What happened to Aligned Data Centres?
Quantum Loophole’s Frederick Campus in Maryland made headlines recently after Aligned Data Centres (Aligned) had its plans to build a 75 acre, 264 megawatt data centre put on hold.
After buying a portion of the 2,100 acres of land that Quantum Loophole is master planning for data centres to be built, Aligned began applying for permits and planning approvals.
Part of its plans were to secure approval for 504 MW of backup power from 168 diesel generators, each providing 3MW each.
In order to secure permission to deploy the backup power, Aligned needed to apply for an exemption from the Certificate of Public Convenience and Necessity (CPCN) process from the Maryland Public
According to Snowhorn, the CPCN process is related to the siting of power plants and transmission lines. He argued that Aligned’s generators are individual sources of power to provide back-up generation, which is standard with data centre designs.
Typically, similar back-up generators had been considered individually by the commission, and therefore had not hit the power generation threshold that would see an application denied.
“Aligned applied under the waiver process, and staff at the Public Service Commission recommended approval of the exemption requested,” Snowhorn said.
That exemption was not granted. Aligned appealed and were eventually granted 70MW of backup power generation, just 15% of what they had initially applied for.
Going through the full CPCN process would nullify the local permits that Aligned had already secured, and delay the whole project by over a year.
“At that point, Aligned decided not to accept the review of their application under the waiver process, and put the brakes on their project,” Snowhorn said.
Setting the record straight
Snowhorn was keen to stress that Aligned’s setbacks would not put the brakes on Quantum Loophole’s project. He noted there had been conflation between Aligned and Quantum Loophole in other reports on the matter.
Quantum Loophole’s function is to provide land, water, energy and fibre to customers who want to build data centres at its Frederick Campus, located just 20 miles from the Ashburn interconnection ecosystem, which Snowhorn describes as the centre of the internet for North America.
Quantum Loophole is developing the land to provide these building blocks for data centres, but won’t be building them itself. It will sell land to companies like Aligned so they can develop their own facilities.
Aligned closed on its transaction to acquire the land from Quantum Loophole in November 2022.
“Everybody's mixing it up and saying that whatever Aligned does is Quantum Loophole and vice versa. I want to clarify that we're two different companies. Of course, they are customer of ours we're happy to support them and all their needs during this issue they are facing”.
So what’s next?
Snowhorn said the whole industry was working to find a resolution to the problem, including hyperscaler and multi-tenant providers, Quantum Loophole and Aligned.
Their goal is to seek clarification to the rules that the Public Service Commission operates under in Maryland.
Maryland’s governor, Wes Moore, announced at a recent conference that he plans to introduce legislation during the upcoming session to support the infrastructure needed to drive the digital economy.
“We fully support Governor Moore's initiatives to make Maryland a centre of innovation and data centres are a critical part of that,” Snowhorn said.
“We think that a definition of what is, and what is not a power plant makes a lot of sense and reduces the regulatory uncertainty holding back data centre development in Maryland”.
Government support for data centres, in particular tax incentives passed by the Maryland legislature, was in fact one of the reasons Quantum Loophole bought Frederick Campus in the first place.
While there is no change being proposed to sustainability and emissions targets, Snowhorn explained why the clarification about what a power plant is was important for the industry and beyond.
“If the precedent is not overruled, it's not just data centres that will be impacted, it's hospitals, military facilities and government buildings. Imagine if they now cannot have backup generators because the Pubic Service Commissions says no, it's just not acceptable”.
Snowhorn said he and his team were familiar with the CPCN waiver when they purchased the Frederick Campus.
“We knew that there was a CPCN waiver process at 70 MW and we knew that precedent suggested that each generator was treated as individual generating source. We knew our customers would never hit that 70 MW target, because to do so would mean they were building a gas turbine plant or something like that”.
Snowhorn said Quantum Loophole, its existing clients, and everyone else that is under contract to buy land at the campus assumed they would be able to apply for backup power under the waiver process, based on this precedent.
The legislation in Maryland goes into early next year, at which time Snowhorn said he fully expects a clarification to be passed in their favour.
“It has the full support from the governor's office all the way down through the legislature,” he said. “If we meet with anybody who doesn't support it and explain the situation, then they support it”.
Snowhorn is confident that the issue is a “bump in the road” rather than a disaster for Frederick Campus and said that for both Aligned and other customers that will require backup power, the process would likely just lead to a three-to-six-month delay.
“Data centres don’t just pop up, they take a lot of planning and are planned out years ahead of time,” Snowhorn said.
“So three to six months is an annoying hiccup for some folks, but all of our customers who have contracts on the land, or even one who's about to sign a very large new contract are lockstep with us and don't see any issues with the legislative rule being changed”.
The full interview with Josh Snowhorn will be published in the Metro Connect and February-April editions of Capacity magazine, coming soon in 2024.
