Phil Thompson, CEO of Balance Power, explains why data centre operators struggling with grid constraints should look to on-site renewable solutions if they want to keep pace in the global AI race.

In the last decade, demand for data centres has soared in response to the role data is playing in modern lives. Now, the emergence of generative AI is set to rocket it even further. We’re seeing a huge acceleration of the use of AI technologies in the UK and around the globe, transforming the way we live and work. The race is now on to build sufficient data centre capacity to support this opportunity.

Key to this build out is access to power, with the power needs of UK data centres anticipated to grow six-fold over the next decade. Concerningly, over the past few months, we’ve seen increasing reports of data centres struggling to obtain electricity supply, which is hindering the sector’s ability to secure necessary investment and limiting the growth of the UK economy.

Naturally, this has triggered growing apprehension around the UK’s position in the global AI race, and concern that these delays will cause the country to fall behind its counterparts at such a pivotal moment on the global stage. Against this backdrop, it’s crucial that we explore the potential solutions that will allow the UK to remain competitive.

The difficulties facing data centres

Data centres are energy-intensive operations, consuming huge amounts of electricity to power servers, storage devices and cooling systems. But they face a number of key hurdles when it comes to procuring this. Like other industries, the sector is grappling with the triple challenge of accessing power, rising energy costs while trying to meet environmental standards and net zero targets.

There is also the major hurdle of trying to compete to connect to the overcrowded national grid. Even before the rise of AI there was already restricted capacity on the electricity network, driven by the transition to renewable energy and wider net zero, resulting in a major bottleneck queue and lengthy delays to get connected to it – despite the UK government’s investment of billions of pounds and the implementation of legislation to expand it, increase capacity and shorten waiting times.

Companies and developers are experiencing an average waiting time of over five years to connect, with reports indicating that any proposed large infrastructure project looking to connect may need to wait until 2037. Sadly, lagging grid connections are also coexisting with regions where data centres are abundant (i.e. the South East), and such postponement is causing data centre developers to pause on submitting new planning proposals and even explore alternatives outside of the UK.

For a market that is encountering speedy development – and consequently has a growing demand for dependable and affordable energy – it’s vital that we seek different and advanced solutions here.

Could behind-the-meter generation be the answer?

With traditional energy networks presenting a multilayered barrier, decentralised energy solutions like behind-the-meter (BTM) generation present a worthwhile opportunity to relieve the strains data centres are currently under when it comes to connecting to a fraught national grid, and obtaining inexpensive, sustainable and dependable energy. This entails developing an energy generation project that can partially meet or fully meet the needs of a data centre at or near the point of consumption, bypassing the need for convoluted and costly grid connections. 

For companies, this usually involves establishing on-site or close to site renewable and flexible generation projects – such as rooftop solar, solar farms, wind turbines and battery storage – that feed power straight to the business via private wires. 

This approach enables companies to take charge of their energy consumption, guaranteeing a higher degree of accountability, and providing clarity to their decarbonisation efforts.

The advantages of BTM for data centres

Cost is a top priority for businesses, and a top concern for data centre developers as the country is confronted with energy price hikes. Currently, the Social Market Foundation has estimated that powering a hypothetical 100 MW data centre would cost four times more in the UK than in the US due to industrial energy prices. Behind-the-meter generation confronts this challenge head-on, notably reducing energy costs, and consequently, making companies more competitive and greener.

In addition, as grid connections become rarer, further postponed and more costly, a private wire connection speeds up projects by avoiding the need for a connection to the national grid network. In lieu of waiting for grid infrastructure to be constructed or improved, tech companies can directly connect to the renewable energy project, minimising project timelines and restrictions on an already under pressure grid.

What’s more, by investing in on-site or near-site renewable energy, companies can bolster their resilience and energy security. By minimising dependency on the grid, data centres can embrace better reliability and have fewer interferences, bringing about greater energy self-sufficiency and command over their supply. Resilience to the changing energy landscape is something that will be increasingly important for tech companies, as the UK moves towards a more varied and decarbonised grid system, and a more precarious energy landscape globally.

Furthermore, behind-the-meter generation helps businesses achieve their net zero goals, which is hugely important considering growing environmental and governmental pressures. BTM can be instrumental in decarbonising the consumer’s energy profile, instead of simply purchasing renewable energy through a grid Power Purchase Agreement (PPA) that may not always meet the same standards. Many PPAs allow companies to buy renewable energy from grid-connected sources that are usually far away from the point of consumption, which doesn’t ensure that the power used by the business is fully decarbonised. In comparison, behind-the-meter solutions provide an actual reduction in emissions by directly providing energy that is 100% renewable.

There is an array of examples of flourishing BTM development across the globe. California, Australia, and Germany have all seen a comparatively swift uptake in industry self-generation over the last 10-15 years. Tech companies can therefore look to these successful case studies for inspiration and the potential they could bring for them.

Next steps: unlocking the full capabilities of AI

Behind-the-meter generation offers a swift, economical solution to the data centre industry that not only decreases dependence on the grid – enhancing their energy dependability and security – but also empowers them to decarbonise rapidly and cost-effectively, enabling them to achieve their net zero goals.

Despite this, adoption of this crucial practice has been relatively slow in the UK, with many companies being uniformed of the advantages it brings. If we are to maintain a competitive edge and continue to perform in the global AI race, it’s paramount that data centre developers are aware of these advantages and commit to taking charge of their energy usage – and as a result, maximise the economic, environmental and reputational rewards that come with it.