• TVA has created a separate data-centre rate that is expected to raise average bills by about 10%, with existing customers moving to the new rate over three fiscal years
  • New and expanding data-centre loads above 5MW will also face charges for capacity TVA prepares to serve them

The fact

The Tennessee Valley Authority has approved a separate electricity rate for data centres as it prepares for growth in large power loads across its service territory. Data-centre customers will move out of the manufacturing rate class, with average all-in electricity bills expected to rise by about 10%. Existing customers will move to the new rate over three fiscal years.

For new or expanding data-centre loads above 5MW, TVA is also introducing capacity-commitment charges intended to recover the cost of generation and grid capacity prepared for those projects. Data Center Dynamics reported the commitment at about US$1.5 million per MW over three to five years for new developments. TVA has also approved a Power Interruption Provision that can allow some projects to take service before enough permanent system capacity is available, provided the customer accepts the risk of interruption.

The assessment

TVA’s new structure makes a power request more than a place in the queue. For new and expanding loads above 5MW, developers must put money behind the capacity TVA is being asked to prepare. That means the amount of power a project reserves becomes a decision during planning, rather than something settled only when the site is close to energisation.

A developer that reserves enough power for the full campus may protect capacity for later phases, but it also commits capital before those phases are built. Reserving only what the first phase needs keeps the initial commitment smaller, but leaves later expansion dependent on additional capacity being available. If permanent capacity is not ready, interruptible service offers another option: the project can take power earlier, but TVA can curtail that supply when required.

For BTW readers, TVA is making developers commit to power earlier. Projects now have to decide how much capacity they need, when to pay for it and whether they can accept interruptions before permanent supply is ready.

What to watch

Watch the first data-centre service agreements for when capacity payments begin, how much power developers reserve and what conditions apply to interruptible service. Those details will show whether projects respond by requesting less power upfront, building in smaller phases or accepting temporary interruption risk while permanent capacity is completed.