With the explosive growth of AI and cloud computing, technology companies are racing to build more data centers than ever before—outpacing both construction timelines and grid capacity. Traditional data centers, AI data centers, and chip foundries are projected to double electricity demand by 2030, with an expected increase from 130 terawatt-hours (TWh) in 2023 to 307 TWh in 2030. In Loudoun County, Virginia, data centers are consuming 20% or more of a utility’s total sales. In Santa Clara, CA, they’re utilizing 60% of the utility’s energy.

This growth is putting decarbonization goals at risk while adding cost pressure on power prices as utilities struggle to meet the new demand, especially in regions where new data centers are concentrated such as the Southeast, Southwest, and Midwest. Building new generation capacity and transmission and distribution infrastructure can take decades to complete. And even if planned, construction can be completed too late to meet the needs of tech companies.

But what if data centers could become grid assets rather than simply exacerbating grid strain?  The headlines are often centered around the larger tech companies investing enormous sums on growing and meeting their own computation needs.  There’s still plenty of room in the conversation for the emerging, locational multi-tenant data centers facing similar market dynamics.

Understanding the Complex Data Center Landscape

Uplight partnered with See Change Institute to better understand how data center energy managers think about load flexibility programs. We interviewed 12 energy decision-makers across different data center types, regions, and sizes to explore their familiarity with demand response (DR) and virtual power plant (VPP) programs—and what would motivate their participation.

What we found was a landscape far more complex than many realize. Data centers vary widely in customer type, geography, size, workload, and energy considerations—making a one-size-fits-all approach ineffective. Most either managed more than one data center across many locations or were colocated and shared with other clients, often using hybrid energy models.

Location and clientele have a greater impact on energy decision-making than size or type. Different types of data center clients have distinct needs and motivations: retail clients prioritize sustainability, healthcare requires reliable 24/7 energy and data security, and hyperscalers focus on decarbonization targets.

Load Flexibility: Interest Exists, But Barriers Remain

We found that data center managers largely understood the idea of demand flexibility, but knew less about VPPs. They expressed some interest in participating, but with significant limitations.

While data center operators were familiar with basic load flexibility programs and showed interest in learning more, many expressed hesitation about participating unless the programs offered significant benefits. The need to maintain 24/7 operational reliability creates challenges for operators to balance reliability requirements with grid flexibility opportunities.

However, hyperscale data centers were the most open to the possibility of load flexibility, especially when thinking about sustainability, financial, and community benefits. Hyperscalers are sophisticated energy buyers and increasingly active market players who are pioneering the use of their assets as flexible load—an approach that helps them meet ambitious decarbonization goals while maintaining operational reliability.  One explained: “Load flex could be an option that will definitely be a value addition for [our] sustainability initiatives, where they want to embed the whole sustainability factor into the entire supply chain.”

Among the participants who already participated in some form of load flexibility program, we discovered their level of engagement often remained minimal, selective, and not comprehensive. Instead of reducing power consumption, they tended to rely on backup systems. Willingness to participate was limited to non-peak times that were convenient for data centers such as holidays, nighttime, or weekend hours

Beyond the Headlines: The Opportunity for Emerging Players

The growth projections are staggering: by 2030, hyperscalers are expected to fulfill about 70% of data center growth directly or through cloud services. However, this still leaves a substantial and growing segment of the market that includes hundreds of smaller regional colocation providers. These players face the same grid constraints and rising energy costs as hyperscalers but may lack the same resources, technical expertise, or established relationships with utilities to implement sophisticated energy management strategies.

For these data centers, catching up to hyperscalers isn’t just about sustainability—it’s about competitiveness. Data centers that can offer load flexibility will gain faster grid connection times, potentially lower energy costs through participation in demand response programs, and enhance appeal to enterprise clients who increasingly prioritize sustainability in their vendor selection. Without adopting these capabilities, emerging players risk being left behind in an increasingly constrained energy landscape.

Five Strategies for Successful Data Center Engagement

Based on our research, we identified five key recommendations for utilities and energy providers looking to engage data centers in load flexibility programs:

Build relationships early and maintain them. New projects require frequent conversations with the utility for planning can serve as a great touch point to establish positive relationships. Keeping close collaboration after the project is complete can help program participation.

Tailor your approach for different profiles. A singular strategy won’t resonate with the diverse data center industry. Explore partnerships with third-party vendors that partner with hyperscalers, as these companies have established relationships. Tailor approaches to multinational companies, which are likely focused on decarbonization goals, and to smaller centers that care most about cost, reliability, and safety.

Lead with education and benefits. Data center operators need a clear understanding of programs before signing up. Focus on communicating practical benefits while directly addressing concerns about operational disruption. For emerging players who may be new to these concepts, provide case studies and success stories from early adopters to demonstrate proven value.

Stay flexible amid regulatory changes. The political and regulatory environment remains more in flux than ever before at global, national, and local levels. Successful partnerships need to  recognize this uncertainty and ensure alignment with those shifts.

Design solutions for data center realities. Programs must seamlessly integrate into existing business practices, deliver tangible and immediate bottom-line impact, enable direct and regular communication, and account for maintaining 24/7 operational integrity.

Download the Full Research Report for Additional Insights

The rapid growth of data centers represents both a significant challenge and opportunity for the electric grid. Our research reveals that while data center operators are cautiously interested in load flexibility programs, successful engagement requires utilities to build strong relationships, provide tailored solutions that maintain reliability, and demonstrate immediate value.

Want to dive deeper into our findings? Read the full eBook to explore:

• Complete research methodology, interview insights, and 25 direct quotes from energy managers
• Comprehensive research takeaways and analysis, including more specific program design recommendations