In today’s digital age, data centres play an integral role in enabling our world. From the applications we use on our personal devices, to the complex processes that drive the global economy, these facilities are critical in storing and processing vast amounts of data.
But they need electricity to operate and as the population’s demand for data processing continues to increase, so too does the electricity consumption of data centres.
According to a report from the National Grid, using existing market data and modelling projections, the growth of data centres could point to annual data centre electricity consumption of between 3.6 TWh in 2020 to as much as 35 TWh by 2050.
Many data centres are already doing what they can to mitigate their energy consumption by implementing technologies and processes to improve sustainability as well as using renewable energy. As a result, sustainable energy procurement has become a strategic priority in this industry.
The process of purchasing energy for data centres is a crucial aspect of ensuring their efficiency and sustainability. It involves procuring the required volumes of energy from the various sources available. such as renewable energy, natural gas, coal, and nuclear to find the most cost-effective and sustainable source for powering these facilities. This is important not only for the benefit of data centre customers, but also for the operators and the environment.
However, energy procurement in the data centre industry is far from simple. It is a complex process that involves numerous factors such as location, energy consumption and regulations. It is also critical to ensure that the energy source is reliable and can meet the data centre’s continuous 24/7 power needs.
In this article, we will explore the importance of energy procurement for the data centre industry and provide practical recommendations on how to get it right.
The critical role of energy procurement
Energy procurement is a strategic task for data centre operators because it determines the overall cost and carbon footprint of the facility. With the world facing the dual challenges of climate change and dwindling resources, there is a growing awareness of the need for sustainable energy. This has put pressure on data centres to improve energy efficiency and reduce their carbon footprint, making energy procurement more critical than ever.
Getting energy procurement right is also important for commercial reasons. As data centres continue to grow in size and complexity to meet demand, they are consuming more and more energy. This has led to facilities’ rising energy costs, which can have a significant impact on the provider’s bottom line as well as cost to the customer. By choosing a sustainable energy source, data centres can reduce their energy costs and carbon footprint and increase their competitiveness in the marketplace.
What to consider when procuring energy for data centres
When it comes to choosing an energy supplier for a data centre, there are several key factors to consider. One of the most important is the environmental impact of the energy source. Different types of sustainable energy are different ‘shades’ of green, and it’s important to look beyond the carbon emissions. For example, biomass and nuclear energy may not produce carbon emissions directly, but they can have negative impacts on the environment in other ways. In contrast, hydro, solar and tidal energy are often considered the most sustainable options available.
Another consideration is the commercial viability of the energy supplier. This includes the cost of the energy as well as any necessary infrastructure, such as transmission lines. Data centres need to ensure that the energy supplier can provide power at a cost that makes sense for their business. It’s also important to consider factors such as the supplier’s reputation for reliability and the terms of their contract.
Furthermore, data centres should ensure that any benefits from sustainable energy procurement are passed on to their customers in the form of lower prices or improved services. By procuring energy from sustainable sources, data centres can also improve their corporate image and attract and retain customers.
Lastly, data centres need to verify the origin of the energy they are using. The Renewable Energy Guarantee of Origin (REGO) certification verifies that the energy being used is truly renewable and sustainable. Checking the energy company’s annual fuel mix report can help data centres make informed decisions about which energy suppliers align with their own sustainability goals.
Looking ahead – harnessing future innovation
Power Purchase Agreements (PPAs) are becoming increasingly popular in the industry. These agreements involve data centre companies committing to buy a guaranteed amount of energy over an extended period of time. This assists with financing of new renewable projects, increasing the availability of renewable energy on the market and supports the growth of sustainable energy generation.
It’s also important to note that energy procurement has come a long way in the past decade. Ten years ago, there wasn’t as much interest in green energy, and it wasn’t as commercially viable. However, as more and more companies and individuals prioritise sustainability, it makes more sense for energy companies to invest in and produce renewable energy. This means that data centre providers have the opportunity to access more sustainable energy options at competitive prices.
Indeed, the cost of renewable energy is decreasing as technology improves and economies of scale are reached. This is making it increasingly competitive with traditional fossil fuel sources, making it a more viable option for data centre providers to consider when making energy procurement decisions. As the demand for renewable energy continues to grow, it’s likely that we will see even more innovation in this area, and even lower costs for data centre providers in the future.
Practical tips for success:
Here are some points to follow to help ensure you are getting energy procurement right:
- Understand your energy consumption: the first step in procuring energy for your data centre is to understand your energy consumption. This includes not only the amount of energy you need, but also when you need it. This will help you identify the best energy source for your needs, as well as any potential energy efficiency opportunities.
- Assess your location: your location can have a significant impact on the cost and availability of energy. For example, if you’re located in an area with high levels of renewable energy, it may be more cost-effective and sustainable to source your energy from local renewable sources.
- Conduct a thorough evaluation of suppliers: research different energy suppliers, including their prices, contracts and environmental impact. This will help you identify the most cost-effective and sustainable option for your data centre.
- Negotiate a contract that works for you: once you have identified the best energy supplier for your needs, negotiate a contract that works for you. This may include a Power Purchase Agreement (PPA) as mentioned earlier.
- Continuously monitor and review: energy procurement is not a one-time process. It’s important to continuously monitor your energy consumption and supplier performance to ensure that you’re getting the best deal possible. This includes regularly reviewing your contract, market pricing and renegotiating as necessary.
