Data Center Dynamics – Brian Janous on how data centers can survive the grid crunch

By Sebastian Moss
September 24, 2024

As data centers’ appetite for power grows, utilities are coming under increased pressure to keep up.

For many in the sector, it’s a significant headache; a serious roadblock on the pathway to promised perennial growth. But others, like Cloverleaf’s Brian Janous, see opportunity.

“I had been at Microsoft for almost 12 years, and it’s not like we weren’t doing a lot of innovation there,” Janous told DCD about his departure in 2023. “But, inevitably, it’s also very sort of execution and operations-oriented. We have to deliver, day in and day out.”

Janous spent nearly a year deciding what to do after his stint as the VP of energy at Microsoft, and witnessed the AI boom that has shaken the entire data center sector.

“The real ‘aha’ moment for me was when GPT 3.5 was released six months after GPT-3 and was bounds better, and I realized that the utility industry is not going to keep up with the pace,” he recalls. “I was hearing rumblings of companies building much, much bigger data centers and I knew that the utility industry was not prepared for what we’re thinking about doing.”

This February, he co-founded Cloverleaf Infrastructure, a new business looking to buy land for data center companies, working with utilities to upgrade power infrastructure.

“Our customer is the data center industry, whether it’s a hyperscaler or colo provider, or someone else that wants to build a factory or hydrogen fuel plant,” he says.

Janous is part of a new crop of energy experts looking to find an opportunity in a coming power crisis, helping bridge the gap between a utility sector that is unprepared for this level of growth and a data center market that has long relied on grid capacity.

“If you go back to the origins of this sector, it was all about building data centers where you’re close to the network,” Janous said. “Those people understand networks really well. They do not understand energy, they don’t have a good energy strategy. A lot of companies right now are playing catch up.”

Cloverleaf expects to work with utilities for as long as a year, applying upgrades like “some batteries strategically placed around the system or other grid enhancing technologies” to help unlock capacity.

“We’re looking at a number of markets right now, where we’re planning on acquiring land, getting those sites to be shovel-ready, working with utilities on a plan for both near-term power and long-term scale. We’re playing in the 500MW-1GW plus sort of scale.”

Cloverleaf is also talking to “a number of very large REITs” that already own a lot of land “and are trying to figure out if any could support a data center.”

“The way I look at it is, if the data center is going to have a backup generator, you have those two options,” Janous says. If you go for gas, those generators could also be used to help the grid during times of peak load, he explains.

“If you’re forcing the utility to have to build a new plant to support your load, that utility is not going to be as incentivized to run that natural gas plant as efficiently and as cleanly as a data center would,” Janous says. “Plus, the utility is going to then have some justification to want to keep that plant online for a long time – if they build a new gas plant in 2025, they’re not going to shut it down in 2029.

“So, all things being equal, you would rather have those gas generators sitting behind a data center. That’s one more diesel plant that you’re not building, and one more gas power plant they’re not building.”

Microsoft experimented with this idea in Cheyenne, with Janous claiming that it helped avoid the utility building a peaker plant. “Unfortunately, we haven’t seen as much of that as we should, more broadly,” he says.

“Data centers haven’t quite been under the pressure that they are under today. But, even with that, there’s still resistance in the industry to doing things like that. Data center designers are super conservative, they want to do things the same way every time.”

This unwillingness to change is a fundamental problem with the industry, he says. “It’s like any change in a data center design is a disease and everyone in that organization is a white blood cell.”

The nuclear option

Conversely, however, the industry has shown a desire to change in a much more dramatic way – by embracing small modular reactors (SMRs), and microreactors.

“It’s really sexy, and it sounds cool,” Janous says. “But no one’s actually ever built an SMR.

“If you think that you’re going to go off-grid, with a brand new technology for the first time, I just laugh. We need those units to be built, we need them to run for a while before anyone starts to feel like they would consider some sort of off-grid configuration. We’re two decades away from that being a reality for the industry.”

This puts “a lot of attention on something that isn’t actually solving the problem,” he argues, instead of putting the focus on the technologies of today and the near future. “You can put batteries behind your meter now, you can do grid technology. There’s a whole bunch of low-hanging fruit that would actually be meaningful in the near term. Instead, you’re spending all this time and resources talking about SMRs and fusion, and it’s not going to solve the problem.”

The multigigawatt era

SMRs and fusion have both been touted by Microsoft and other operators as a way to power the next generation of data centers, which seem to be getting ever larger and ever more power-intensive.

“The scale of these data centers is not going to get smaller,” Janous said. “You’ve got places like Northern Virginia that are just going to have to keep growing, which makes the power solution absolutely critical, and then you have the Stargates of the world.”

Earlier this year, The Information reported that Microsoft was considering a 5GW mega data center to be used by OpenAI, codenamed Stargate – but representatives from the company have disputed the claim.

“I do see a pathway to multi-gigawatt, I think everyone is thinking about it,” Janous says. “I think part of the evidence of that is if you look at [utility] AEP, they announced that they had something like 80GW in queue. The reason is that everyone is buying land adjacent to their 765kV system – they have the largest 765kV system in the US.” Janous is referring to a huge extra-high-voltage transmission line that can bring enormous amounts of power over much longer distances.

He continues: “Amazon’s bought land there, Meta’s bought land there, Google’s bought land there, Microsoft bought land there. You see all these announcements of people buying land in Ohio and Indiana and, if you trace it, they’re all buying the same thing, which is access to that 765kV, because that’s the only way you could get enough power to have a multi-gigawatt.”

Those projects will have to think carefully about how they power and provide backup to those enormous complexes. “You’d have a hard time permitting 5GW of diesel gens,” Janous says. “If this is a training model, you might not need it anyway.”

Data centers, whether ultra-large or small, are also competing with other sectors, including factories and hydrogen production.

For now, they should usually win out. “You have the most well-capitalized companies in the world building something with fantastic margins, going after a new market that is valued in the trillions,” says Janous.

“Turning electricity into data is one of the most profitable businesses in the world.”

But that could soon get harder, he warns: “I don’t feel like the industry fully understands that, when push comes to shove, data centers are gonna be the first to be cut out.

“If I’m the governor of some state, I’m not going to turn away a factory that brings 1,500 jobs so I can plug in another data center. I think one of the things the industry has to be thinking about more proactively is what are we collectively doing to avoid that outcome?”

He adds: “We are going to start to see more and more moratoriums and more restrictions on growth – that’s inevitable. Yeah, that’s going to happen. And I just don’t see the industry taking it seriously enough. That’s where this is all going.”