Aligned Data Centers on Wednesday said it will not proceed with its Frederick County data center project after not receiving an exemption to install 168 backup diesel generators at Quantum Loophole’s site near Adamstown.
In a letter to the Maryland Public Service Commission, Aligned rejected the commission’s provisional order that would have limited Aligned to installing up to 70 megawatts of power to support the first phase of its planned data center development.
The company had 15 days after the order was issued to either accept or reject it.
Seventy megawatts of power, the maximum capacity Maryland allows for a generating station, would be effectively equivalent to 23 three-megawatt diesel generators.
The letter states that the commission’s order “did not present Aligned Data Centers … with sufficient relief to permit the project to proceed.”
Aligned received site-plan approval on May 10 from the Frederick County Planning Commission to build a data center including 42 diesel generators on the former Alcoa Eastalco smelting plant site, where Quantum Loophole plans to create a campus of data centers.
On May 12, Aligned applied to the Public Service Commission asking to be exempt from getting a certificate of public convenience and necessity (CPCN).
A CPCN “provides authority for a person to construct or modify a new generating station or high-voltage transmission lines,” according to the commission’s website. Without an exemption, the company would need to enter a process to obtain a CPCN to install 168 proposed generators as part of its planned data center facilities.
The 168 generators included the 42 generators from the approved data center site plan, as well as generators for three other future data centers.
Each generator would be three megawatts, for a total of 504 megawatts of power generation eventually being installed.
The PSC staff recommended approving Aligned’s application and granting an exception from having to obtain a CPCN.
But on Aug. 2, the commission unanimously voted to deny Aligned’s request due to concerns about the generators’ environmental impact.
‘A barrier to companies’
Pat Murray, senior advisor to Frederick County Executive Jessica Fitzwater, said Aligned’s decision “demonstrates the State’s regulatory framework is a barrier to companies investing here.”
“We will watch the State’s reaction to today’s news closely while our Data Center Workgroup continues to develop its recommendations,” he wrote in an emailed statement.
Quantum Loophole could not provide an immediate response to requests for comment. When contacted Wednesday afternoon, Quantum Loophole spokesperson Steve Kearney said he was not aware of Aligned’s letter.
Aligned filed a request for a rehearing for a CPCN exemption on Sept. 1, alleging the commission made factual and legal errors in its decision.
The request argued that the commission erroneously treated the generators as a single 504-megawatt generating station when each generator’s individual power doesn’t exceed the state’s maximum capacity of 70 megawatts.
Aligned’s request also said the backup generators will only be used all together in the event of a complete power disruption to the data center facilities. The generators would be run individually for short maintenance periods.
On Oct. 10, the commission issued a provisional order granting Aligned a provisional exemption to install diesel generators with a total combined capacity of 70 megawatts to serve the project’s initial development phase.
This initial phase includes constructing the core and shell of the data center building in Aligned’s approved site plan, according to the company’s rehearing request.
The order said Aligned’s arguments that the proposed backup power generation is not an aggregate 504-megawatt system “are not persuasive” and Aligned would have to seek a CPCN for the rest of its proposed generators.
Commission spokesperson Tori Leonard said on Wednesday that the commission operated under its legal authority and stands by its order.
“As noted in the Commission’s October 10 Order … the Commission takes seriously its statutory obligation to consider the impact of its decisions on the climate of our state, and rejected … [Aligned’s] request to not consider the total capacity of its backup diesel generators,” Leonard wrote in an emailed statement.
When reached Wednesday afternoon, the Gov. Wes Moore’s office said it could not provide immediate comment.
Uncertainty over project
Aligned’s letter on Wednesday stated that “nothing in the record” supports the assumption that 70 megawatts of backup power could support the project’s initial phase.
The letter also said the order would require the company to start project construction and invest more money despite “significant doubt” the commission would approve the installation of the rest of the requested generators.
“No company could invest the hundreds of millions of dollars needed to complete the first phase of the project with that uncertainty … hanging over the project,” the letter said.
The company said the process to get a CPCN is “ill suited” for commercial developments such as data centers that include generators for backup power.
The company said the commission has granted CPCN exemptions to other institutions, such as hospitals, research institutions and military installations, whose backup generation exceeds 70 megawatts.
“The Commission will need to decide whether those installations must now disclose their aggregated generation on site and, if the amount exceeds 70 MW, seek a CPCN [retroactively],” the letter said.
The letter stated that the commission’s initial decision in August and provisional order in October may have “sent a negative — and perhaps fatal — signal to the hoped-for data center industry in Maryland.”