By: 2022 DC Fellow Tejas Patel
Over the last decade, we have been submerged in the world of the digital economy. Our consumption of data has grown rapidly and with that, so has the need for more data centers, which consume extensive amounts of energy. This leads to the question: Can we support the future demand of the digital economy in a climate-neutral method? Long answer short, yes we can!
To put this in perspective, energy consumed by data centers as of 2021 equates to 0.9–1.3% of global electricity demand. Between 2015 and 2021, energy consumption from data centers increased by 20 -120 TWh (+10–60%). It is only forecasted to increase as digitization and technologies such as Blockchain, Internet of Technology (IoT), and AI become more accessible and adopted globally.
Advancements in server and network technologies have increased the operational efficiency of data centers. However, a vast amount of energy is still required to operate data centers.
In recent years major center owners (Equinix, AWS, Meta, Google) have executed roadmaps that resulted in meeting their carbon-neutral commitments. There are 4 key common strategies in the US.
- Efficient Data Center Design: Build hyper-scale data centers which are designed to support large digital loads all under one location, which helps optimize the Power Usage Effectiveness (What is a Hyperscale Data Center? | Vertiv Articles) of data centers and therefore reduces the overall energy load.
- Power Purchase Agreements (PPA): Long-term (10–20 year) contracts to offtake clean energy from renewable energy projects/developers at a fixed rate.
- Purchase Renewable Energy Certificates (RECs): Purchase certified RECs to offset the energy consumed from non-renewable sources.
- Invest in Renewable Energy Projects: Develop renewable energy projects to source green energy for the data centers.
By implementing a combination of these strategies, we have proven that it is possible to power data centers in a climate-neutral way.
Is this sustainable?
Designing efficient data centers, securing PPA, and purchasing RECs all help achieve short-term goals to offset carbon footprint. However, they do not guarantee data centers are going to have access to renewable energy sources in the future.
So, what is a sustainable solution?
Investing in Renewable Energy Projects is the most viable sustainable solution. However, it comes with financial and geographic challenges.
Financial: Building and investing in renewable energy projects has long timelines and requires a large financial commitment. Therefore, investment of such scale needs to have thorough due diligence and indicate a positive ROI. This calls to shift the approach to ROI analysis. The breakeven (BE) period of such investment should align with the timeline of the future demand for data centers. Instead of looking for a BE in 10–20 years, shift the mindset of such investments to be at a longer period (20–40 years).
Geographic: Data centers have two key geographic challenges. 1) It consumes high amounts of power at a single location. 2) The location of data centers is constrained by four factors: power, connectivity, carrier neutrality, and natural disaster resilience. Though power is one of the four factors, it is not necessary that the location be suitable for renewable energy generation.
Solar and Wind have shown to be the most reliable and widely adapted in the US, but are limited by geographic conditions. This calls to broaden our approach to clean energy development. Advancements in nuclear power technology (Advanced Small Modular Reactors) over the last decade have shown to be safer, more efficient, and sustainable and requires lower plant capital cost. Alongside the introduction of recent legislation makes a strong case to consider Nuclear Energy to power data centers in areas where Solar + Storage and Wind can’t support energy demands.
Importance of such projects to the community?
Developing renewable energy projects not only builds a sustainable energy source but also builds equity in the community. Such projects create opportunities for local communities to access clean energy at affordable prices and increase grid reliability. Furthermore, infrastructure projects such as these foster employment. The community not only benefits from the immediate financial cash flow, but also from the long-term reward of talent development.
Long answer short, yes. It is feasible to power the digital economy sustainably. By pivoting our attention from our short goal solutions to the long-term development of renewable projects. We can guarantee both a consistent supply of clean energy and equity in the local community.
