Data center developer wants to build own power plant. Does it need SC’s approval?

A group of Spartanburg residents and environmentalists want South Carolina’s utility regulators to scrutinize a planned natural gas plant in Spartanburg County.

Read more Data center developer wants to build own power plant. Does it need SC’s approval?

The more than 450 megawatt natural gas plant, proposed by Valara Holdings, wouldn’t power homes or businesses. The energy would be created and used entirely by the developer for its planned Upstate data center.

Some, including the Trump administration, have pitched data center companies producing their own power as a way to avoid costing ratepayers.

But whether a power plant can be built in Spartanburg County by private data center developer Valara Holdings without the permission of utility regulators was the subject of a hearing Wednesday. Many members of the public attended the hearing in-person, Commissioner Justin Williams said.

“The last time we’ve had this many people present in our hearing room was the merger and abandonment hearing for Dominion Energy and SCE&G back in 2018,” Williams said.

A group of residents, labeled in the docket as “Concerned Citizens of Spartanburg County,” and the Southern Alliance for Clean Energy asked the Public Service Commission to require Valara Holdings to obtain a certificate for its planned natural gas plant from the utility regulators before continuing construction.

Not seeking a certificate under the state’s siting law for the data center’s natural gas plant may keep some critical information about the project away from the public, lawyers for Spartanburg residents argued in a docket filing. While determining whether to grant any project a certificate, the Public Service Commission often weighs its necessity against potential consequences, like negative impacts to the environment.

“The whole Siting Act, at least the way I view it, is it gives the commission this holistic view of what’s the impact on the state,” said Office of Regulatory Staff deputy director Ben Mustian during a hearing Wednesday.

The Office of Regulatory Staff, a state utility watchdog, agreed Valara Holdings should be required to seek approval from the PSC, in a docket filing and during the hearing.

The Public Service Commission did not make a decision after hours of arguments from lawyers for Valara Holdings, the Spartanburg residents and the Office of Regulatory Staff.

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Because the private company doesn’t generate power for the public, Valara Holdings argued its more than 450 megawatt natural gas plant should not be subject to Public Service Commission scrutiny. The PSC, South Carolina’s utility regulators, doesn’t have jurisdiction over a private company generating power for only itself, wrote Valara Holdings’ attorneys in a July 27 docket filing.

“Critically, not a single watt of Valara’s privately generated power will enter the public grid,” Valara’s attorneys wrote in its request to reject. Andrew D’Antoni repeated the argument during a hearing Wednesday.

Alongside the data center, Valara Holdings wants to operate 45 natural gas-fuel generators and 11 natural gas turbines, according to permit applications with the state Department of Environmental Services. DES has granted the first of two requested environmental permits for the project.

Other companies in South Carolina generate their own power, but D’Antoni couldn’t say Wednesday whether any projects were larger than 75 megawatts, the state’s legal threshold for the PSC to evaluate projects.

Valara Holding’s generators and turbines will emit pollutants, including particulate matter, carbon monoxide and nitrogen oxide, according to a state Department of Environmental Services fact sheet for the project.

Valara has applied for development permits with Spartanburg County, the subject of a lawsuit, and the state Department of Environmental Services for its data center.

The $2.8 billion data center development project is being built at 4000 Pine Street in Spartanburg County, with construction continuing through 2028, according to news releases. It includes four proposed buildings, a power yard, internal roadways, a site access road and electrical equipment houses, according to a permit description.

Residents and local governments across South Carolina and the country have pushed back against rapid data center development, often citing concerns that the infrastructure needed to power AI and other digital services could use too much water, raise power bills or lead to noise pollution in rural communities.

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