Energy security: The latest challenge for the power-hungry data centre sector

‘Energy security’, i.e. access to reliable, continuous and affordable power supplies, was a concept that didn’t demand a huge amount of attention prior to the Russia/Ukraine conflict. However, with the ongoing instability in the energy market and concerns around over-reliance on gas and oil from Russia, it has shot to the top of the agenda, particularly within Europe.

For the energy hungry data centre market, access to power has always been at the core of its existence. Unsurprisingly, the instability in the energy market is driving discussions ranging from which locations might be best to site new hyperscale facilities, to how to fast track innovations around renewables energy, to examining options around power supplies previously thought to be off-limits. Necessity is often the mother of invention.

Access to renewable energy is in huge demand

The global market was valued at $187.35 billion in 2020, and is projected to reach $517.17 billion by 2030, registering a compounded annual growth rate (CAGR) of 10.5% from 2021 to 2030 according to Allied Market Research. The demand for new builds is only ramping up as is the debate about where they are best located. Renewable energy and sustainable sources are hugely in demand and have been a contributing factor to the increased popularity of locations such as Spain, Greece and Portugal where these power supplies are more available. For example, in Spain the country currently runs on 53% renewable or green sources.

Switching to new green energy technologies is often a multi-layered decision that brings with it new challenges and opportunities. Working with our clients, we know implementing greener solutions, such as moving away from diesel generators, needs careful planning. Potential risks need to be assessed from the impact on project design to consideration of any delays to the build programme and whether there are any factors that could affect the building operation.

For example, in the Netherlands the use of wind is an obvious source of energy but with wind turbines requiring nickel, 60% of which is sourced from Russia, building new turbines at the rate needed will be significantly impacted. 

The rise of “Edge” computing fuels location debate

With their prevalence of power generated from wind, hydro and cool climates, Nordic countries have been popular data centre locations and may well see increasing demand for cloud-based data centres. However, siting of remote, “centralised” data centres does not suit rapidly growing technologies such as driverless cars and IoT (Internet of Things) applications, where low latency, high bandwidth, real-time “edge” computing is essential to ensure safe and reliable operation. The edge computing market is predicted by some analysts to be growing at about 20% per annum, being valued at c.$36billion USD in 2021 and growing to $87billion by 2026.

Energy security is also influencing the way the industry enters new developing markets such as Africa. In many instances the infrastructure in these locations is simply not there. So that brings with it the opportunity to create and design sustainable and resilient energy solutions right from the start for the data centre facility and the wider community. As things are less fixed to start with, we can put in the roadmap to build future-fit data centres and the infrastructure they sit within.

All energy sources under review

As well as running the rule over new locations for the data centre pipeline, the push for energy security is also encouraging the debate about alternative power supplies. New energy sources alongside those that have previously been discounted as they were seen as too expensive, too dangerous, or too controversial are now back on the table. 

We are certainly hearing the discussion around the use of nuclear energy. In the UK it has been interesting to see that the government has approved the go-ahead for a new nuclear power plant that could generate 3.2 gigawatts of electricity and there is also talk of removing the ban on the contentious practice of fracking for shale gas.

The good news is we are also seeing a real impetus behind the development of zero-carbon technologies such as hydrogen fuel cells. Although there are still many challenges to overcome, vehicle manufacturers are now prototyping (and selling to the public) hydrogen fuel cell electric vehicles and with increasing scale, efficiencies will no doubt follow. Implementation of large-scale hydrogen emergency power supplies into data centre infrastructure would also significantly contribute to the greening up of the data centre market, reducing reliance on gas and oil into the bargain.

This is particularly encouraging as there is a concern that the volume of energy needed by data centres could push back their sustainability agenda as solutions are disrupted. The conundrum for data centre clients could be, do they pivot away from sustainable targets they have set or invest heavily? We have seen for example in Germany, which has a huge reliance on Russia for gas, that coal fired stations are back on the rise. With the aspirations and goals set out on climate change at COP26 less than a year ago, this feels like a backward step. So, it is vital we carry on investing in these new technologies, particularly around renewables, not just for energy security, but for the sustainability of the planet.