The explosion of large data centers shows no signs of slowing in rural America, where land is plentiful and power from electric cooperatives is reliable.

So how can co-ops ensure the needs of these new industrial members are met without adding costs or risk for their other members? NRECA has taken an in-depth look at the situation in a new report that includes case studies of six co-ops with data centers in their service areas.

“Data centers are approaching cooperatives with requests for large amounts of power and accelerated timelines to interconnect, which differs from other large industrial loads,” said Allison Hamilton, NRECA director of markets and rates. “Data centers are prioritizing resource adequacy but at a faster pace.”

To ensure reliability and insulate other members from utility bill impacts, co-ops managing these new large loads are developing rate structures, contract provisions and internal policies to mitigate financial risks, Hamilton said.

“As co-ops make these business decisions based on their own unique circumstances, they are learning from each other,” she said. “Sharing their experiences in addressing the challenges of serving large industrial loads, making sure assets are paid for upfront and their high-capacity demands are met are ways co-ops are avoiding cost-shifts to members.”

Distribution and generation and transmission co-ops, no matter their size, are encouraged to start conversations early with their wholesale power supplier and regional transmission operators about potential challenges in serving these large load customers.

Collaborating with appropriate stakeholders, including energy providers and regional transmission operators, on an ongoing basis will help ensure a smooth process to serve data centers, the report said.

“The important thing is to engage early,” said Hamilton. “As soon as a data center approaches them, co-ops need to ascertain their seriousness. They can do that by asking them to pay for something, such as an engineering study.

“Then co-ops should involve their wholesale suppliers to explore all options before determining the best path. If there is excess capacity on the system, the data center may prefer to locate in that area. If their demand is above a certain amount, new infrastructure may be warranted. Co-ops may have to coordinate with their generation and transmission providers on a level they’ve never had to before.”

The report, Electric Cooperative Rates and Cost Recovery Mechanisms for Large Loads and Data Centers, includes other key takeaways for co-ops:

• Educate your board about data centers, including their potential risks and benefits for members.

• Gather a team of legal and financial advisers to negotiate effectively with the data center and develop a contract.

• Consider impacts to existing small and large loads when drafting a contract with a data center to avoid obligations that lead to unnecessary financial risk.

The report is part of a growing set of NRECA resources to help co-ops serve large loads, from initial engagement and interconnection studies to load forecasting, risk mitigation and long-term strategic planning.