Electrons and Overheads: Data centres and the renewable energy bottom line

Posted 18th August 2021 | 729 words | 4 minutes

Running hot and cold

Though they’re leading the way on energy efficiency, data centres still have to grapple with soaring power costs. Could strategic energy purchasing be the answer?

The hum — If you’ve ever been inside a big data centre, you’ll know what I mean: a warm, mid-range murmur emanating from row after row of stacked internet servers and storage arrays. It’s steady and reassuring, blending with the subtle ‘whirr’ of cooling units keeping everything temperature stable.

Lately, however, data centres have generated a different kind of buzz — thrust into the sustainability spotlight by the COVID-driven boom in internet usage and the ongoing electrification of everything.

With their aeroplane-hangar dimensions and all the densely-packed electrical kit inside, it’s natural to think of them as power-hungry behemoths hoovering up everything on the grid.

The reality is very different from the perception.

It isn’t consumption, its cost

It’s true that data centre infrastructure is power intensive. Britain’s commercial sector consumes about 2.89 TWh each year.

But that’s less than 1 per cent of the UK total (1). Globally it’s less than 0.3 per cent.

Ongoing improvements in power consumption plus energy-saving innovations like virtualisation have made data centres lean consumers of electricity. So instead of installing more boxes, data centres are adding capacity through software. There’s also been a shift to leasing capacity from cloud and ‘hyperscale’ data centres — mega-efficient information factories that use centrally-organised computing architecture that easily scales up to hundreds of thousands of servers.

So while cloud services boom and internet usage spikes, sector-wide electricity consumption is staying flat.

Source: IEA: ‘Global trends in internet traffic, data centre workloads and data centre energy use, 2010-2019

Electrons and overheads

As the industry’s footprint expands, electricity costs are soaring. A data centre can see 20-40% of its operating budget (2) eaten up by power bills.

Emma Fryer, associate director of technology industry group TechUK, says Britain’s 500+ data centres are ‘always looking at ways to mitigate electricity costs.’

‘The majority of our power bills are made up of non-commodity charges like tariffs and network charges — well over fifty percent,’ she says. ‘It’s a constant thorn in our sides.

With electricity being a central requirement of data centre operations, Fryer says there’s an opportunity for the sector to use strategic energy purchasing to achieve carbon reduction.

Operators are already considering their options. One of them is to use power purchase agreements to secure clean energy directly from renewable generation projects.

Power play

For large hyperscale data centres, negotiating a direct PPA can be an obvious solution. They consume energy at volume with stable consumption patterns, making them near-perfect anchor customers for a renewable project.

For smaller data centres, however, negotiating a PPA can be a struggle. Many can’t summon the negotiating leverage on their own to secure future-proofed, volume-discounted pricing.

So aggregated PPAs have emerged as a potential option. By pooling their buying power in a consortium, smaller data centres should be able to secure better long term pricing and more attractive contractual terms.

But matching partners throws up a new set of challenges. Plus: the long-term nature of PPAs can be a poor fit for the structure of data centre leasing agreements.

‘You could have a data centre in Dungeness with a direct wire to an ocean wind farm,’ says Emma Fryer, ‘but there would be hesitation about matching the benefit to the business liability.

‘If a large customer were to leave, you might end up with a stranded asset in that location and still have to be paying for the renewable power agreed in the PPA’.

To overcome those complexities, Fryer says TechUK is looking at things like PPA standardisation as a way to de-risk long term agreements, and considering how better access to market data can help small to mid-sized operators find either suitable procurement partners to form a buying consortium or identify smaller-scale renewable projects open to negotiating with a smaller off-taker.

From moving electrons to consuming them, data centres are getting better all the time. But getting to grips with spiralling energy costs will require a different strategy. A shift to cost-efficient clean energy and a more strategic approach to buying it may be the answer.

(1) Statista: Electricity consumption from all electricity suppliers in the United Kingdom (UK) from 2002 to 2020

(2) Green Mountain: ‘Data Center Power Costs’