David Tranter, Principal Engineer, Critical Systems at Cundall, explains the many shades of green energy.
The UK aims to achieve net zero carbon emissions by 2050, focusing on integrating renewable energy into the National Grid. As data centres globally and in the UK are substantial electricity consumers, shifting them to operating with renewable energy will be crucial to meet environmental targets.
It’s commonly known that data centres support most of our daily digital lives. But, like most things, they come with a cost. This comes in the form of electricity usage, and as AI and the sheer number of data centres grow as expected, they will require more than ever.
The International Energy Agency (IEA) reported that global data centres (excluding crypto mining) consumed between 240 and 340 TWh of energy in 2022, accounting for approximately 1-1.3% of global electricity demand. This marks a staggering 70% increase since 2015, underscoring the rapid growth of the sector and its footprint.
In the UK, data centres currently consume up to 2.5% of the country’s energy, which may rise to 6% by 2030. Given their substantial electricity consumption, exploring, and evaluating renewable energy procurement options is essential to support the UK’s decarbonisation goals.
Potential ‘green’ sources come in many shades.
Should you listen to the guidance?
To source electricity, the UK Green Building Council – a membership organisation designed to influence policies to move the built environment forward sustainably – released their best practice guidelines.
They emphasise three main points:
- Ensuring that on-site or traceable renewable sources match the energy consumed.
- Improving the grid’s capacity through the procurement strategy.
- Aligning energy purchases with renewable supply hourly or sub-hourly.
Understanding these three elements is essential when evaluating different renewable energy purchasing schemes. With these questions in mind, we are now armed to assess these agreements against our criteria properly.
Alternatives to green tariffs
A ‘green’ tariff may seem an easy way to support renewable energy, but it’s one of the least effective methods. These tariffs often fail to guarantee that the energy supplier uses renewable energy.
Loopholes in the system allow Renewable Energy Guarantee of Origin (REGO) backed contracts to be traded separately from the actual amount of electricity, meaning green tariffs do not contribute any new capacity to the grid. These tariffs are usually based on annually reported data for consumption and generation and fall short of the best practice metrics set by the UK Green Building Council. While they are acceptable for carbon reporting, they are not considered the gold standard.
A more practical alternative is tariffs, where suppliers must demonstrate that the sourced energy aligns with REGO certificates. These can be traced back to the actual power generation and reported hourly, meeting items 1 and 3 of the UK Green Building Council’s best practice criteria. While these schemes still rely on the existing supply without adding new capacity, they are less widely available. However, they offer a more reliable and transparent way to support renewable energy. Key providers include Good Energy, GEUK, and Ecotricity.
Some data centres are setting a high bar by purchasing energy hourly. For instance, LevelTen Energy has collaborated with Google, Microsoft, and others to establish a time-based energy certificate trading marketplace, supporting the ambition of 24/7 renewable energy usage. This approach ensures a closer match between consumption and generation, pushing the boundaries of what’s possible in renewable energy procurement.
Upgrading Power Purchase Agreements
Power Purchase Agreements (PPAs) for off-site generation are an excellent option for data centres to source renewable energy. They offer a reliable energy supply with stable pricing, making them a cost-effective choice for data centre operators. Moreover, they allow for direct investments in expanding the grid’s capacity, ensuring a good return on investment.
Although PPAs may not be practical for smaller electricity users, they are well-suited for data centres due to their high energy consumption. These agreements help build strong partnerships between data centre operators and energy developers, meeting the criteria set by the UK Green Building Council. According to their sustainability report, a significant example is Google’s recent PPAs, with a rated capacity of 1.5 GW, representing approximately 60% of their global annual energy demand.
On-site PPAs are even more effective for renewable energy procurement. Positioned ‘behind the meter’, they minimise emissions from grid transportation, reduce distribution losses and avoid utility connection costs. Similarly to off-site PPAs, on-site agreements meet the UK Green Building Council’s criteria. However, due to the massive energy demands of data centres, more than on-site PPAs are required. In such cases, organisations must complement with off-site PPAs or energy matching.
Ultimately, while both on-site and off-site are compelling, often a combination of both is best to meet the needs of data centres. Given the scale of these buildings, this provides a comprehensive approach to grid resilience and promoting sustainability.
Creating a new benchmark
UK data centres are not just here to stay but here to grow. For the UK to reach its net zero carbon targets, these critical buildings must be viewed differently. They are major energy consumers, key stakeholders, and policy influencers. The operators in charge must do more than choose ‘green’ energy. They need to use the industry’s advice to understand where suppliers are sourcing energy and work with these companies to obtain accurate data. Only then can they match consumption with generation.
Achieving this alignment is more straightforward than expected. As overviewed, entering Power Purchase Agreements enables operators to align their goals with the energy industry’s. They can go further by directly investing in local or off-site renewable energy sources.
However, PPAs are just the beginning if data centres are to achieve net zero carbon. While electrical demand is essential, operators must look holistically to reach sustainable targets. It is what needs to be done for the industry to progress.
