The UK’s digital economy is expanding at an extraordinary rate. However, alongside it, the rapid growth in power demand from data centres is putting significant pressure on local and national grids.
Google’s recent investment in clean energy - including the world’s largest long duration battery – to power a Minnesota data centre, highlights how major operators are increasingly turning to innovative clean energy strategies to strengthen reliable power supply for data centres.
One such strategy which is proving effective is co-locating data centres alongside renewable generation. How can this provide the stable, low carbon power needed to support sustainable growth?
With great power needs come great challenges
Data centres require continuous, high-quality power, and even very brief interruptions to power supply can have significant financial and operational consequences. Protecting against this requires a multi-layered solution.
Energy supplied directly from the grid can pose challenges to the stable supply that’s critically needed. Whilst the UK has made commendable progress in integrating renewable generation, wind and solar’s intermittent generation undoubtedly presents risks to the grid. Sudden spikes in energy could prompt blackouts or brownouts by damaging grid equipment, whilst drops in supply can lead to localised grid constraints.
This possible inconsistency in supply is a fundamental vulnerability for data centre operations, particularly when coupled with the fluctuation in price of energy from the grid. As a result, to unlock the full potential promised by data centre expansion, we must find a way to evolve energy supply in parallel with data centre growth.
Without this, the sector risks bottlenecks that could slow investment, hamper operations, and undermine international competitiveness.
Support for data centre construction
Against this background, last year’s Industrial and Infrastructure Strategies delivered encouraging signals for data centres – particularly around construction.
The Government’s commitments to faster planning decisions, accelerated grid connections, and the option for developers of data centre projects to opt in to the Nationally Significant Infrastructure Project process represent meaningful progress for an industry that’s often been hindered by administrative obstacles.
However, policy reform alone will not resolve these central issues, and we must also consider whether additional solutions can power Britian’s data centres and ensure they are ready for operation.
This needs to be addressed sooner rather than later, as retrofitting power solutions is highly challenging. It is therefore best to plan these measures alongside the initial construction of the data centre itself.
Could co-location be the answer?
Alongside macro improvements at grid level, the industry should also focus on energy strategies for individual data centres. Indeed, data centre operators should look to make the most of co-location: positioning data centres in close proximity to large renewable energy assets such as solar or wind farms.
By powering data centres directly from these renewable, nearby sources, operators can take advantage of low cost, green power as an alternative option to the often-over-burdened grid. In doing so, they protect themselves against market volatility and bypass roadblocks to access energy. This also has the beneficial knock-on effect of reducing wider pressure on the grid.
There will however be the challenge of scale - a very large solar farm, requiring significant acreages of land would be needed to supply enough power to a data centre. Indeed, we are currently working on a project which will require 650MW over 2,000 acres. This is certainly a factor that will need to be considered early on, when selecting an appropriate site
Funding options will also need to be thought about. Data centres can draw on “behind-the-meter” energy supply through innovative Power Purchase Agreements. Co-locating next to renewable energy sources supplied by PPAs has significant commercial benefits for data centre operators. PPAs provide stable pricing structures and cost certainty, regardless of wider market fluctuations, whilst also avoiding the upfront cost of building the energy asset itself.
Keeping energy local can also reduce transmission fees and grid congestion charges, giving operators a competitive edge against sites that haven’t yet considered co-location.
Moreover, boosting green credentials is an increasingly important priority for stakeholders. While data centres connected to the grid may be using renewably generated energy, they have had limited ways - beyond the REGO scheme, which comes at an additional cost and is not without imperfections - to verify this accurately.
However, by connecting to co-located renewable assets through PPAs, data centres can directly demonstrate the source of their clean power. After all, to demonstrate that they are using renewable energy and validate their green credentials, operators would need only to point to the field opposite covered by solar panels.
Making co-location go further
The benefits which co-location can offer are clear and operators should look to make the most of these as soon as possible, whether it’s co-locating next to an existing large-scale solar field or wind farm, or planning co-located renewable assets on any new build projects.
Data centres should also look to maximise the value of the renewable energy generated by investing in energy storage. This means they can save excess energy to re-deploy when supply is low, but needs are high. Not only is this cost-efficient, but it also helps smooth fluctuations and ensures power supply remains consistent.
It is currently commonplace to store renewable energy for 1-2 hours, but as storage capability of batteries is expanded further, data centres will be able to make even more of the assets they are already co-located next to.
Additionally, there is also the possibility of engaging with flexibility markets and selling surplus energy back to the grid as an additional revenue stream.
Not only is co-location already needed and proven as a strategy in the here and now, but those data centres which invest in it soon will also be able to unlock renewed benefits in the long term, too.
