Explosive electricity load growth driven by the computational demands of artificial intelligence is straining U.S. grid planning frameworks and development timelines, emerging as a major bottleneck to hyperscale data center deployment. In response, utilities and regulators are rapidly developing new interconnection frameworks and large-load tariffs that incorporate flexibility and co-location to improve system utilization and protect ratepayers while enabling ambitious time-to-power targets. Although prior research has examined the feasibility of on-site storage and the system-level benefits of load flexibility, the site-level value of co-locating battery energy storage systems (BESS) under emerging tariff structures remains underexplored. This study addresses that gap by simulating the load profile of a 500 MW hyperscale data center in Northern Virginia’s “Data Center Alley” alongside multiple co-located BESS configurations dispatched to minimize electricity costs. The results suggest that Dominion Energy Virginia’s large-load tariff limits the ability of on-site storage to reduce cost recovery tied to system capacity obligations, thereby reducing stranded asset risk for ratepayers. For developers, co-located BESS provides only modest electricity bill savings under the new tariff structure, leaving energy savings alone insufficient to justify investment. However, when broader strategic benefits such as accelerated interconnection and improved site power reliability are considered, the additional value required to justify co-located BESS appears negligible, suggesting that battery storage could serve as a key enabling technology for future hyperscale data center development.
Kyle Daniels (Fri,) studied this question.