The Top 5: Why Data Centres Are A Favourite To Shift To Renewable Energy

Whenever you use the internet, you’re connecting to one of the millions of servers distributed across hundreds of data centres located worldwide. Yes, these are the ‘cloud’ servers every digital user today is familiar with. While they are crucial for tech giants, people may not realise that these centres, with their extensive security requirements, and built in redundancies in terms of power supply for the hardware inside are a huge source of energy consumption. We explain why that matters, and makes them a target for shifting away from fossil fuels to renewables.

What are Data Centres?

At its simplest, a data centre is a physical facility that organizations use to house their critical applications and data. A data centres design is based on a network of computing and storage resources that enable the delivery of shared applications and data. The key components in a data centre are storage systems, servers, firewalls, routers, and application-delivery controllers.

In the IT industry, data centres support very important activities like email and file sharing, productivity applications, customer relationship management (CRM), ERP and databases, virtual desktops, communications and collaboration services, big data, AI, and machine learning.

These data centres are now favoured for shifting to renewable energy as well.There are several rationales behind rooting Data centres for a renewable energy transition. Especially, considering the mammoth energy that they require to operate – about 1-1.5 per cent of global electricity consumption according to IEA.

Here are the top 5 reasons why data centres have now become favourites for shifting to renewable energy worldwide.

#1 Data Centres Consume Very High Amounts of Energy

Data centres consume a very high amount of energy. Surprisingly, the energy use is not just to run the servers, but also to keep them cool. That explains why some firms tried to locate these centres in cold regions to save on the cooling costs. The legacy corporate data centres continue to be major consumers of power, though not at the rates they once used to perhaps 20 years ago when cloud data centres were emerging as a major alternative to legacy facilities. And, while large cloud data centres, often called hyperscale centres, are steadily increasing their power usage, they’re balancing that increase by investing in green initiatives.

For instance, PubMatic, an independent technology company, recently claimed that all of its global data centres are powered by 100 per cent renewable energy. Vantage Data Centers also moved to green energy for its Johannesburg (JNB1) data centre campus as it signed a 20-year PPA with South Africa’s solar energy financing player – SolarAfrica.

#2 Predictable Consumption Patterns

The electricity consumption patterns of data centres are predictable owing to the organized setup of their work. Data centres use a variety of equipment to measure and monitor their energy usage. This includes power meters, data collectors, and energy management software. data centre operators can better understand how much energy they are using and identify areas where they can reduce their consumption.

Owing to their predictability, it becomes a lot easier to define renewable energy requirements. Understanding the energy usage of data centres has earlier helped in understanding and improving the energy efficiency of data centres. Since 2010, data centre energy use (excluding crypto) has grown only moderately despite the strong growth in demand for data centre services, thanks in part to efficiency improvements in IT hardware and cooling and a shift away from small, inefficient enterprise data centres towards more efficient cloud and hyperscale data centres.

In the same way, now shifting to renewable energy will also be easier for data centres. Demand for data centre services is also poised to rise. While the energy use does not increase proportionally with increasing traffic volumes of data-intensive activities such as video streaming, cloud gaming and augmented and virtual reality applications, if streaming and other data-intensive services add to peak internet traffic, the build-out of additional infrastructure to accommodate higher anticipated peak capacity could raise overall network energy use in the long run.

#3 Finance is not an Issue

The biggest Data Centres are owned by the largest tech firms like Google, Microsoft, Amazon etc. So money is not an issue. The rise of the big tech firms is undeniably one of the most characteristic financial developments of the past decade. By the end of 2020, the top three tech giants had a stock market capitalisation of USD 5.5 trillion. This is twice as much as all the German and Brazilian firms listed in Frankfurt and São Paulo combined. Fortunately, the big tech companies have already committed to net-zero.

Several companies have tried to shift their focus to Green data centres and adopted the concept as a part of their sustainable development solutions. Technology mammoths Facebook, Microsoft, and Google committed to going ‘100 per cent renewable’ through the RE100. Microsoft signed PPAs for the supply of over 900 MW of renewable energy for its data centres in Ireland. Its two new data centres in Helsinki will be powered by renewable energy.

States have deep pockets and their efforts to go green are now bringing data centres under the radar. In India, Bharti Airtel commissioned a 14-megawatt (MW) captive solar power plant in Uttar Pradesh to meet the energy requirement of data centres in the state. Reliance Jio Infocomm Ltd also planned to build a solar-powered data centre in Uttar Pradesh at an investment of around $950 million.

A miss here seems to be the large Chinese firms that donot share information on their plans. As these firms keep their data centres in China itself. it’s tough to figure out just how far they have traveled down the green road.

#4 Data Centres – a Great Opportunity to Add Renewable Energy

Transitioning to renewable energy use is an important but not easily achieved goal. Several pathways to utilizing renewable energy stop short of installing generation onsite or a direct connection to renewable generation. The two most common are renewable energy certificates (RECs) and power purchase agreements (PPAs).

As of now, generating sufficient renewable energy on-site is a little impractical, though roof-mounted solar PV panels presently can deliver about 5 per cent of a data centre’s annual electricity demand. A credible option for data centres to achieve 100 per cent renewable energy involves entering into direct PPAs with wind or solar farms. For instance, Google recently signed a PPA with French utility company Engie for the supply of 100 MW of green energy produced in the Moray West offshore wind farm to power the firm’s UK operations.

#5 It’s a Good Business

The opportunity to grow drives interest in any market. The green Data Centre market is estimated to grow at a CAGR of 20.1 per cent from $49.7 billion in 2021 to reach over $303 billion by 2027, as per one research. Sustainable and low-carbon growth is increasingly becoming a primary consideration for data centre development.

Initiatives promoting sustainable development, such as the Science Based Targets initiative (SBTi), the Climate Neutral Data Center Pact, The Long Duration Energy Storage (LDES) Council, and the RE100, are spearheading this new transition of data centres to renewable energy.

The rise in penetration of high-end cloud computing in companies, the surge in the need for scalability, and the increase in expenditure on green data centre technology will further drive the global green data centre market. Moreover, customers are bound to move toward ‘green’ data centres in a global call for arresting climate change. Overall, it provides a good business opportunity.