Data centres are an increasingly central part of the world economy, a trend that is set to accelerate as demand for computing power increases. The International Energy Agency estimates that by the end of this decade, data centres will consume more energy than Japan – a nation of 124 million people. This stat highlights the scale of data centres’ energy needs.
At a time when grids are already operating under increasing capacity constraints, the UK has been forced to spend money to pay wind turbines not to send energy to the grid and timelines for grid connections are often measured in years rather than weeks or months. As a result, the pressure to find alternative solutions to power data centres is growing.
Microgrids might well have a key role to play in meeting that demand. Indeed, microgrids – a flexible and decentralised source of energy – offer a number of advantages to data centre operators and developers. Chief amongst these is the ability to reduce reliance on the grid and thereby increase energy resilience. This is made possible by the fact that microgrids can be built onsite and connected directly to the data centre. This means that the often significant challenge that utility operators face in getting power from where it’s generated to where it is needed can be largely overcome.
Moreover, although microgrids were once reliant on fossil fuels to generate power, the dial is shifting and renewable assets are increasingly playing a central role. This doesn’t necessarily mean that microgrids are operating entirely powered by renewable assets, such as BESS, wind, and solar, as gas turbines and fuel cells also often form part of the mix – not least as the challenge posed by intermittent generation is a particularly significant obstacle for data centres. As a result, emissions controls such as carbon capture should also be factored into planning for microgrids.
Nonetheless, as renewable technologies continue to develop and diversify – whether that’s the increasing affordability and efficiency of solar arrays or advances across the hydrogen ecosystem – microgrids are unquestionably becoming increasingly sustainable.
Another benefit is that, unlike with energy purchased from the grid, it’s possible for data centre operators who utilise microgrids to put an almost exact figure on the amount of power they are using that has been generated by renewables. This is the output of renewables onsite that can be closely monitored – which is simply not replicable across modern energy grids. With ESG and wider sustainability credentials increasingly important to investors in a number of markets, the importance of this should not be overlooked.
This onsite energy also provides increased energy resilience for data centre operators, providing both a potential back-up and an alternative to energy sourced from the grid. For data centre operators who are searching for a route around grid constraints, being able to demonstrate access to alternative energy sources could potentially play a key role in securing both planning permission and external investment.
There are challenges that need to be overcome to incorporate microgrids into data centre development, particularly those in urban areas. Perhaps the most significant thing is access to space. Although renewable technologies are becoming increasingly efficient and effective, most renewable assets require a considerable amount of space. For example, solar power requires approximately 10,000 square feet per 100 kilowatts (kW) whilst onshore wind turbines are typically around 100m tall.
However, the reality is that the majority of data centres are still being built in relatively remote areas where concerns over space are less pressing. Similarly, whilst the costs of installation could also be a barrier to entry, this can generally be navigated by using a power purchase agreement (PPA) with an energy provider. This also offers certainty over energy costs over a long duration, which again could help developers and investors make a more compelling case for investment.
Ultimately, whilst microgrids are not a perfect solution and won’t necessarily be right for every data centre development, they do offer compelling solutions to a number of the problems that are facing data centre developers. The role of microgrids may also continue to grow in the years to come as data centre development continues at pace – a pace that may well continue to outstrip the speed at which grid capacity can be expanded.
