERAGE DESIGNS, UH, INNOVATIONS AND DESIGN INNOVATIONS AND TECHNOLOGY INNOVATIONS AND COOLING THAT HELP US COMPUTE, UH, MORE EFFICIENTLY AND THEREBY MAKING US FAR MORE PRODUCTIVE.
AND SO THAT'S JUST A POINT WE LIKE TO EMPHASIZE.
AND ALL OF THIS RESEARCH WAS CONDUCTED BY THE LAWRENCE BERKELEY, UH, NATIONAL LABORATORY.
CAN I ASK YOU A QUESTION ABOUT THAT? YES.
WHAT, WHAT, WHAT MAKES UP COMPUTING OUTPUT? WHAT DOES THAT MEAN? ARE WE TALKING ABOUT BITS AND BYTES, OR HOW IS THAT MEASURED? YES, YOU HAVE SOMETHING TO ADD? YEAH, IT IS.
SO THE AMOUNT OF PROCESSING THAT TOOK PLACE WITHIN THAT TIME PERIOD.
SO THERE, THERE SEEMS TO BE A, A NEW FORECAST OF, OF LOAD GROWTH EVERY OTHER WEEK.
I, I THINK, IN FACT, ONE WAS RELEASED THIS MORNING.
UH, WE DO NOT PRODUCE OUR, OUR OWN FORECASTED DEMAND, UH, BUT ONE THAT COMES FROM MCKINSEY AND COMPANY SHOWS THAT, UH, 2024 DATA CENTER ENERGY CONSUMPTION WAS AROUND 25 GIGAWATTS NATIONALLY, UH, AND IS EXPECTED TO GROW TO 80 GIGAWATTS BY 2030.
UH, DCC IS AS AN ASSOCIATION, WE ARE VERY INTERESTED IN THE CONVERSATIONS WITH GRID OPERATORS LIKE ERCOT, UH, WITH UTILITIES ACROSS THE COUNTRY.
AND IN FACT, WE'VE BEEN ENGAGING, UH, WITH THOSE ENTITIES ACROSS THE COUNTRY ON HOW DO WE, UH, CREATE MORE CONFIDENCE IN THE LOAD FORECAST.
HOW DO WE ENSURE THAT THE, UH, LOAD REQUEST BEING INCORPORATED INTO THE FORECAST THAT INFORM PLANNING DECISIONS, UH, HAVE A HIGH DEGREE OF CONFIDENCE, UH, THAT WE UNDERSTAND WHAT IS BEING INCLUDED, UH, THAT WE UNDERSTAND WHAT TYPES OF COMMITMENTS ARE, ARE BEHIND THOSE LOAD REQUESTS, UH, TO HELP GET US TO A PLACE WHERE, WHERE THERE'S FULL CONFIDENCE OR RELATIVE CONFIDENCE IN THE FORECASTING.
SO WITH THAT, JOSH, I'LL TURN BACK TO YOU.
THERE IS A MEASUREMENT OF DATA CALLED THE ZETTABYTE, AND I'M STILL NOT SURE EXACTLY HOW TO ARTICULATE JUST HOW MUCH DATA THAT IS, BUT, UH, READING THROUGH SOME SOURCES, SOMEWHERE IN THE EARLY TWO THOUSANDS, SO FROM THE HISTORY OF TIME THROUGH 2000, MAYBE 2008, 2012, UH, WE GENERATED ONE ZETA BYTE OF DATA AS, AS A SOCIETY.
UH, WE ARE NOW LOOKING AT MULTIPLE, UH, UH, GENERATIONS OF ZETABYTES SINCE, UM, IN FACT, THE, UH, CHART THAT WE HAVE UP HERE SHOWS THAT WE ARE PROBABLY SOMEWHERE NORTH OF 150 ZETABYTES AT THE MINUTE, AT THE MOMENT, UH, CLOSING IN ON 200, UH, WITH PROJECTIONS THAT WE'LL HIT 500 ZETABYTES BY 2030.
UH, WE USE THIS CHART JUST TO ILLUSTRATE THE VELOCITY AT WHICH WE'RE SEEING DATA CREATED AND, AND JUST HOW MUCH DATA IS BEING CREATED AT ANY GIVEN TIME.
JLL TELLS US THAT WE WILL SEE TWICE THE AMOUNT OF DATA GENERATED OVER THE NEXT FIVE YEARS, AS WE SAW OVER THE PREVIOUS 10.
SO WE'RE IN THIS COMPRESSED CYCLE OF DATA GENERATION.
ONE OF THE BIG DRIVERS IS JUST THE POPULATION.
UH, AND, AND THIS STILL I THINK IS, IS REALLY AN INCREDIBLE STATISTIC.
WE HAVE ABOUT 67% OF THE GLOBAL POPULATION ONLINE TODAY.
45% OF THOSE CAME ONLINE SINCE 2018.
SO WE'VE SEEN THIS TREMENDOUS INFLUX OF, OF USERS, FOLKS TRYING TO ACCESS DIGITAL, UH, SERVICES, DIGITAL INFORMATION.
IMPORTANTLY, OUR MEMBERS ARE ALSO THINKING ABOUT THAT ONE THIRD OF THE GLOBAL POPULATION THAT'S YET NOT YET ONLINE, BUT COMING, UH, AT THE SAME TIME, THE US HOUSE, UH, DELOITTE TELLS US THE AVERAGE US HOUSEHOLD NOW HAS 21 CONNECTED DEVICES.
UH, I WILL CONFESS TO YOU AS THE FATHER OF TWO TEENAGERS, WE NOW HAVE 50 DEVICES IN MY HOME.
THAT INCLUDES OUR BOSCH DISHWASHER, THE BLINDS
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THAT GO UP AND DOWN, OUR PROGRAMMABLE THERMOSTATS, OUR DOORBELLS, AND, AND CAMERAS.UH, EVERYBODY'S GOT A WATCH, A TABLET, A PHONE, UH, STREAMING TV.
UH, AND I THINK IT IS INTERESTING, I'D ENCOURAGE EVERYBODY TO GO HOME, COUNT THE DEVICES YOU ALL HAVE.
UM, I THINK WE'RE GOING UPWARDS, NOT DOWNWARDS AS WE, WE CONTINUE TO, UH, UTILIZE AND GENERATE DATA.
UM, THE, UH, ORGANIZATION OPEN VAULT TELLS US THE AVERAGE MONTHLY HOUSEHOLD BROADBAND CONSUMPTION HAS ROUGHLY DOUBLED, UH, BETWEEN 20, UH, 18 20 23, UH, YEAR OVER YEAR.
WE SAW A 9.7% INCREASE IN AVERAGE MONTHLY BROADBAND CONSUMPTION.
THAT'S NOT NEW HOUSEHOLDS COMING IN.
THAT'S THE AVERAGE HOUSEHOLD USING 9.7%.
MORE DATA, MORE BROADBAND THAN THAN YEAR PREVIOUSLY.
UH, EXTREME USERS, THOSE THAT USE FIVE TERABYTES OR MORE IS UP 77% YEAR OVER YEAR.
AND WE'RE SEEING ALL KINDS OF NEW APPLICATIONS AND EXPERIENCES.
WE TALKED ABOUT GENERATIVE AI, BUSINESS APPLICATIONS, UH, HEALTHCARE AND TELEHEALTH, UH, STREAMING VIDEO, VIRTUAL AND AUGMENTED REALITY, AUTONOMOUS VEHICLES, ONLINE LEARNING AND INNOVATION, GENERALLY DRIVING THE NEED FOR ALL OF THIS, UH, DATA.
THE US CENSUS BUREAU TELLS US THAT FROM MAY 23 TO MAY 24, THE AMOUNT OF CONSTRUCTION ACTIVITY GREW FROM $16 BILLION NATIONALLY TO $27 BILLION.
NATIONALLY, THAT IS ROUGHLY A 69% YEAR OVER YEAR INCREASE IN DATA CENTER CONSTRUCTION.
ASSOCIATED GENERAL CONTRACTORS OF AMERICA PUT OUT THIS CHART DEMONSTRATING, UH, WHAT THAT LOOKS LIKE FROM A, A VERTICAL PERSPECTIVE, THOUGH THEY DO IT HORIZONTAL HERE.
BUT THE DATA CENTER INDUSTRY, UH, WHERE MANUFACTURING, OF COURSE, IS ALSO GROWING SUBSTANTIALLY AT 20%, YOU'RE SEEING OTHER SECTORS, UH, UH, YOU KNOW, CONTINUING TO GROW, UH, BUT BUT NOT QUITE THE SAME AS WE'RE SEEING WITH THE DATA CENTER INDUSTRY AS WE SEEK TO SUPPORT EVERYBODY'S DATA NEEDS.
AND SO, AS JOSH SHOWS, THE INDUSTRY IS OBVIOUSLY GROWING QUICKLY.
UM, A COMMON QUESTION WE, WE RECEIVE IT SEEMS WHEREVER WE GO IS, IS HOW ARE OUR MEMBERS MAKING DECISIONS ON WHERE TO CITE, UH, DATA CENTER INFRASTRUCTURE? UH, AS JOSH MENTIONED, WE HAVE 38 MEMBERS.
YOU COULD HAVE 38 DIFFERENT ANSWERS, AND, AND THE CALCULUS VARIES COMPANY BY COMPANY, UH, BUT GENERALLY INCORPORATES SOME COMBINATION OF, OF THESE CONSIDERATIONS.
UH, NUMBER ONE, ACCESS TO FIBER AND INTERCONNECTION.
UH, WHY IS VIRGINIA, BY FAR THE WORLD'S, UH, LARGEST DATA CENTER MARKET? THAT'S LARGELY A STORY OF ABOUT FIBER.
UM, HISTORICALLY, YOU HAVE THE UNDERSEA CABLES COMING UP, UH, NEAR NEWPORT NEWS IN VIRGINIA.
UH, IF YOU REMEMBER A COMPANY CALLED AMERICA ONLINE IN THE 1990S THAT BUILT OUT, UH, THE INFRASTRUCTURE THAT CONNECTS TO THOSE CABLES.
AND THEN SUBSEQUENTLY, UH, OVER THE DECADES, DATA CENTER COMPANIES HAVE BUILT OUT THAT INFRASTRUCTURE, UH, ACCESS TO WATER FOR INDUSTRIAL PURPOSES.
UM, COOLING IS ABSOLUTELY CRITICAL, UH, FOR THESE FACILITIES.
IF YOU DID NOT COOL A DATA CENTER, SERVER ROOM, UH, STUDIES SHOW THAT THE TEMPERATURE WOULD INCREASE AROUND ONE DEGREE PER MINUTE, AT WHICH POINT YOU WOULD VERY QUICKLY ENCOUNTER SOME FAILURES OF SERVER EQUIPMENT, AND THEN, UH, FAILURES WITH THE SERVICES BEING SUPPORTED BY THOSE SERVERS.
SO THERE ARE TRADE-OFFS WHEN YOU CONSIDER, UH, WATER, UH, COOLING, OR TO WHAT DEGREE WATER IS USED FOR THE COOLING VERSUS ELECTRICITY.
UH, AND THAT WILL VARY BY FACILITY AND LOCATION.
UH, ACCESS TO ENERGY IS AN IMPORTANT PIECE.
UH, GENERAL RISK OF, OF NATURAL DISASTER AND WHAT THE LOCAL CLIMATE IS.
AGAIN, PLAYING BACK TO THE COOLING FACTOR.
UH, IS THERE AVAILABLE LAND? AND, AND WHAT IS THE COST OF THAT LAND? WHAT'S THE OVERALL TAX AND REGULATORY CLIMATE OF THE STATE, UH, IN WHICH A PROJECT'S BEING CONSTRUCTED? UM, OWNERSHIP AND OCCUPANCY COSTS, UH, THIS OFTEN REFERS TO ELECTRICITY RATES, UH, TIME TO MARKET, SPEED TO MARKET.
UH, WE'RE AT A HIGHLY COMPETITIVE MOMENT IN OUR INDUSTRY, UH, AS WE'VE UNDERSCORED HERE TODAY.
THERE IS UNPRECEDENTED DEMAND FOR THE DATA AND DIGITAL SERVICES THAT ARE DRIVING OUR ECONOMY.
SO TO OUR MEMBERS, HOW QUICKLY CAN YOU GET A FACILITY CONSTRUCTED AND POWERED TO MEET THIS DEMAND, UH, IS REALLY THE DRIVING CONSIDERATION WITH ALL THINGS.
AND THEN FINALLY, UH, ACCESS TO A LOCAL SKILLED CONSTRUCTION AND IT WORKFORCE, UH, TO MAINTAIN AND OPERATE THESE FACILITIES.
SO WHEN YOU TAKE ALL OF THOSE SITE SELECTION CONSIDERATIONS, WHERE ARE WE SEEING, UH, THE GREATEST AMOUNT OF DEVELOPMENT? UH, THE LARGE BLUE BAR ON THE LEFT THERE IS VIRGINIA.
UH, SO YOU CAN SEE IT IS MORE THAN DOUBLE, UH, THE SIZE OF THE NEXT MARKET, UH, WHICH IS BEIJING.
UM, AND SO THE, THE BARS IN, IN THAT ORANGE RED HUE IS, IS APAC.
UH, AND, AND THAT REALLY UNDERSCORES A, A
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GROWING NATIONAL SECURITY, GLOBAL COMPETITIVENESS STORY.UM, JOSH AND I RECEIVE A LOT OF OUTREACH FROM THE FEDERAL GOVERNMENT, ESPECIALLY IN THE PAST YEAR OR SO.
UH, AND THE CHINESE MARKETPLACE IS GROWING VERY SIGNIFICANTLY, VERY QUICKLY.
AND WE DON'T NECESSARILY HAVE, UH, FULLY TRANSPARENT DATA ON HOW LARGE THE MARKET IS.
BUT WHEN WE'RE TALKING ABOUT, UH, WHERE DATA IS STORED, UM, WE WANT IT HERE IN THE US.
UH, WHEN WE TALK ABOUT AI DEVELOPMENT, UH, HAVING THE DATA CENTER INFRASTRUCTURE IN PLACE IN THE UNITED STATES TO ENSURE THAT THE US LEADS IN THE AI RACE IS, IS WHAT WE'RE HEARING AT THE FEDERAL GOVERNMENT, IS OF CRITICAL IMPORTANCE.
UH, SO WE EXPECT THOSE RED BARS ON THE LEFT, UH, TO CONTINUE TO GROW.
UH, BUT ALSO, YOU KNOW, OUR, OUR JOB IS TO ENSURE THAT, UH, MARKETS CONTINUE TO OPEN AND REMAIN OPEN FOR, FOR, FOR US DEVELOPMENT.
UH, YOU CAN SEE SOME OF THE OTHER PRIMARY MARKETS, OREGON, PHOENIX, UH, AND THEN DALLAS WOULD BE THE, THE MOST SIGNIFICANT MARKET IN TEXAS AT THE MOMENT.
UH, ONE KEY POINT HERE IS THAT, UH, WHAT DATA CENTERS ARE SUPPORTING, UH, CAN REALLY VARY BY MARKET AND IS OFTEN A REFLECTION OF, OF THE COMPANIES THAT ARE HOUSED IN THE LOCAL ECONOMY.
SO YOU CAN SEE, UH, DATA CENTERS WITHIN THE AUSTIN SAN ANTONIO MARKET.
UM, SOME OF THAT IS CLOUD, SOME OF THAT IS LOCAL TECHNOLOGY.
AND THEN THERE'S JUST A LARGE MIX AT THIS POINT AS TO WHAT'S BEING SERVED IN DALLAS.
THE STORY IS A LITTLE BIT DIFFERENT, WHERE YOU CAN SEE, UH, 15% IS SERVING BANKING, AND THEN 40% IS, IS SERVING CLOUD.
AND THEN IN HOUSTON, UNSURPRISINGLY, A, A LARGE CHUNK OF THAT IS SUPPORTING ENERGY AROUND 40% OF THE DATA CENTER INFRASTRUCTURE IN HOUSTON CURRENTLY, UH, THERE ARE A NUMBER OF, OF REAL ESTATE PUBLICATIONS COVERING, UH, DATA CENTER MARKET TRENDS.
UH, THE LIGHTER GREEN HERE SHOWS, UH, CURRENT INVENTORY, SO THOSE DATA CENTERS THAT ARE ALREADY UP AND RUNNING, BUT THE DARK SHADE, UM, SHOWS WHAT IS CURRENTLY UNDER, UNDER CONSTRUCTION.
SO YOU CAN SEE IN NORTHERN VIRGINIA, FOR EXAMPLE.
AND, AND ALL OF THIS IS, IS MULTI-TENANT BUILD TO SUIT FACILITIES.
UH, NEARLY THE SAME AMOUNT OF, OF MULTI-TENANT, UH, UH, FACILITIES ARE UNDER CONSTRUCTION AS IS CURRENTLY ONLINE.
ATLANTA JUMPS OUT HERE AS AN ANOMALY, UH, WHERE MORE THAN DOUBLE OF CURRENT INVENTORY IS UNDER CONSTRUCTION.
UH, SO IT IS A, A VERY FAST GROWING MARKET IN AN IMPORTANT MARKET, UH, FOR OUR MEMBERS.
AND THEN YOU CAN SEE DALLAS-FORT WORTH HERE HAS NEARLY THE SAME AMOUNT, UH, UNDER CONSTRUCTION AS IS CURRENTLY ONLINE THERE.
THIS IS JUST A BREAKDOWN OF, OF, OF TOTAL SHARE.
AND THEN SECONDARY MARKET, UH, A BIG STORY OF THE DATA CENTER INDUSTRY IS IN, IN THE PAST COUPLE OF YEARS, HAS BEEN THIS, UM, MOVEMENT OUT OF WHAT WE WOULD CONSIDER PRIMARY MARKETS, UH, AND NOW INTO SECONDARY MARKETS.
SO YOU CAN SEE AUSTIN, SAN ANTONIO AREA, AND, AND THAT'S HOW CBRE GROUPS THEM AS, AS ONE MARKET, UM, MORE THAN, UH, 200 MEGAWATTS MORE THAN WHAT'S CURRENTLY ONLINE, UH, IS, IS PLANNED UNDER CONSTRUCTION.
SO YOU COULD VERY MUCH SEE AUSTIN AND SAN ANTONIO BECOMING A PRIMARY MARKET, UH, WITHIN THE COMING YEARS.
AGAIN, JUST A, A BREAKDOWN HERE IN WHICH AUSTIN, SAN ANTONIO SERVES AROUND 17% OF SECOND MARKET INVENTORY CURRENTLY.
AND THEN THIS LAST SLIDE, UH, REALLY SHOWS THE ABSORPTION OUTSIDE OF THOSE PRIMARY AND SECONDARY MARKETS.
UH, SO IN 2024 ALONE, UH, THERE WERE MORE THAN 1600 MEGAWATTS OF, OF DATA CENTER CAPACITY THAT CAME ONLINE IN PLACES THAT HAVE NEVER HAD DATA CENTER DEVELOPMENT.
UH, AND AS OF THIS YEAR, THERE ARE AT LEAST 23 STATES THAT HAVE ANNOUNCEMENTS FOR DATA CENTERS CURRENTLY UNDER CONSTRUCTION.
AND SO IT'S REALLY BECOMING, UH, AROUND HALF OF THE NATION HAS DATA CENTER CAPACITY ONLINE.
SO WANTED TO COVER THOSE MARKET TRENDS, SITE SELECTION, CONSIDERATIONS, BENEFITS, AND, AND OTHER INFORMATION AROUND DEMAND DRIVERS FOR OUR INDUSTRY.
BUT CERTAINLY WOULD WELCOME ANY QUESTIONS YOU MAY HAVE.
I, I HAVE A QUESTION ABOUT YOUR CONSTRUCTION STATS.
UM, DOES THAT MEAN, DOES UNDER CONSTRUCTION LEAN MEAN LITERALLY UNDER CONSTRUCTION, UH, UH, IN SHOVEL IN THE GROUND, OR DOES IT MEAN PERMITTED IT, IT INCLUDES PERMITTED AND SHOVELS IN THE GROUND, SO IT'S, SO IT, YEAH.
IT COULD INCLUDE STUFF THAT HASN'T YET BEEN BUILT YEAH.
OR, OR HASN'T YET BROKEN GROUND.
OTHER QUESTIONS? YEAH, I HAVE A, I HAVE A QUESTION.
SO, FOR YOUR CLIENTS THAT ARE BUILDING, FOR OTHER TENANTS, SPECIFICALLY MULTIPLE OTHER TENANTS, IS THERE
[00:25:01]
TYPICALLY A CRITICAL MASS OF, UH, TENANTS THAT THEY HAVE BEFORE THEY BUILD CONSTRUCTION? OR IS IT MORE OF A IF WE BUILD IT, THEY WILL COME TYPE OF SCENARIO? THAT'S A GREAT QUESTION.THE MULTI-TENANT OR CO-LOCATION DATA CENTER MARKET IS ONE WHERE WE WILL HAVE COMPANIES, AGAIN, THAT COULD HAVE 20, 30, A HUNDRED, 200 TENANTS INSIDE A FACILITY.
IF YOU THINK ABOUT MAYBE A BIG BOX, UH, RETAILER THAT STRIKES A DEAL WITH A CREDIT CARD COMPANY, IT WOULD NOT BE UNCOMMON TO SEE TWO SERVERS SIDE BY SIDE WITHIN ONE OF THOSE FACILITIES, UH, WITH SOME FIBER CONNECTING THE TWO FOR EASE OF TRANSACTIONS.
UH, TYPICALLY, UH, THOSE FACILITIES WILL HAVE, UH, SIGNIFICANT INTEREST AND SIGNIFICANT COMMITMENT AS THEY LOOK TO BUILD OUT, BUT NOT TOTAL, UH, ABSORPTION.
IT'S, IT'S A, UH, IT'S A, UH, CRITICAL MASS ANALYSIS AND, AND THEN THEY WILL BUILD AND, AND, UH, TYPICALLY THEY'VE GOTTEN PRETTY GOOD AT, YOU KNOW, LOOKING AT A MARKET, LOOKING AT THE DEMAND TIMELINE AND ANTICIPATING WHEN A PARTICULAR FACILITY WOULD FILL AND WHEN THE NEXT ONE WOULD BE REQUIRED.
SO IS IT FAIR TO SAY THEN THAT IT IS RARE FOR THOSE FACILITIES TO NOT MAKE, TO WHERE YOU WOULD START THE PROCESS AND THEN SEE NOT SEE ENOUGH TENANTS AND, AND THEN THE CONSTRUCTION WOULD BE FOR NOT, AND, AND WE WOULDN'T ACTUALLY HAVE A VIABLE DATA CENTER? I, I THINK TO THE EXTENT THAT HAPPENED, YOU WOULD HAVE A DATA CENTER DEVELOPER THAT PROBABLY WOULDN'T BE, WOULDN'T BE COMPETITIVE OR, OR ABLE TO RAISE CAPITAL TO DEPLOY ADDITIONAL FACILITIES? YES, SIR.
AND WHAT DOES THE BACKUP GENERATION LOOK LIKE? SO THE BACKUP GENERATION WILL VARY BASED ON, OR DEPENDING ON THE FACILITY, THE COMPUTE LOADS AND, AND HOW THEY'RE CONFIGURED.
UH, THERE IS A TIERING SYSTEM WITHIN THE DATA CENTER INDUSTRY, UH, THAT IS INTENDED TO SHOW JUST HOW REDUNDANT THE OPERATIONS CAN BE INSIDE.
UM, TYPICALLY THERE WILL BE AT LEAST ENOUGH BACKUP GENERATION, UH, TO MIRROR THE REQUIRED CRITICAL LOAD, UH, THAT ONE IS GETTING OFF THE GRID.
UH, THERE ARE FACILITIES THAT WILL MAINTAIN, UH, TWO GENERATORS, UH, FOR EXAMPLE, FOR, FOR EVERY ONE GENERATOR THAT MAY BE NEEDED DURING AN OUTAGE, BECAUSE IT'S IMPORTANT TO HAVE THAT ADDITIONAL, UH, UH, RESOURCE AVAILABLE AS A CONTINGENCY.
UM, ONE THING THAT I PROBABLY DIDN'T HIT ENOUGH, BUT I DO WANNA UNDERSCORE, AND MAYBE SOME OF THIS WAS REFLECTED IN THAT OTHER CATEGORY, AS WE'RE LOOKING AT THE MIXES OF, OF WHO'S INSIDE THESE DATA CENTERS, DATA CENTERS HAVE TENANTS INSIDE THEM THAT ARE ESSENTIAL, UH, WHETHER YOU THINK ABOUT HOSPITALS AND HAVING ACCESS TO MEDICAL RECORDS DURING AN EMERGENCY.
FIRST RESPONDERS, UH, STATE, LOCAL, FEDERAL GOVERNMENT, MILITARY, UH, BANKING.
WE HAVE A MEMBER THAT DOES 31,000 CREDIT CARD TRANSACTIONS A SECOND THROUGH ONE OF THEIR FACILITIES OUT IN NORTHERN VIRGINIA, FOR EXAMPLE, 31,000 TRANSACTIONS A SECOND.
UH, THE IDEA THAT THERE WOULD BE ANY DOWNTIME, UH, FOR A USE CASE LIKE THAT IS ONE THAT WOULD BE INCREDIBLY IMPACTFUL.
SO, UH, IT BECOMES A RISK AVERSE ANALYSIS AND ALSO A COMPETITIVENESS ANALYSIS, DEPENDING ON WHO THE TENANT IS IN TERMS OF WHAT YOUR BACKUP SCENARIO LOOKS LIKE AND HOW MUCH REDUNDANCY YOU HAVE, THERE'S EXPENSE ASSOCIATED WITH THAT ADDITIONAL REDUNDANCY, BUT IT'S A PREMIUM THAT SOME ARE WILLING TO INCLUDE IN THEIR, IN THEIR LEASES.
ON THE REDUNDANCY QUESTION, ARE, ARE MOST OF THE DATA CENTERS YOU SEE LEVEL ONE DATA CENTERS OR LEVEL TWO OR THREE? OR WHAT, WHAT, WHAT LEVEL OF REDUNDANCY DO YOU TYPICALLY SEE BUILT OUT? THE, THE MOST COMMON, UH, FRAMEWORK IS ONE OF TIERS, AND IT'S PUT OUT BY UPTIME INSTITUTE WITH TIER FOUR BEING, BEING, I THINK, UH, THERE ARE SOME THAT CLAIM TO BE TIER FIVE, BUT I THINK TIER FOUR IS KIND OF THE FORMAL.
UH, AND THAT SEEMS TO BE THE TYPICAL, UH, UH, DATA CENTER DEPLOYED THESE DAYS, GIVEN THE ESSENTIAL WORKLOADS INSIDE.
DO YOU HAVE A FEEL FOR WHICH DATA CENTERS ARE ALREADY PLANNING TO BRING THEIR OWN GENERATION WITH THEM IN ADDITION TO THE BACKUP? I THINK THE ANSWER WOULD BE YES AND NO.
SO AS, AS AARON INDICATED, WE HAVE 38 MEMBERS, WE'RE, WE'RE FAIRLY FAMILIAR WITH SOME OF OUR MEMBERS AND THEIR DEPLOYMENT PLANS AND, AND MAYBE NOT SO MUCH WITH OTHERS.
SOME OF THIS IS GOING TO BE, UH, LOCATION DEPENDENT.
SOME OF IT'S GOING TO DEPEND ON WHAT'S AVAILABLE IN A PARTICULAR MARKET.
UM, ONE THING THAT I WOULD JUST ABSOLUTELY EMPHASIZE, THERE IS NO SUBSTITUTE FOR GRID POWER WHEN IT COMES TO ACCESS TO ENERGY.
OUR MEMBERS REALIZE, UH, THERE, YOU KNOW, THE, THE GRID IS, YOU KNOW, UNDER PRESSURE.
IT'S, IT'S A, UH, UH, UH, AN, UH, A TECHNOLOGY THAT IS VERY MUCH IN NEED OF UPGRADING AND, AND ADDITIONAL AUGMENTATION.
BUT AT THE END OF THE DAY, IT STILL OFFERS THE BEST SOLUTION THAT WE HAVE IN TERMS OF PROVIDING RELIABLE ACCESS TO POWER.
UH, IN SITUATIONS WHERE MEMBERS ARE NOT ABLE TO ACCESS GRID POWER OR WHERE WE'RE RUNNING INTO TALE DELAYS.
UM, YOU KNOW, AVERAGE DATA CENTER CAN BE BUILT IN ONE AND A HALF TO TWO AND A HALF
[00:30:01]
YEARS.UH, WE'VE HAD DATA CENTERS BUILT IN SOME MARKETS AS QUICKLY AS NINE MONTHS FROM, FROM SHOVELING THE GROUND TO COMMISSIONING.
UH, WE ARE AWARE THAT FOR GENERATION, UH, PERMITTING ALONE CAN TAKE FOUR YEARS, UH, AND LONGER, UH, FOR TRANSMISSION PERMITTING CAN TAKE SEVEN YEARS.
UM, SO THAT, UH, ASYMMETRY AND TIMELINES IS AN, IS AN ONGOING CHALLENGE.
AS MEMBERS OF OURS LOOK TO DEPLOY IN CERTAIN GEOGRAPHIES, UH, THEY WILL CONSIDER BRINGING THEIR OWN POWER TO THE EXTENT GRID RESOURCES ARE NOT AVAILABLE OR ARE NOT AVAILABLE IN A TIMELY WAY, EITHER AS A BRIDGE OR, OR AS A MORE PERMANENT SOLUTION.
DOES THAT ANSWER YOUR QUESTION? I DON'T WANNA BE EVASIVE.
I'D ALWAYS LIKE TO HAVE A NUMBER, BUT THAT'S OKAY.
I WANNA THANK YOU FOR YOUR PRESENTATION.
UM, NOTIONALLY MOST COMMUNITIES WOULD LOOK FORWARD TO HAVING THE ECONOMIC ACTIVITY THAT'S ASSOCIATED WITH HAVING A DATA CENTER, BUT YOU'RE STARTING TO SEE, BECAUSE OF POWER DEMAND AND WATER USAGE THAT, UH, UH, SOME COMMUNITIES ARE BEGINNING TO LOOK AT IT THROUGH A DIFFERENT LENS.
AND SO, HOW, MY QUESTION IS THIS.
HOW MUCH OF AN MB IMPACT ARE YOU SEEING FROM YOUR MEMBERS, AMONG YOUR MEMBERSHIP AS THEY LOOK TO DIFFERENT ALTERNATIVES? AND FOR NOT ONLY AMONG THE POPULATIONS OF THOSE COMMUNITIES, BUT PARTICULARLY AMONG POLICY MAKERS? WHAT ARE YOU SEEING THERE, OR WHAT'S YOUR MEMBERSHIP SEEING? SO I WOULD REALLY REFER TO THESE TWO, THESE TWO SLIDES IN PARTICULAR, THE AMOUNT, THE 69% INCREASE YEAR OVER YEAR CONSTRUCTION.
AND THEN LOOKING AT THE DATA CENTER INDUSTRY AS, AS ITS OWN VERTICAL.
UM, THERE IS A NATIONAL IMPERATIVE NOW TO BUILD OUT THIS DIGITAL INFRASTRUCTURE.
AND THAT MEANS MORE OFTEN THAN NOT, WHEN YOU DO SEE A CRANE, WHEN YOU DO SEE CONSTRUCTION ACTIVITY, UH, WHEN YOU HAVE A, UH, CANDIDATE OR POLITICIAN WANTING TO GO TO A CONSTRUCTION SITE, IT, IT'S TYPICALLY A DATA CENTER SITE THESE DAYS.
UH, SO FROM A VOLUME AND SCALE PERSPECTIVE, WE'RE CERTAINLY SEEING, UH, A LOT OF QUESTIONS RAISED LOCALLY AROUND DATA CENTER FACILITIES.
WHAT THEY MEAN, UH, UH, A PART OF OUR, OUR CHALLENGE IS, IS REALLY TO HELP CLARIFY AND, AND, AND TELL PEOPLE, UH, YOU KNOW, WHAT DATA CENTERS DO AND DON'T MEAN, AND I'LL GIVE YOU ONE EXAMPLE.
UM, WE HAVE DATA CENTERS THAT ARE WATERLESS.
THE ONLY WATER THEY WILL USE IS, IS FOR A, UH, A BATHROOM OR COFFEE.
UH, AND OTHERWISE THEY'LL USE POWER, UH, TO COOL ENERGY, TO COOL.
UH, THEY WILL USE MORE ENERGY THAN MAYBE THE DATA CENTER THAT THAT'S UTILIZING WATER, BUT, BUT THEY CAN DO IT.
UH, VIRGINIA'S JOINT LEGISLATIVE AUDIT AND REVIEW COMMISSION, WHICH IS A GENERAL ASSEMBLY ENTITY, UH, DID A 12 MONTH STUDY ON THE DATA CENTER INDUSTRY IN VIRGINIA IN RESPONSE TO A LOT OF THE QUESTIONS THAT WERE BUBBLING UP FROM LOCAL JURISDICTIONS AND STATE POLICY MAKERS ON WATER, THEY CONCLUDED THE FOLLOWING, IN 20 23, 80 3% OF DATA CENTERS IN VIRGINIA USED THE EQUIVALENT AMOUNT OF WATER OR LESS THAN A LARGE COMMERCIAL OFFICE BUILDING.
SO, UM, PUTTING THAT IN CONTEXT, UM, YOU KNOW, A DATA CENTER VERSUS A AVERAGE COMMERCIAL OFFICE BUILDING MAY USE THE SAME AMOUNT OF WATER.
PUTTING THAT AT SCALE AND THINKING ABOUT QUANTITY, WE'RE BUILDING A LOT OF DATA CENTERS.
YEAH, THANK YOU FOR YOUR PRESENTATION.
WE ARE STRUGGLING WITH SOME OF THE PROJECTIONS AND THE, FOR THE NEXT FEW YEARS IN DATA CENTERS AND HOW TO EVALUATE, UH, THOSE PROJECTIONS.
AND WHAT WE'RE HEARING, AND THIS MAY BE AN UNFAIR QUESTION, BUT ANY THOUGHTS YOU CAN, UH, SHARE WITH US, WE'D APPRECIATE IT.
HOW SHOULD WE THINK ABOUT, UH, THE IMPACT ON THE DATA CENTER GROWTH, UH, RELATIVE TO TARIFFS AND, UH, UNCERTAINTY IN THE ECONOMY AND THE MARKETS? NOW? I, I VERY MUCH APPRECIATE THE QUESTION THERE.
THERE'S TWO THINGS IN THERE, AND I, I THINK MAYBE AARON CAN, CAN DIG IN A LITTLE MORE ON SOME OF THE EFFORTS THAT WE'VE BEEN MAKING ON THE FORECASTING SIDE, BECAUSE THERE ARE A LOT OF QUESTIONS AROUND WHAT'S REAL, WHAT'S NOT REAL, WHAT'S GONNA MATERIALIZE AND WHAT DOES IT MEAN? AND WE'VE REALLY BEEN LEANING IN THERE IN TERMS OF THE TARIFFS THEMSELVES, THAT THAT'S A, A SITUATION I THINK, WHERE WE ALL FIND OURSELVES WITH A GREAT DEGREE OF UNCERTAINTY, UH, INCLUDING NOT JUST THE TARIFFS THAT HAVE BEEN IMPLEMENTED, BUT I THINK WE'RE ALL EXPECTING, UH, WITHIN THE NEXT DAY OR TWO TO SEE SOME, SOME REACTIONS FROM OTHER COUNTRIES AND RECIPROCAL TARIFFS.
UH, SO THE ANSWER IS THAT THAT'S A STORY THAT JUST HASN'T BEEN WRITTEN YET.
UH, BUT CLEARLY THERE'S, THERE'S A SUBSTANTIAL AMOUNT OF UNCERTAINTY, UH, THAT'S ECONOMY WIDE.
UH, BUT THAT DOES INCLUDE THE DATA CENTER INDUSTRY.
WHEN YOU THINK OF THINGS LIKE STEEL, WHEN YOU THINK OF THINGS LIKE COMPUTER SERVERS, CHILLERS, BACKUP EQUIPMENT, AND SO ON.
SO, UH, I WOULDN'T CALL IT AN UNFAIR QUESTION, BUT IT'S ONE I'M JUST NOT EQUIPPED TO ANSWER YET.
UH, BUT WE'RE, WE'RE CERTAINLY FOLLOWING THE NEWS CYCLE THERE.
AARON, DO YOU WANNA TALK ABOUT OUR EFFORTS ON, ON FORECASTING A LITTLE MORE DEEPLY? YES.
[00:35:01]
BRIEFLY.SO WE'VE BEEN ENGAGED, AS I MENTIONED, WITH, WITH UTILITIES, WITH GRID OPERATORS, UTILITY COMMISSIONS ACROSS THE COUNTRY OF, OF HOW DO WE BUILD MORE CERTAINTY, UH, WITH THE FORECASTING, RECOGNIZING THERE'S ALWAYS GONNA BE SOME DEGREE OF, OF UNCERTAINTY.
IT'S, IT'S THE NATURE OF FORECASTING, UM, YOU KNOW, SOLUTIONS WE'RE BRINGING TOGETHER, UH, AT A VERY HIGH LEVEL, WE NEED GREATER COMMUNICATION.
AND SO, DCC AS AN ENTITY, WE'RE HERE TO BE A HELPFUL RESOURCE, UH, TO ERCOT TO OTHER STAKEHOLDERS IN CONNECTING YOU WITH THE INDUSTRY.
AND, AND OUR MEMBERS AND OUR MEMBERS ARE LOOKING TO US TO WORK WITH YOU TO IDENTIFY WHAT TYPE OF INFORMATION FROM THEM, WHAT WOULD HELP BUILD GREATER CERTAINTY WITH THE FORECASTING TO INFORM PLANNING, UH, DECISIONS.
I THINK BEYOND THAT, YOU KNOW, A NUMBER OF, OF DIFFERENT SOLUTIONS WE'VE BEEN TALKING ABOUT IS ENSURING THAT, UH, FORECASTS INCLUDE SCENARIO PLANNING, THAT THERE ARE LOW, MEDIUM, HIGH GROWTH SCENARIOS, UH, FOR, FOR DATA CENTER GROWTH, BUT ALSO BROADER GROWTH THAT INCLUDES MANUFACTURING, UH, INCLUDES THINGS LIKE ELECTRIFICATION SO THAT WE HAVE A HOLISTIC PICTURE.
UM, ARE THERE OTHER DATA SETS THAT CAN BE LEVERAGED? I KNOW S AND P GLOBAL IS, IS DOING SOME WORK IN, IN THAT REGARD AS, AS WELL AS AN ORGANIZATION CALLED DATA CENTER HAWK, UH, TO HELP PROVIDE, UH, SUPPLEMENTAL DATA THAT CAN INFORM FORECASTING.
UM, I THINK GREATER TRANSPARENCY AROUND THE LOAD REQUEST ALL AROUND, UH, I, I THINK IT'S, IT'S REASONABLE TO TO KNOW GENERALLY WHAT'S BEHIND A LOAD REQUEST, UH, TO ASCERTAIN WHETHER IT'S A, A LEGITIMATE REQUEST OR, OR OFTEN REFERRED TO AS SPECULATIVE, UH, FOR, FOR THE LACK OF A BETTER TERM.
UM, I THINK OUR MEMBERS WOULD LOVE TO KNOW WHAT HAPPENS WITH A LOAD REQUEST.
I THINK ERCOT IS, UM, FURTHER AHEAD WITH, ITS, ITS INTERCONNECTION QUEUE IN TERMS OF TRANSPARENCY, BUT THERE ARE MARKETS IN ACROSS THE COUNTRY, UH, WHERE IT'S, IT'S UNCLEAR WHEN WE PUT IN A LOAD REQUEST, UH, WHAT HAPPENS TO IT, UH, IS THERE A, A TRANSPARENT QUEUE, UH, THAT CAN BE REVIEWED.
AND SO THOSE ARE THE TYPES OF SOLUTIONS WE'VE BEEN TALKING THROUGH IN, IN A NUMBER OF MARKETS AND WOULD CERTAINLY WELCOME, UH, GREATER DIALOGUE HERE IN ERCOT AS WELL.
QUICK QUESTION HERE, CHAIRMAN.
UM, AND THIS WILL PROBABLY BE ANOTHER UNFAIR QUESTION, BUT TALK BACK TO THE LOAD FORECAST.
C, CAN YOU COMMENT THIS KIND OF A TWO PART QUESTION? CAN YOU COMMENT ON THE, UM, OVERALL PERSPECTIVE YOU HAVE, LIKE ON STUDIES LIKE THE MCKINSEY STUDY THAT SHOW POTENTIAL FOR 80 GIGAWATTS OF, OF, UH, ENERGY DEMAND FOR DATA CENTERS IN THE NEXT FIVE YEARS? AND THEN SECONDARY TO THAT, DOES YOUR DATA THAT YOU SHOW BY PRIMARY AND SECONDARY MARKETS, DOES IT SHOW TRENDS THAT YOU WOULD BE ABLE TO COMMENT AROUND WHAT PERCENTAGE OF, UH, GROWTH YOU WOULD EXPECT IN DIFFERENT REGIONS OF THE COUNTRY? AND SPECIFICALLY, WE'RE INTERESTED IN TEXAS, OF COURSE.
SO SEEING HOW MARKETS ARE GROWING IN NORTHERN VIRGINIA AND THE WESTERN PART OF THE US AND, AND IN THE SOUTHEAST AND AND IN TEXAS.
CAN YOU SPECULATE, KIND OF SWAG KIND OF DIRECTION, HOW YOU SEE THAT PERCENTAGE GROWTH, MAYBE BY AREA? WANNA TAKE THE MARKET QUESTION? SURE.
I'LL, I'LL, I'LL TAKE THE MARKET QUESTION.
I, AND, UM, I THINK THERE ARE A LOT OF FACTORS AND, AND AARON KIND OF NUMERATED SOME OF THEM THAT GO INTO A BUILD SITUATION IN A PLACE LIKE VIRGINIA, WHERE SOME OF THE, UH, REAL ESTATE, UH, RESOURCES ARE NOW REFERRING TO THE VIRGINIA DATA CENTER MARKET AS OPPOSED TO THE NORTHERN VIRGINIA MARKET BECAUSE WE'RE SEEING SO MUCH, UH, EXPANSION ACROSS THE STATE.
UH, THOSE GOING INTO THE MAIN UTILITY TERRITORY IN VIRGINIA ARE TOLD TODAY, UH, THAT THEY WILL NOT GET POWER FOR FOUR TO SEVEN YEARS.
UM, THAT WILL HAVE AN IMPACT AT SOME POINT ON WHAT HAPPENS IN, IN A MARKET LIKE VIRGINIA AND HOW MUCH GROWTH AND, AND, AND ROOM THERE IS, UH, GIVEN THE IMPORTANCE OF TIME TO MARKET RIGHT NOW.
AND, AND AGAIN, THIS, THIS NATIONAL IMPERATIVE OF BUILDING OUT DIGITAL INFRASTRUCTURE.
SO IT'S NOT AN UNFAIR QUESTION, BUT IT'S ONE THAT'S VERY COMPLEX AS YET YOU KIND OF PULL APART DIFFERENT, DIFFERENT ASPECTS AND, AND TRY AND READ THE CRYSTAL BALL.
UM, THERE ARE OTHER MARKETS ACROSS THE COUNTRY, LIKEWISE WHERE, WHERE POWER IS BECOMING SIGNIFICANTLY, UH, HARDER TO COME BY LONGER TIMELINES, AND THAT MAY HAVE AN IMPACT.
UM, THERE ARE SOME THAT THINK THAT, THAT ONE OF THE REASONS YOU SAW SUCH A SIGNIFICANT SHIFT TO ATLANTA AND, AND AARON HAD SHOWN THAT SLIDE, UH, WAS BECAUSE OF SOME OF THE CONSTRAINTS WHEN THEY INITIALLY MERGED IN THE VIRGINIA MARKET AND, AND, AND THERE WAS A POTENTIALLY A MIGRATION OF SOME INVESTMENT TO, TO OTHER MARKETS.
SO YOU'RE ALWAYS GONNA HAVE DYNAMICS LIKE THAT.
UM, I THINK REALLY IT'S GOING TO BE A MATTER OF THINKING ABOUT THE CRITERIA THAT WE LAID OUT.
UH, THINGS LIKE THE ABILITY TO GET TIME TO MARKET, THINGS LIKE, UH, YOU KNOW, THE COST OF OCCUPANCY, UH, COST OF, YOU KNOW, AND THAT INCLUDES ENERGY AS AARON SAID, BUT ALSO TAX RATES, WHICH, WHICH CAN BE SIGNIFICANT AND, AND, UH, IMPORTANT.
[00:40:01]
STATES THAT HAVE TAX POLICIES IN PLACE, UH, SIMILAR TO MANUFACTURERS WHERE YOU DON'T TAX THE INPUTS OR THE CAPITAL EQUIPMENT WITHIN THE DATA CENTER.UM, THERE ARE STATES THAT DO NOT HAVE THAT POLICY.
AND BY AND LARGE, YOU'RE SEEING MOST OF THE INVESTMENT TAKE PLACE IN THE STATES THAT DO TREAT DATA CENTERS SIMILAR TO MANUFACTURERS.
FROM A TAX PERSPECTIVE, UH, WORKFORCE IS CONTINUING TO BE INCREDIBLY IMPORTANT CHALLENGE.
UM, AND AS OUR MEMBERS ARE GOING INTO NEW MARKETS, THEY'RE, THEY'RE REALIZING THAT THERE'S NOT NECESSARILY A WORKFORCE READY TO, READY TO GO, UM, AT LEAST NOT ONE AT SCALE.
SO LOUDOUN COUNTY, VIRGINIA LAST YEAR HAD 22 DATA CENTERS ENROLLED IN THEIR FAST TRACK PROGRAM, MEANING THEY WERE ACCELERATED PERMITTING.
UH, AND, AND YOU KNOW, YOU NEED A REALLY STRONG BROAD CONSTRUCTION FORCE TO DO 22 DATA CENTERS AT THE SAME TIME IN A COUNTY.
UM, GOING INTO A NEW MARKET TAKES TIME TO GET THAT MUSCLE MEMORY.
THAT'LL BE THE FACTOR, I THINK IS SO NOT AN UNFAIR QUESTION, BUT A COMPLEX ONE.
AND JUST BRIEFLY TO ADD BACK TO THE, THE FORECASTING PIECE, UH, IN DECEMBER, LAWRENCE BERKELEY RELEASED ITS 2024 US NATIONAL DATA CENTER ENERGY USAGE REPORT.
UM, WE SHOWED THE, THE SLIDE WITH THE MCKINSEY GROWTH FIGURE.
UH, LAWRENCE BERKLEY PRESENTS ALL OF THE VARIOUS FORECASTS AS OF DECEMBER THAT IT HAD RECEIVED.
JUST SHOWING THE, THE VARIANCE OF THAT.
UM, I ALSO MENTIONED THAT A, A FORECAST CAME OUT EARLIER TODAY FROM NEMA, THE NATIONAL ELECTRICAL MANUFACTURERS ASSOCIATION, THAT'S DOING A LOT OF WORK TO DETERMINE WHAT THE GROWTH MEANS FOR, FOR ITS INDUSTRY AND THEIR MEMBERS.
UM, NEMA TAKES A, A MIDDLE OF THE ROAD APPROACH THAT IS PROBABLY WORTH CONSIDERING THAT I THINK WOULD FALL IN BETWEEN ALL OF THOSE VARIOUS FORECASTS THAT LAWRENCE BERKELEY, UH, PRESENTS.
BUT I WOULD POINT YOU TO, TO BOTH OF THOSE RESOURCES AS WELL.
ANY OTHER QUESTIONS? GREAT GENTLEMEN, THANK YOU VERY MUCH.
THANK YOU AGAIN, WE APPRECIATE THE OPPORTUNITY.
[5.1 Projects and Technology Update]
FIVE, PROJECT AND TECHNOLOGY UPDATE, STARTING WITH REAL TIME CO-OP OPTIMIZATION AND JP P ACTUALLY STARTING WITH PROJECT AND TECHNOLOGY UPDATE AND THEN REAL TIME CO OPTIMIZATION.I WAS JUST ABOUT TO CORRECT THAT, BUT THEY ONE AFTER THE OTHER, SO NO PROBLEM.
SO, SO COMPARED TO LAST YEAR, WE DO HAVE A SLOWDOWN IN TERMS OF, UH, NEW PROJECTS THAT WE ARE STARTING.
AND THIS IS PRIMARILY TO AVOID COLLISIONS WITH THE RTC.
AND WE ALSO, WE WILL SOON START SEEING A SLOW DOWN IN TERMS OF PROJECT COMPLETION.
AND, UM, AND THAT'S BECAUSE WE WANT TO HAVE THESE PROJECTS SKIP OVER THE RTC GO LIVE.
WE DON'T WANT TO COLLUDE WITH RTC, UH, UH, WHEN RTC GOES LIVE, SO THAT, UM, UM, WE DON'T HAVE RESOURCE CONTENTIONS OR SYSTEM CONTENTIONS.
SO YOU START BEGINNING TO SEE THAT, AND WHEN YOU START COMPARING IT LAST YEAR, YOU CAN SEE THAT WE ARE NOT AT THE SAME NUMBER OF PROJECTS, BUT THEN IT DOES MEAN THAT POST RTC THERE WILL BE A DELUGE THEN WHEN ALL THIS STARTS OPENING UP.
SO, SO FOR NEXT YEAR, THIS TIME, I THINK WE'LL BE ON THE OTHER SIDE OF THAT, UH, GRAPH.
SO THIS IS OUR LABOR FORECAST THAT WE SHOW EVERY, UH, MEETING.
AND, UH, I THINK BASED ON, UH, QUESTION FROM LAST TIME, WE ALSO SHOWING A THREE MONTH ROLLING AVERAGE.
UM, BUT WORK IS CONTINUING TO RAMP UP AS RTC GETS INTO MARKET TRIALS, AND THAT'S, I THINK, THE BIGGEST DRIVER FOR THE GROWTH.
BUT AT THIS POINT, UM, I DON'T HAVE ANY, UH, RESOURCE CONTENTION.
I'M, I'M ON TRACK FOR EVERYTHING.
UH, THIS, UM, SLIDE IS BASED ON AN ACTION ITEM.
I THINK IT WAS LINDA WHO ASKED, UM, WHEN I, WHEN I PRESENTED, YOU KNOW, I'VE BEEN PRESENTING THE LABOR FORECAST ALL THE EVERY TIME, AND SHE HAD ASKED, CAN YOU SPLIT IT VERSUS NON IT? SO THIS IS OUR SPLIT.
UM, BUT I ALSO, UH, DECIDED TO SPLIT SOME OF THE MAJOR PROJECTS OVER THE LAST, UH, COUPLE OF YEARS THAT THIS GRAPH SHOWS.
SO, SO WE ARE SHOWING THE EMS PROJECT AS WELL AS RTC, UM, AND, UM, AND THE GREEN ON THE TOP IS CONTRACTORS THAT WE USE.
SO, UM, I THINK YOU CAN EASILY CONCLUDE THAT MOST OF THE ACTUAL CHARGES ARE, ARE REALLY IT.
UM, BUT YOU CAN SEE, ESPECIALLY WITH PROJECTS LIKE RTC, THAT WE HAVE A LOT OF BUSINESS FOLKS THAT ARE RAMPING UP TO BE ON THE PROJECT.
AND THIS IS SOMETHING THAT I'LL BRING UP IN FNA AS WELL,
[00:45:01]
UM, AS AN INTERNAL VENDOR FOR, UH, FUNCTIONALITY THAT WE DELIVER TO OUR BUSINESS PARTNERS THAT WE HAVE, UM, A BIG TEAM THAT IMPLEMENTS FEATURES AND KEEPS OUR SYSTEM, UM, UP TO DATE.UM, IN TERMS OF, UH, DELIVERY FOR THIS CYCLE, UM, I THINK IN MARCH, UH, WE HAD THIS RELEASE OF OUR MARKET PARTICIPANT IDENTITY MANAGEMENT SYSTEM.
WE HAD A TECH HEALTH UPDATE, UM, WE DID THAT.
UM, WE ALSO RELEASED AN NPRR RELATED TO, UM, UH, TRANSMISSION LO LOSS LOSS FACTORS, I THINK.
UM, AND WE HAVE ENHANCEMENTS AS WELL TO IMPROVE, UH, FUTURE STUDIES FOR OUR OPS TEAM, THE FUTURE CASE BUILDERS, ONE OF THAT, UH, IT'S BE GOING LIVE SOON.
UH, SAME WITH THE GRID PLANNING IN THE CLOUD, WHERE WE ARE TAKING THE PLANNING SOFTWARE THAT PLANNING TEAM RUNS ON DESKTOPS AND BRINGING IT AT THIS FOR THIS PHASE ONE, AT LEAST USING ON-PREM COMPUTE.
SO IT GIVES THEM MUCH BETTER COMPUTE THAN USING THEIR LAPTOPS.
UM, BUT, UM, PHASE TWO WOULD TAKE THIS APPROACH AND WE, WE WILL BE ABLE TO LEVERAGE THE CLOUD, WHICH MEANS THEY HAVE BETTER, UM, UH, INFRASTRUCTURE AND THEY CAN ALSO SCALE UP AND DOWN DEPENDING ON THIS CASES THAT YOU'RE STUDYING.
THAT'S MY LAST SLIDE ON PROJECT UPDATE.
NOTHING, UM, UM, OFF WE ARE ALL ON TRACK.
UM, IF THERE'S NO S STILL ABOUT 60 PROJECTS IN FLIGHT? YES.
SO THE CONCURRENT PROJECTS ARE KIND OF THE SAME AS, UM, UM, ABOUT, UH, 55 TO 60 IN THAT RANGE.
UM, BUT IT'S JUST THAT WE ARE SLOWING DOWN INTAKE IF THERE IS CONFLICTS WITH RTC.
[5.2 Real-Time Co-Optimization Implementation Update]
I'LL GET TO RTC.NOW, SINCE WE DO HAVE A NEW BOARD MEMBER HERE, UM, I WILL PUT BACK, I PUT BACK THE SLIDE THAT I TOOK OUT, UH, BECAUSE I'VE BEEN REPEATING THIS SLIDE, BUT, UH, UM, A LESSON I LEARNED.
SO, UM, SO JUST TO, UH, SET UP SOME CONTEXT, RIGHT? THE WHOLE RTC PROJECTS IS BROKEN DOWN INTO MULTIPLE PROJECTS.
WE HAVE A HIGH LEVEL GOVERNANCE PROJECT, A CONTROL PROJECT, BUT THEN THERE ARE THREE PROJECTS THAT ACTUALLY, UM, HAS MOST OF THE SYSTEMS IN THERE.
AND THE MAIN ONE IS THE PRO IS THE SHADE, THE RECTANGLE ON THE LEFT, WHICH CONSISTS OF OUR ENERGY MANAGEMENT SYSTEM, EMS, OUR MARKET MANAGEMENT SYSTEM.
UM, AND THIS IS A SYSTEM THAT INTERFACES WITH OUR MARKET PARTICIPANT SYSTEMS. UM, THE OTHER PROJECTS ARE, UH, RELATED TO OUR SETTLEMENT SYSTEM, AND THAT'S A PROJECT TWO ON THE TOP RIGHT, IT HAS, UH, SETTLEMENT AND REGISTRATION.
AND THE THIRD PROJECT IS, UM, OUR INTEGRATION AND REPORTS AND DASHBOARDING.
SO IN TERMS OF COMPLEXITY, THE PROJECT ON THE LEFT IS THE MOST COMPLEX BECAUSE THAT HAS A MARKET SYSTEM, IT HAS THE INTERACTION WITH MARKET PARTICIPANTS, UM, UM, BUT IN REALITY THE LONG POLE IS A PROJECT ON THE, UM, BOTTOM RIGHT, WHICH IS OUR INTEGRATION, WHICH TENDS TO, UM, HAPPEN AT THE END, THE REPORTING THAT PEOPLE TEND TO CHANGE HOW A REPORT SHOULD LOOK LIKE, WHAT A DASHBOARD SHOULD LOOK LIKE.
UM, SO IT'S LESS COMPLEX, BUT STILL THE LONG, SO JUST A HIGH LEVEL ON, UM, UM, WHAT THE PROJECTS ARE.
AND BECAUSE RTC REQUIRES US TO CHANGE THE MARKET PARTICIPANT SYSTEM AS WELL, THERE'S A COMPLEXITY WHERE THEY NEED TO GO SIMULTANEOUS WITH OUR SYSTEM.
SO, UM, JUST RESTATING SOME OF THAT THAT I MENTIONED BEFORE THAT YOU MET HIM, MISS ALEX.
SO THIS IS THE FINANCIAL STATUS FOR THOSE PROJECTS I MENTIONED, UM, ON THAT, UM, UH, FIRST LINE IT LOOKS, MAY LOOK LIKE WE ARE A LITTLE OVER BUDGET, BUT, BUT THAT'S NOT REALLY TRUE BECAUSE AT THE END OF THE PROJECT WE DO HAVE DECOMMISSIONS COMING THAT GIVES CREDIT BACK TO THE PROJECT.
BUT SO OVERALL WE ARE ON TRACK REALLY AND MAYBE EVEN SLIGHTLY UNDER BUDGET.
AND THIS IS ANOTHER VIEW OF THAT, A MORE DYNAMIC VIEW WHERE WE CAN SEE THE TIME ASPECT OF THAT.
UM, AND, AND THIS ALSO SHOWS, YOU KNOW, TOWARDS THE AFTER GO LIVE, WE, FOR A LITTLE WHILE, WE ARE ACTUALLY OVER BUDGET AND THEN THOSE DECOMMISSIONS KICK IN AND THEN WE GET BACK UNDER BUDGET.
BUT, SO AT THIS POINT, AS IT LOOKS OUR ESTIMATED COMPLETION, WE ARE SLIGHTLY UNDER BUDGET.
UM, SO THIS IS ANOTHER VIEW OF WHAT'S HAPPENING IN THE PROJECT.
AND, UH, AND WE ARE HERE IN THIS NOW AREA.
[00:50:01]
OUR DEVELOPMENT IS COMPLETE ON OUR CORE SYSTEMS. OKAY.AND WHICH MEANS, UM, THE DEV MAJOR DEVELOPMENT OF THE MARKET SYSTEM ON THE EMS SYSTEM AND SETTLEMENT SYSTEM IS COMPLETE.
AND IN FACT, UM, IS A WEEK AGO, UH, WE FINISHED OUR FIRST OPERATING DAY TESTING, WHICH IS AN INTEGRATED TESTING WITH THESE THREE SYSTEMS. JUST THESE THREE, NOT, NOT EVERYTHING, BUT IT IS THESE THREE CORE SYSTEMS THAT ARE READY.
AND, UM, AS A RESULT OF THAT TEST, WE ARE VERY MUCH READY TO START MARKET TRIALS ON MAY 5TH.
UM, AND NOW THIS OPERATING DATE TEST, UH, HAS BEEN SIGNIFICANT EFFORT TO OUR INTERNAL, UH, STAFF.
UM, AND I MENTIONED THIS BECAUSE, UM, WE HAVE NOT ONLY MET OUR DAY THAT TARGET DATE, BUT WE ARE ALSO MET A STRETCH GOAL DATE.
OKAY? AND SOMETIMES I GLOSS OVER IT, BUT BEHIND THE SCENE THERE IS SO MUCH EFFORT THAT OUR TEAM HAS PUT IN TO MEET THOSE STRETCH DATES, UM, WORK ON WEEKENDS, WORK EXTRA TIME.
AND I THOUGHT I JUST CALL THAT OUT, THAT WHILE I GLOSS OVER IT, THAT HEY, WE MET THE STRETCH GOALS.
THERE IS A LOT OF EFFORT THAT WENT BEHIND IT.
AND, UM, I REALLY ACKNOWLEDGE, UM, THAT TEAM AND, UH, THANKS TO THAT AND THIS IS, UH, BUSINESS TEAMS, IT, UM, MARKET PARTICIPANTS.
SO, UM, REALLY APPRECIATE THAT.
SO, SO RIGHT NOW, WHERE ARE WE? WE ARE IN THE PROCESS OF THE SUBMISSION TESTING AND I'VE SEEN LOT OF THE MARKET PARTICIPANTS SUBMITTING, UH, BITS AND, UM, YOU'RE VALIDATING THAT AND THINGS ARE STILL LOOKING TO PLAN.
UM, WE HAVE AN UPCOMING PRODUCTION CODE FREEZE.
AND WHY THAT IS IMPORTANT IS THAT, UM, TO MAKE SURE WE, WHATEVER WE PUT IN PRODUCTION, WE DON'T HAVE TO KEEP RE-IMPLEMENTING THAT ON AN RTC SYSTEM BECAUSE NOW WE ARE SO CLOSE TO CUT OVER, YOU KNOW, I, I SAY CLOSE, BUT IT'S, YOU KNOW, A FEW MONTHS AWAY.
BUT EVERY CHANGE WE MAKE IN PRODUCTION, WE HAVE TO ALSO IMPLEMENT IN OUR RTC SYSTEM.
SO TO MINIMIZE THAT, UM, DOUBLE WORK, DOUBLE TESTING AND RISK THAT IT MAY BRING TO RTC POST, UM, END OF MAY, WE WILL IMPLEMENT A FREEZE, WHICH MEANS THAT, UM, WE'LL ONLY IMPLEMENT SOMETHING THAT IS DEEMED URGENT OR EMERGENCY, RIGHT? OBVIOUSLY THERE'S A PRODUCTION IMPACT.
WE WILL MAKE CHANGES, BUT WE WILL HAVE TO GO THROUGH SOME AUTHORIZATION TO MAKE THOSE CHANGES.
SO NEXT TIME WE ARE HERE, HOPEFULLY I'LL BE ABLE TO TALK ABOUT HOW READY WE ARE WITH OUR, UH, OPEN LOOP TESTING.
UM, SO LOOKING FORWARD TO THAT.
NOW, UM, I PRESENT THIS SLIDE EVERY TIME THAT TALKS ABOUT, UH, MAJOR MILESTONES UPCOMING AS WELL AS WHERE WE ARE.
AND, UH, AND YOU CAN SEE THAT, UM, WE HAVE MET ALL THE TIMELINES THAT WE SHOULD BE MEETING AT THIS POINT.
AND THE BOLD ONE IS OUR OKR MILESTONE.
AND WE ACTUALLY MET, UH, THAT AHEAD OF THAT APRIL 16, AND IN FACT, UM, HIT THE STRETCH GOAL.
YES, I JUST REINFORCED THAT AGAIN.
AND, AND ALL THIS HELPS TO BUY MORE TIME FOR OUR MARKET TRIALS.
AND, AND THERE'S NO STRETCH DATE FOR THAT BECAUSE WE WANT EVERYONE TO BE READY.
WE CAN'T BE READY AHEAD OF THE MARKET.
BUT, BUT THE IMPORTANT THING IS BECAUSE WE ARE AHEAD IN TERMS OF THE OPERATING DAY TEST, IT GIVES US MORE TIME TO TEST AND BE READY FOR OUR, UH, MARKET TRIALS.
JP, HOW MANY, HOW MANY, UM, UH, QCS DO YOU EXPECT TO ACTUALLY BE IN THE INITIAL TESTING PHASE? I THINK I'LL LIKE TO DEFER TO MATT ON THAT, UM, 'CAUSE HE'S KEEPING TRACK OF THAT AND HE ACTUALLY HAS SOME NUMBERS THAT HE'LL BRING IN HIS PRESENTATION AS WELL.
SO INTERNALLY WHAT WE TRACK TO IS QUAIS THAT ARE QUALIFIED WITH RESOURCES AND ACTIVE IN THE MARKET TODAY.
SO THAT'S 107 QU THAT WE TRACK.
UM, AND OBVIOUSLY AS WE DRIFT THROUGH TIME, IT WAS 1 0 5, NOW IT'S 1 0 7.
SO THERE'S A SLOW NATURAL GROWTH, BUT THAT'S OUR TARGET AUDIENCE.
AND HOW MANY OF THEM DO YOU THINK SORT OF JOIN THE FIRST PHASE OF THE PROJECT? OH, THEY'RE ALL REQUIRED TO, THEY'RE ALL GONNA COME.
SO WHEN WE COME IN MAY AND JUNE, SO MAY 5TH IS WHAT YOU'LL KEEP HEARING.
THAT'S WHEN WE EXPECT EVERYONE TO START DOING INITIAL CONNECTIVITY TESTING ON TELEMETRY AND SENDING US TEST SUBMISSIONS.
AND THEN WE'LL GO THROUGH A CRAWL, WALK, RUN OVER THE NEXT SIX MONTHS.
ARE THERE ANY THAT ARE, YOU KNOW, WAY BEHIND THAT AREN'T GONNA MAKE IT? IT'S, SO WE JUST DID A SURVEY AND I, I HAVE, WE'RE MISSING FOUR MARKET PARTICIPANTS RESPONSES, BUT THERE'S STILL TIME TO MITIGATE THAT.
BUT OUTTA THE 107, WE SENT OUT A NOTE AND IT'S IN MY SLIDES LATER ON TODAY THAT SAID ON MARCH 13TH, HERE'S THE PLANS, HERE'S THE MARKET TRIALS, HERE'S THE HANDBOOKS GREEN LIGHT, WE'RE GOING, PLEASE RESPOND THAT YOU'RE AWARE OF THIS SO THAT YOU KNOW THAT, YOU KNOW, SO WE'VE HEARD BACK FROM LIKE I SAID, 103 OUTTA THE 107, SO IT'S GOOD, BUT WE'RE STILL TRACKING DOWN THOSE LAST
[00:55:01]
FOUR.SO 103 SAID THAT THEY WERE AWARE AND THEY'RE READY AND CORRECT.
AND WE'LL KEEP BRINGING THAT INFORMATION HERE AND UM, IF YOU NEED HELP, WE'LL ALSO BRING THAT UP HERE.
UM, 'CAUSE WE DO NEED EVERYONE TO PARTICIPATE, BUT AT THIS POINT I THINK WE ARE DOING GOOD.
UM, NOW LAST TIME WHEN WE WERE HERE, WHEN YOU PRESENTED THE RED SLIDES, YOU KNOW, THERE WAS A QUESTION ON, UM, HOW, UM, WHAT'S ON THE PROCESS AND HOW IT GETS ESCALATED.
SO I THOUGHT IT'D SPEND A COUPLE OF MINUTES ON THAT.
SO THE FORM ON THE RIGHT, UH, IS WHAT OUR, UM, THE PROJECT MANAGEMENT TEAM, UM, USED TO ENTER THE RISK.
SO THESE RISKS ARE EVALUATED WEEKLY ON THE PROJECT BY THE PROJECT LEADERSHIP TEAM.
THAT INCLUDES MATT, OUR JERRY INSHA, OUR PROJECT MANAGER, AS WELL AS AT THE CHRISTIAN OUR TECH LEAD, UH, AS WELL AS OUR PMO MANDY, AS WELL AS VARIOUS, UH, DEPARTMENT DIRECTORS.
SO THIS IS A WEEKLY PROCESS THAT WE DO.
AND THEN SOME OF THESE RISKS ARE THEN, UH, YOU KNOW, BASED ON THE LEVEL AND IMPACT, VERY EXPOSED TO THE STEERING COMMITTEE THAT INCLUDES, UH, KEITH AND ME.
UM, AND THEN IN THAT MEETING WE DECIDE WHETHER SOME OF THE RISK NEEDS TO BE ESCALATED TO THE EXECUTIVE TEAM, AND THEN KEITH AND I WILL BRING THAT TO THE EXECUTIVE TEAM.
AND, AND THEN OF COURSE SOME OF THIS RISK THAT DEPENDING ON THE LEVEL WE BRING HERE TOO, TO THE BOARD SO THAT YOU GUYS CAN SEE IT.
BUT THAT'S GENERALLY THE PROCESS.
OBVIOUSLY WHAT I'M SHOWING HERE IS NOT THE FULL SET.
IT IS WAY MORE RISK THAT WE TRACK, BUT THESE ARE THE FEW THAT, YOU KNOW, WE JUST HIGHLIGHT HERE.
UM, THE RISK, UH, AND THIS IS A SLIDE I'VE SHOWN LAST TIME.
IT'S KIND OF THE SAME, UM, AS LAST TIME, BUT THERE IS A LITTLE BIT OF MOVEMENT AND, AND WE'RE USING THE ARROWS TO CATCH THE DYNAMICS.
UM, THERE'S A RISK THAT, UM, UM, YOU KNOW, IF YOU WANT TO PRESERVE THE DATE, IF YOU LOSE OUR KEY RESOURCES, WE WOULD HAVE AN IMPACT TRYING TO MEET THE DATES BECAUSE WE ARE, UM, SINGLE THREADED ON RESOURCES, UM, IN MANY AREAS.
SO, SO LOSING A RESOURCE AT THIS TIME WOULD HAVE AN IMPACT ON DATE.
AND, AND A VARIATION OF THAT IS THE EXTERNAL EVENT DISRUPTION WHERE YES, WE COULD HAVE AN IMPACT.
SO THAT'S WHAT THE UPWARD MOTION IS, BUT WE ALSO GIVEN TIME, THE PROBABILITY IS REDUCING, WHICH IS WHY IT'S UPWARD AND LEFT.
UM, BUT, UM, UM, BUT NOTHING DIFFERENT THAT I HAVE ALREADY COMMUNICATED AND NO CHANGE HERE.
THIS IS JUST THE SAME THING, WHAT I MENTIONED IN WORDS.
UM, CAN WE TALK ABOUT SOME OF THOSE RISKS? YES.
WHAT, WHAT DOES REGULATORY SLASH POLICY MEAN? WHAT, WHAT SPECIFICALLY ARE WE AT RISK? SO, SO THIS IS, YOU KNOW, IF WE HAVE SOME NPRR AND, AND MATT CAN ADD TO IT TOO.
OKAY? UM, ONE THING WE ARE DOING IS WITH THE UM, RTCB TASK FORCE, RIGHT? WE HAVE A GOOD COMMUNICATION WITH THE MARKET ON WHAT THE REQUIREMENTS ARE, AND THEY HAVE A LOT OF DISCUSSIONS, WHICH IS WHY REALLY THE PROJECT'S ON TRACK, BECAUSE WE NOT HAD SURPRISE REQUIREMENTS AND THINGS LIKE THAT, RIGHT? SO IT'S, IT'S A LOT OF WORK BY MATT AND HIS TEAM WITH THE MARKET PARTS, WITH SET EXPECTATIONS SAYING THIS IS WHAT RTC WILL BE, THIS OTHER REQUIREMENTS, THIS IS HOW WE EXPECT IT TO BEHAVE, THINGS LIKE THAT.
BUT IF WE GET OUR NPRS THAT WE HAVE TO IMPLEMENT, YOU KNOW, I SAID, HEY, I'M DEVELOPMENT COMPLETE AND I'M TESTING, BUT NOW IF I GET AN NPRR THAT SAYS, NO, YOU NEED TO GO LIVE WITH THIS REQUIREMENT, THAT'S A REGULATORY IMPACT THAT I WILL HAVE TO DEAL WITH, RIGHT? AND, AND YOU KNOW, WE HAVE HAD ALL THIS DISCUSSION ABOUT THE AS DEMAND CURVE, RIGHT? FOR A, FOR AN AS AN EXAMPLE.
BUT AT LEAST THAT WE HAVE CODED IT SO THAT IT'S ONLY PARAMETER CHANGES THAT WE NEED TO MAKE.
BUT IF SOMEBODY SAYS, WELL, I DON'T WANT THIS CURVE AT ALL, I WANT SOMETHING TOTALLY DIFFERENT, THAT'S AN IMPLEMENTATION THAT'S NOT NO LONGER PARAMETER CHANGES, RIGHT? SO THAT'S AN EXAMPLE OF SOMETHING THAT COULD IMPACT OR DERAIL.
AND, AND MY ANSWER THERE IS, YOU KNOW, MAYBE THERE ARE THINGS THAT WE CAN DO POST GO LIVE.
THERE MAY BE MANY CHANGES THAT WE LEARN AFTER RTC, BUT DOESN'T MEAN WE HAVE TO GO LIVE WITH THEM AND MATT, FEEL FREE TO ADD MORE BASED ON YOUR DISCUSSION WITH MARKET PARTICIPANTS.
NO, I THINK NPR 1269 THAT WE'LL BE DISCUSSING TOMORROW IS A GOOD EXAMPLE OF, IT'S WHERE THERE'S TWO SIDES TO THE MARKET THAT BELIEVE IN DIFFERENT THINGS AND DO WE GET STUCK ON ANYTHING IN PARTICULAR.
SO IT'S MAINLY TO CAPTURE THAT, BUT YOU KNOW, ON THE BROADER REALM, ARE THERE POLICY CHANGES, LAWSUITS, ANYTHING LIKE THAT, IT JUST FITS INTO THAT REALM OF WE HAVE TO BE AWARE OF AND STAY IN TUNE WITH EVERYTHING THAT'S GOING ON OUTSIDE OF OUR COT.
SO THAT'S HOW WE'VE CAPTURED THAT.
[01:00:01]
THAT WAS MY LAST SLIDE.LET ME KNOW IF THERE ARE ANY QUESTIONS.
ANY MORE QUESTIONS FOR JP? JP? JUST, UH, IT'S, ALEX HAD ONE QUESTION ON THE, ON YOUR TRIALS, GIVEN THAT WE'RE LESS THAN 30 DAYS AWAY TO THE INITIATION OF THOSE MARKET TRIALS, CAN YOU JUST WALK US THROUGH MAYBE AN EXAMPLE OF WHAT A TRIAL LOOKS LIKE IS, UM, MAYBE BY A, A TYPE OF QUEASY, IS IT, UM, A NEW SUBMISSION OF DATA? IS THERE ANY RESPONSE? IS THERE A LOOP OF AN ANSWER? JUST GIVE US A LITTLE SENSE OF, YEAH.
OF HOW A TRIAL MIGHT WORK TO GIVE US CONFIDENCE THAT THE THINGS ARE IN FACT ON TRACK.
YEAH, AND UH, YOU KNOW, MATT RAISED HIS HANDS TO JUMP TO ANSWER, WHICH I THINK I WILL LET HIM.
AND I'M JUST GONNA SAY, YOU KNOW, THERE ARE TWO KINDS OF THINGS THAT WE ARE DOING HERE.
ONE IS THIS OPEN LOOP AND I LET ALSO MATT TALK ABOUT THAT.
AND THE SECOND IS THE CLOSED LOOP.
'CAUSE THERE ARE DIFFERENT LEVELS OF TESTING.
SO WE START WITH THE EASY, DO YOUR SUBMISSION, WE'LL AT LEAST CHECK OUT HOW YOUR SUBMISSIONS WORK IN THE OPEN LOOP.
WE'LL RUN THE MARKET, BUT WE'LL NOT SEND BACK SOMETHING YOU TO ACT.
BUT CLOSED LOOP IS WHERE IT IS THE REAL THING.
AND WE'LL TEST FOR SOME TIME, BUT I LET MATT ANSWER IN MORE DETAIL.
WELL, THAT'S THE GREAT QUICK VERSION.
I COULD GIVE YOU A VERY LONG, I COULD GIVE YOU ANOTHER 60 SECONDS ON THAT IF YOU'D LIKE.
UM, GENERALLY THE QUIZ WITH RESOURCES DURING THAT MAY THROUGH JUNE PROCESS WILL JUST SUBMIT NEW AND MODIFIED SUBMISSIONS TO US.
SO WE'RE NOT RIPPING OUT THE MARKET STARTING OVER FROM SCRATCH.
IT'S JUST INCREMENTAL TYPE DATA THAT NEEDS TO COME IN.
SO WE'RE REQUIRING THOSE DATA ELEMENTS IN MAY AND JUNE AS WELL AS NEW TELEMETRY POINTS.
AND TELEMETRY IS REAL TIME FIELD DATA ON CAPABILITIES.
SO THAT IS THE FIRST TWO MONTHS.
THEN IT'S THE JULY AND AUGUST IS WE START TO ACTUALLY RUN OUR MARKET SYSTEMS BEHIND THE SCENES AND PUBLISH NUMBERS.
SO THAT'S NOT A SIMULATION OR WHAT IS IT GONNA LOOK LIKE? GO LIVE THAT WILL RUN THE REAL TIME MARKET? WE'LL PUBLISH PRICES AND WE'LL ASK THE MARKET PARTICIPANTS TO OFFER IN 80 TO 120% COSTS.
SO IT'S A GOOD, UH, FEEDBACK LOOP BECAUSE THE MARKET WILL THEN SEE OUR PRICES.
THEY CAN CHANGE THEIR TELEMETRY, SEE HOW THINGS MOVE IN THEIR FLEET, BUT THEY'RE NOT ACTUALLY MOVING ANYTHING.
NOW THE LAST ONE IS THE ONE THAT'S THE HIGHEST RISK ONE THAT WE'RE ALL FOCUSED ON IS THAT CLOSED LOOP TEST, WHICH MEANS CONTROL ROOM TO CONTROL ROOM.
WE SNAP INTO REAL TIME CO OPTIMIZATION AT ERCOT AND THE QUAIS FOR TWO HOURS AND FOLLOW THE TELEMETRY AND THE DISPATCH THROUGH THOSE TWO SYSTEMS. SO THAT'S A TWO TO FOUR HOUR TEST, THAT'S A RELIABILITY PIECE, NOT SO MUCH A MARKETS PIECE TO MAKE SURE THAT WE CAN MANAGE REGULATION, UH, FOR THAT DURATION ON THESE NEW CONTROL SYSTEMS. AND THEN WE TRANSITION TO GO LIVE.
AND THE LAST THING IS, HOW WILL YOU KNOW IF THE MARKET PARTICIPANTS ARE PRESENT? WE WILL BRING BOARD SLIDES THAT HAVE EVERY MARKET PARTICIPANT LISTED AND WHETHER OR NOT THEY'RE SUCCESSFULLY ENGAGED IN AND DOING EACH OF THESE.
SO WE HAVE METRICS ON EACH OF THEM AND WE'LL HAVE NAMES.
SO IF WE'RE HAVING A HARD TIME GETTING A HOLD OF ONE COMPANY, THERE'S THE PRESSURE OF THE MARKET AND GOVERNANCE TO MAKE SURE THEY'RE INVOLVED.
[6. Future Agenda Items]
AGENDA ITEMS. UM, AND UH, YOU CAN SEE ON THIS SLIDE THAT WE HAVE, UM, A SORT OF A STANDARD FORMAT OF AGENDA ITEMS. WE WILL CONTINUE TO, UM, LOOK TO BRING IN FUTURE TOPICS AND, AND JP AND I ARE ARE TALKING ABOUT SORT OF A, A COUPLE OF POTENTIAL, UH, TOPICS FOR OUR JUNE MEETING.UM, AND, UH, WE ALWAYS, YOU KNOW, NEED THREE OR FOUR OF THEM FRANKLY BECAUSE, UH, OUR HIT RATE ON ANY ONE GIVEN TOPIC IS NOT VERY HIGH.
BUT, UH, WHEN WE HAVE ENOUGH OF THEM, WE, WE TEND TO BE ABLE TO GET ONE GOOD ONE.
SO YEAH, WE'RE WORKING, WE'RE WORKING ON THAT NOW.
AND IF, IF MEMBERS OF THE COMMITTEE HAVE ANY PARTICULAR SUBJECTS THAT THEY WOULD BE INTERESTED IN, PLEASE LET US KNOW.
SO JOHN, ONE PROPOSAL MAYBE I HAVE, IS THAT FOR THE GRID TRANSFORMATION AS WE START RELEASING THE WHITE PAPERS, MAYBE SOME OF THOSE SMES CAN COME HERE AND UM, MAYBE THEY CAN BE GOOD TOPICS AS WELL DOWN THE ROAD.
BUT, UH, I'LL CHECK WITH YOU, UM, WHEN THE TIME COMES.
OKAY, WE'RE READY TO TRANSITION TO EXECUTIVE
[Convene Executive Session]
SESSION.SO WHY DON'T WE TAKE FIVE MINUTES TO, UH, REFILL COFFEES AND UH, WE'LL RECONVENE IN EXECUTIVE SESSION IN ABOUT FIVE.