Q&A: Electric co-ops considering data center deal

Editor’s note: This is one in a continuing series of interviews with local officials and community leaders. Vick Christian is a board member of cooperative companies Deaf Smith Electric and Golden Spread Electric, which are in the process of seeing if they should back up a data center that would power Artificial Intelligence with 206 megawatts. That’s more than 200 times the amount of electricity Farwell uses. 

Q: Can you outline this potential deal involving Deaf Smith Electric and Golden Spread Electric and the data center?

A: They are wanting us to back them up with 206 megawatts when the wind’s not blowing or when they don’t have any wind.

Q: Do you know the data center?

A: Our lawyer does. I don’t know who it is. I probably wouldn’t want to name them right now anyway.

We know that this is an American company that’s signing all the contracts and doing all the power.

Q: How come they don’t have to share their information?

A: I think, well, it’s who signs the contract and who they’re backed by. We don’t know who their bankers are.

We know who the company is that we’re dealing with, but where’s the money coming from, you don’t have to find out who they’re getting all their money from to do the deal. So that’s private information.

Q: Can you outline the risk and the reward?

A: Well, the reward is the profit. We make a margin selling electricity, so we’re going to sell twice as much electricity. So that could double your profit margin if it’s done right.

The risk is, if they don’t stay there long and we don’t recover our investment. That’s pretty risky, because you don’t want to overbuild an electric system, because you’re not going to pay for it.

Q: What happens in that scenario?

A: You’re stuck with generation you don’t need. You’re stuck with a system you don’t need.

We’re required to be 12% overbuilt because you’re going to have breakdowns, but you don’t want to go much further than that.

But if we get all these data centers at one time, we can’t build that much generation that fast. We need to just build it slowly.

With all the regulations that are going on around that, it will take us five years to get on any new generation, including a wind farm.

A wind farm, that’s the new generation. But that only blows 52% of the time in West Texas, and in Parmer County, in particular in Curry County. So that’s not reliable electricity.

And if you have to back that up with gas or coal or anything else, you’re doubling the price of electricity. And it’s already subsidized to be competitive in the first place, but it’s gonna cost you twice as much if you want electricity all the time.

It’s gonna cost you twice as much in the future if you’re gonna back it up with wind, because wind is not reliable.

I mean, it’s OK to have some, we’re thinking 10 to 15%, but you can’t go over that. It’s not reliable. So that’s the risk.

You’re backing it up, and you’re hoping you have enough electricity. If you have enough electricity, and you can sell them like in the winter months, it’s good, because we have irrigation mode.

In the summer months, which is June, July and August, we’re at peak nearly all the time. So if they overload us, we’re going to have to be kicking them off in those three months for sure. So that’s the risk for them, and they understand that going in, you know.

But for us, it fills a gap where we don’t sell enough electricity in the winter months, so that’s the reason you want to do it. You just don’t want to overdo it.

Q: When could the deal be decided?

A: It will happen within the year. We’re talking about breaking ground shortly, and they already have in the Floydada area. There’s one in operation there, and there’s another one going in in Swisher County.

Q: How do area farmers and ranchers feel about this?

A: They want enough electricity to operate their farms and their irrigation. So it makes them a little bit nervous.

Q: How does this impact farmers and ranchers in this area?

A: We’re not sure because we want to be sure that we have enough power when they’re wanting to irrigate, so the first thing we’re going to do is shut them (data center) off.

We’re not going to shut irrigators off, so it shouldn’t have anything except for maybe, if Deaf Smith makes money, it’s a co-op, so everybody shares that dividend. That could be good.

But right now, we’re not going to shut irrigators off to run a data center. We aren’t gonna shut houses off, either.

Q: Does this have any impact on everyday people in Texico or Farwell?

A: It could because we’re worried about, if there’s too many going live, where are we going to get the power?

Because we’re going to start building a new generation to supply them if it’s for real. It’s going to take five years to do that.

So we don’t know how we’re going to deal with all that.

— Compiled by Matt Weiner, the Staff of The News