Data centers use up to 2.2 percent of the country’s electricity, and their hunger for power is only expected to grow in the coming years. Can these massive burdens on the power grid transform themselves into grid assets?

Data center power management software startup Power Assure is going to try it out, in tandem with its new strategic investor, Dominion Resources. The Virginia-based utility announced a $1 million investment in the Santa Clara, Calif.-based data center power management startup on Tuesday, along with a partnership aimed at harnessing data centers to make the grid run more efficiently.

Power Assure and Dominion haven’t yet identified the specific data centers they plan to target for feeding power back to the grid, said Brad Wurtz, CEO of PowerAssure, though he said a couple have expressed interest in participating in the pilot project.

“Right now, we’re at the point of doing the assessments, evaluating what services they could qualify for today, so that we could essentially roll something out immediately,” he said in a Monday interview. Our business is to manage power for our clients, and that includes integrating them into the smart grid so they can take advantage of the revenue streams” that playing into demand response and power markets could provide, he said.

This wouldn’t be the first instance of data centers being targeted as smart grid assets. After all, what other buildings can possibly claim as “smart” a set of power loads as data centers’ thousands upon thousands of servers? Lawrence Berkeley National Laboratory has found that data centers offer significant potential for demand response, and a few trial projects have shown they’re capable of doing it with the right combination of technology.

Still, most data centers aren’t running their servers to conserve power, but rather to carry out their computing tasks as efficiently and as reliably as possible. That’s made data center operators leery of offering up their excess capacity and ability to shift computing loads -- and thus power consumption -- to different times of day or different physical locations to the grid at large.

Even so, data center operators, much like building owners in general, are interested in finding revenue streams to help pay for broader energy efficiency upgrades, which makes them a prime target for smart grid integration, Wurtz said. What’s been missing so far is technology that’s sophisticated enough to manage data center power use on the fly, and to integrate it into demand response and power markets, without compromising their core business functions.

Power Assure’s partnership with Dominion, which runs electric utilities in Virginia and North Carolina and has operations in 15 states, is making a bet that it can deliver on that promise. Wurtz said the two companies were working with another partner to connect data centers' power to markets for demand response, frequency regulation, ancillary services and the like, though he wouldn’t name the company in question.

Power Assure’s software manages data center power at the individual server level, as well as integrating with data center facility management systems. Its partners include ABB, Cisco, Dell, IBM, Intel, In-Q-Tel, Raritan, Underwriters Laboratories and VMware, and Wurtz told me the company will have its software deployed in about 50 data centers by year’s end. The company raised $13.5 million in a September B round, and with the new $1 million, it has raised a total of $29.75 million.

That makes it a significant player in the data center energy efficiency space, which includes startups such as Sentilla, Synapsense and Viridity Software, as well as giants like General Electric, HP and IBM. Data centers’ growing power bills and capacity constraints have led to a big push to make them more energy efficient, both in terms of their IT operations and the cooling systems, power delivery and backup power systems that keep them running.

While showcase green data center projects from the likes of Facebook, Google and Yahoo are deploying custom-built combinations of energy efficient servers, high-efficiency cooling systems and LED lighting, the second tier of workhorse data center operations will need pre-integrated systems to get the job done.

Whether Power Assure or its competitors in the data center energy management space can convince data center operators to try it out remains to be seen -- but this won't be the last time we see the data center-smart grid connection being put to the test.

Tags: data center, demand response, efficiency, energy efficiency, facebook, general electric, google, green building, green it, power assure, smart grid, synapsense, utilities, viridity, yahoo