Microgrids & Power Solutions for Data Centers: An Interview with Enchanted Rock CEO Thomas McAndrew

[00:00:00] Buffy Harakidis: Welcome back to JSA TV, where we're covering the latest stories, trends, and innovations from leaders in the digital infrastructure industry. I'm Buffy Harakidis of JSA, and joining me today is Thomas McAndrew. He is the founder and CEO of Enchanted Rock. Thomas, welcome to JSA TV. [00:00:33] Thomas McAndrew: Thanks so much for having me, Buffy. [00:00:35] Buffy Harakidis: Yeah, we're here live in Las Vegas for the Yota Conference, and this is day one. The floor is absolutely buzzing here in glamorous Las Vegas at the MGM. And such an honor to be speaking to you today about Enchanted Rock, your microgrids, and your resiliency as a service model for delivering power to customers and utilities. How does this differ from traditional models? [00:01:00] Speaker ?: Sure. [00:01:00] Thomas McAndrew: The traditional model for backup power was a business that I need to be able to stay in business during and after some type of severe weather event that caused them to lose power. And so they would go install a diesel generator. In many cases, they really didn't want to be in the business of building, operating a diesel generator. They just wanted to keep the lights on. And so it got into that kind of the business of owning and operating a diesel generator because they had to. So at Enchanted Rock, we said, you don't have to do that. Let us handle all of that as far as actually the installation of a backup generator, the operations, and we'll keep the lights on for you. And we basically turned it into a service model, what was a known operate model for grocery stores, hospitals, senior living facilities, data centers. And we said, no, well, we will actually own that backup generation, and we will do everything to make it as simple and as worry-free as we possibly can. And so that's what we've done. We actually bring the cost. We currently are installing natural gas microgrids, and those are a much more expensive system than a diesel generator, but they're much cleaner and they're more reliable. The way we bring the cost down to our customers is we sell back to the electric grid in times of grid stress. And so our customers end up getting a much cleaner, more reliable system. It's worry-free, and they get it at about the same cost as what they would have spent on a diesel. So that's our business model. [00:02:31] Buffy Harakidis: Well, let's dive right into sustainability, and it's important to data centers. Right. Specifically here at this conference, we're hearing all about sustainability. And tell us a little bit more about why natural gas is a better choice, especially for data centers. [00:02:48] Thomas McAndrew: So there's a couple of aspects of natural gas that make it a better option. The sustainability is one of them. It's a much, much cleaner solution. Our generators typically have, say, less than 1% of the tailpipe emissions that you would see with a diesel generator. So just from a local community perspective, it's much more sustainable. You don't have the same type of emissions that you would have with the diesel. And that's incredibly important to us to be a good local citizen. Also, the sound emissions are much lower. And people don't think about that from the standpoint of sustainability. But if you're building a 20-plus year asset, you want to be as quiet as possible and be good, again, to be a good local citizen. And then from the standpoint of sustainability, kind of in the traditional carbon emissions perspective, a couple of things. One, for example, we have a data center that we're working on with Microsoft. We actually purchased renewable natural gas offsets. Basically, you're capturing methane that is being released. And that actually totally decarbonizes the actual resiliency system for Microsoft. So that's a much more sustainable solution. So any of the natural gas we use has to be offset by renewable natural gas. And so we're very, very excited about the use of renewable natural gas and capturing methane that would have been released. And methane is a very, very potent greenhouse gas. And so that's pretty neat for us. The other thing that we do is when we actually -- we don't run that often in support of the grid. But when we do, there's typically a problem. For example, in Texas, maybe the wind isn't blowing the way folks thought. So we can help fill the gap where the renewables can't provide during that period of time. And so our type of microgrid batteries and other types of resources help buffer the intermittency of renewables. So it enables kind of this continued ramp of wind and solar. But in a way that you don't have grid reliability issues. [00:04:45] Buffy Harakidis: Well, grid reliability issues are surely a big concern, especially in the data center industry. And all we're hearing, you know, here today at this conference is all about the explosive growth within our industry, specifically when it comes to enabling AI and machine learning. So how can your solution accelerate access to power since it's such a challenge to unlock this growth? [00:05:12] Thomas McAndrew: Yeah, great question, Buffy. The power constraint is a significant constraint to data center growth. I think it's become the primary constraint, right? And so that's a little bit of a scary thing, right? We have a great opportunity with AI, but we need to fix the power problem. You know, it's interesting because what we're seeing is in many of these markets, not just in the US, but around the world, where the issue isn't that we're just out of power. It's that there's very, there's a limited number of hours where the utility has a hard time delivering for whatever reason. And it may be 500 hours a year, 100 hours a year, 800 hours a year. And so kind of our solution, what we're saying is look to solve kind of that problem that the utility has. And so data centers work in partnership with the utilities to say, how do we solve those kind of those very few, let's call it 5% of the hours a year where they're having a very hard time serving that load. And so our solution says, the data center has to continue to operate, but we will install a natural gas micro grid. And when during times of grid stress, we can basically take that load of the data center off the grid and provide surplus back to the grid to help actually be to solve problems that the utility is having. So instead of being considered a problem, the data center is now part of the solution. And so we think that's an incredibly powerful concept. And we're very involved with many utilities around the country and working through these types of programs where they can actually serve the data center load and potentially accelerate service. So they may have said, well, if we have to serve you at a very high level of reliability, it may take seven years for us to provide that service. But if we can interrupt you 5% of the hours in a year, we can provide that service in two to three years. So that we think that's a, again, a very, very powerful concept. And, oh, by the way, this actually helps integrate renewables too, because a lot of times the problems are being created by the intermittency of renewables. And so then we can, again, we can help buffer the renewables and we can continue the ramp in renewables. And the data centers will actually be part of the solution and we can continue down the path of decarbonizing the electric grid and making it more reliable. [00:07:32] Buffy Harakidis: So that's the solution, which is critically important in this fight against climate change here today in this world. So it seems like you guys are doing such amazing things to really unlock, unleash the power of the data center. And how, in particular, you guys are working directly with the utilities to make such a difference. [00:07:53] Thomas McAndrew: So, yeah, we're very excited about continuing down that path of partnership with the local utilities and with the data centers to look for the very specific ways to, again, to unlock the capacity and do it in a way that everybody ends up winning. [00:08:09] Buffy Harakidis: Yeah. Well, it's a win-win situation. It is. And we're here at Vegas. Yeah. So what a win there. Right, right. And for those that want to learn more about Enchanted Rock and this unique solution that you're working on with the utilities to unlock the growth of the data center industry, tell viewers where they can go. [00:08:29] Thomas McAndrew: Just the easiest thing to do is just go to EnchantedRock.com. You can look at our website, reach out to me directly. We have other folks here at the conference and we're willing to talk to folks that are interested in being a part of this solution. So thank you very much. [00:08:45] Buffy Harakidis: Yes, it's my pleasure, Thomas. And thank you viewers for tuning in to another episode of JSA TV. Stay curious, stay connected and happy networking. [00:09:05] Speaker ?: Stay curious. Stay curious. Stay curious. Stay curious. Stay curious. Stay curious.