Utility Companies: Help Them, Help You During Site Selection

One of the first questions our team asks a client as a technical advisor during the site selection process for high-demand utility projects – think data centers, advanced manufacturing, controlled environment agriculture, etc. is what are the power, water (including wastewater), and gas requirements for the project.?

The quality of the answers we receive varies greatly, but is often times a series of back of the napkin calculations – especially for first of their kind projects.? While this might seem like an acceptable approach at the beginning of the process, it can inadvertently drive the site selection process in a direction where quality sites are overlooked and create headaches down the road.?

Below I share a few tips on how to avoid this issue by doing some upfront homework to more effectively engage utilities to improve the process and outcomes.? While I use power as my main example, this is true for water and gas as well.

Engage Early

Engaging a power company early in site selection is crucial for assessing power availability and capacity, identifying potential upgrades, and exploring cost-saving and incentives opportunities. It also streamlines the permitting process and fosters collaboration for smoother project execution. Early engagement ensures your project's power needs are met efficiently and cost-effectively, mitigating risks of delays and unexpected costs.? By engaging the right utility resources early, there may be opportunities to identify and leverage existing projects in the pipeline that can dramatically improve the timing and capex associated with delivering service.? An example of this would be “piggy backing” on a planned transmission upgrade project near a site to leverage existing utility easements and rights of way.?

Be Realistic

Projected utility demands for projects are often materially inflated.? This is due to a variety of factors, but often entails several innocent instances of “just in case”.? ?While this might not seem like a big deal, it’s one of the biggest mistakes made, and may disqualify otherwise excellent sites from consideration.?

Let’s say an engineer comes up with a SWAG demand figure of 8MW.? That engineer sends it to their manager who looks at the number, asks some questions, and decides to increase that by 20% - so we’re up to 9.6MW.? The manager sends it to their director who decides to pad it with another 10% (increase to 10.6MW).? Finally, the person in charge of the site selection process increases it by another 10%. After all of this “just in case” padding, we’ve arrived at +/- 11.6MW – a 45% increase from the original 8MW.? In a case where a utility’s distribution network is operating at 13.2kV, the final requirement may now exceed the available power on a single feeder, whereas the original 8MW would have been able to be serviced by a single feeder.? This just in case approach has a cascading effect on increasing time and costs.? While I used the example of distribution circuit capacity above, that same increase could have an impact on upstream infrastructure upgrades such as substation enhancements, that may not really be required.

Properly Frame Your Ask

Now more than ever, utilities are being asked to serve increasingly large demands, while often being provided minimal information.? Questions like “how long until you can deliver 200MW”, or “we need between 10-30MW” are not constructive, and quite frankly, don’t paint you in the best light with the utility company.? There are a few key technical details that are worth spending time and money developing, which will in turn, help the utility provide a more accurate assessment of providing power to the project. In no particular order:

Create a demand forecast

Create a schedule that answers the question “how much power is needed, and when is it required by”.? For example, on day one, the project requires 6MW, with an additional 2MW every 6 months until a maximum of 12MW is reached.? In the instance where a significant amount of power is needed to perform construction or commissioning, be sure to note that as well, as temporary construction power is typically minimal.? Include dates - the more detail, the better.

Read a load letter application

The overwhelming majority of utilities require a load letter application to be filled out in order to evaluate the technical demands of a project.? While the forms differ slightly from utility to utility, they typically share many common elements.? While you may not have some of the more granular data available at the beginning of a project, it’s important to know what will eventually be asked of you.? At a minimum, go into the conversation with an understanding of your connected load, demand/base load, peak demand, desired service delivery characteristics, and if an upgrade – your existing load data.?

Don’t recreate the wheel

If you are constructing a new facility very similar to an existing facility, look to data from the existing facility to help guide you.? This data, especially historic demand information, can help to determine the tariff and associated energy rates at a particular location.? While not a predictor of future energy costs, it can help estimate expenses related to energy, including the cost of generation and transmission/distribution charges, demand charges, taxes, etc.? The more accurate that information is, the more accurate your energy cost projections will be.

Hire experts

There is often an aversion to spending money on engineers, architects and consultants at the early stages of a project - this is especially true for start-ups.? Instead, companies rely on internal resources to answer many of the questions I’ve discussed, with varying results.? At best, internal resources are qualified and have experience with identical or very similar projects, providing accurate information to guide the project.? At worst, the internal resources are less than qualified, provide incorrect information, and unwittingly doom the project before it even starts.? Spending a few hundred thousand dollars to ensure you’re headed down the right path on a $200M project is a rounding error, and money very well spent to avoid pitfalls down the road.