The gas supply crisis in Europe and the UK has exposed the fragility of fuel supplies, and their significant impact on economies and business.
A major reduction in availability has challenged our national resilience and increased our sensitivity to price increases, not least in our predominantly gas-fired electricity generation sector.
This is not the last time we’ll face such a situation. Since the crisis first emerged, concern has continued to grow over rising energy costs, driven by geopolitical tensions and increased demand for energy in the short term, and the global need to meet net zero targets by 2050.
While many data centre operators will have struck long-term deals with electricity suppliers to insulate them from raw material price hikes, the high electricity demand of these facilities could make them very vulnerable to this price volatility – particularly in light of increasing media and political scrutiny over their vast power demands.
In the depths of winter, a cold snap could be all it takes for energy demand to exceed supply, triggering emergency measures such as limiting energy usage in industry or even domestic settings. Data centres could be among the hardest hit if policymakers decide to reprioritise the recipients of limited energy supplies.
Data centre owners and operators must act now to improve their operating efficiency, mobilise on-site electricity generation and grow their storage capacity to ensure they are resilient and able to meet ever-increasing demand from consumers.
Improving operating efficiency
The obvious way to build resilience is to reduce the overall need for electricity through enhanced operating efficiencies. The way operators measure and optimise energy usage is key here.
As many data centre operators are already demonstrating, performance data should be collected and stored in a standardised way, so meaningful trends can be identified and issues anticipated. This should be married with clear and agreed timescales for review and analysis.
Operators should also be considering effective strategies for load shedding, so that energy usage can be matched to supply and in times of limited electricity input, usage can be reprioritised. Only with total visibility can operators act quickly and decisively.
In the longer term, technology developments are moving ahead at an unprecedented speed, and the ongoing work from chip developers to explore a new topology for processors could pave the way for much more efficient operation of data centres. Pressures on finding sufficient available land and meeting energy demand would be significantly eased were this to be rolled out at scale.
Reinvigorating on-site generation
Most data centres have very little on-site self-generation capacity to supplement their electricity demand. What capacity does exist is more often found through diesel-fired generators in the UK, and gas turbines in Ireland.
These are short term carbon-intensive solutions, with diesel storage in particular limited to up to 72 hours of full capacity usage. To provide the sector with the resilience it needs during fuel supply shocks, and to meet the requests of some leading markets for data centres to bring more of their own power solutions to the table, on-site generation will need to be significantly upscaled.
While acting on this swiftly, data centre owners and operators also need to plan ahead and ensure that any future generation capability itself is sustainable – otherwise, they will find themselves back at square one, unable to source the fuels for continuity of electricity supply. Renewable energy sources such as solar and biomass could be gradually implemented into the overall supply mix for generators to achieve this, however any new technologies required for delivery will have commercial implications.
Bolstering storage capacity
Power generation is only one element of this equation – the other is fuel storage. Data centres are going to become increasingly reliant on this in future supply crises or shortages.
The long-term solution is likely to lie in better battery storage, which can de-risk fluctuation in the current gas-led network and support the transition to wind and solar power. The commercialisation of this technology at a scale needed for data centres is still some way off but investment within the UK and Europe in the battery ‘gigafactory’ industry is growing.
In the outlook for our Data Centre Cost Index 2021, we anticipated that investment in battery capacity was going to be a major focus for the sector going forward, and with the burgeoning electric vehicle industry there is going to be stiff competition for lithium resources.
Sourcing an alternative
As the dual pressure of lack of fuel supplies and need to decarbonise the sector coincide, any efforts by the industry to bolster diesel storage capacity as a short term, quick fix for back-up power will destabilise carbon reduction plans. With 40% of respondents to our latest Cost Index survey believing that net zero carbon data centres are possible within five years, greener alternatives need to be looked at more carefully.
Recycled biofuels could be a better alternative, and one emerging option is Hydrotreated Vegetable Oil (HVO). The fuel boasts a 90% reduction in CO2 emissions, and it can be used immediately with existing generators, requiring minimal operational investment to make the switch. While HVO is roughly 25% more expensive than red diesel, the end is near for cheap diesel with restrictions on its use in non-military or agricultural settings coming into force from April 2022 – so now is the time to explore HVO and other green alternatives.
Long-term thinking
No sector can defer energy consumption until the future arrives. With price volatility, current reliance on fossil fuels and an urgent requirement to drive net zero, the data centre market needs to consider its power options. In the short term, operators should be exploring how they can maximise efficiency and improve resilience to help hedge against rising energy prices and associated supply risks.
The sector’s long-term playbook is exploring a reduction in power requirements through server technology and exploring which renewable energy sources can form an effective part of operators’ storage and on-site generation mix. We don’t have all the answers yet, but it’s vital we act now and start finding those answers to ensure a sustainable future for data centres.
