Data centers are emerging as flexible loads, but they could also procure local flexibility from clubs of Virtual Power Plants. This “clubbing” model strengthens communities, lowers costs, relieves grid constraints, and enhances resilience.
Much of today’s discussion on AI and power focuses on how data centers themselves can act as sources of flexibility. Duke University’s flagship report Rethinking Load Growth kicked off this new flexibility category, outlining the huge opportunity in tapping into compute flexibility, shifting workloads, and using on-site assets like batteries and UPS systems. Hyperscalers are already moving in this direction - Google’s agreements with TVA and Indiana & Michigan show that compute can be dispatched just like a generator. Startups like Emerald AI recently announced over-subscribed seed rounds. Articles reinforcing this trend are popping up everywhere, E&E News “How Data Centers Can Learn to Turn Off and Help the Grid”, Heatmap “AI’s Flexible Loads”, and Economist “How big tech plans to feed AI’s voracious appetite for power”. The industry is treating data centers as the next great flexible load.
That’s all good news. But there’s another model we should be exploring too.
Instead of only focusing behind the meter, data centers could procure flexibility and resource adequacy from third parties through local Virtual Power Plants (VPPs) or “clubs” of distributed energy resources (DERs). The key is ensuring these resources are situated locally, so they do two jobs at once:
This means a data center doesn’t just become a large consumer, it becomes a partner in local reliability.
Setup
Operations
In effect, the Data Center is buying Flex-as-Firmness from its neighbors.
Advantages of this approach:
Challenges to solve:
The current debate casts data centers as either problems (too much load) or partial solutions (flexing their own assets). The VPP/club approach reframes them as partners: procuring flexibility from others, relieving local grid constraints, and helping the system scale faster.
Data centers will certainly become giant new flex providers in their own right. But they could also become the biggest new buyers in town - purchasing flexibility and resource adequacy from local ecosystems. If we open up flexibility markets to this model, the lowest-cost portfolio - whether on-site, off-site, or compute - will win. That’s how AI grows without breaking the grid.