Data Centers and the Future They Face
As the energy industry faces unique challenges with respect to decarbonization, sustainability objectives are becoming increasingly paramount. With the tremendous rise of technology of the past decade has come a rise in the amount of data – and with that, the data center market is experiencing exponential growth. The downside? Growth typically comes with its set of corresponding challenges for owners, developers, and operators.
Power Shortages for Data Center Expansion: Average energy demand for data center facilities is increasing significantly due to the development of artificial intelligence (AI), post-pandemic applications deployment, as well as higher and faster computing requirements. With the growing need for more data centers, the industry is outgrowing its grid resources, creating wait times to obtain power. Furthermore, connection lead times of one to two years, demands for highly reliable power, and requests for power from new, non-emitting generation sources can create local and regional electric supply challenges.
Decarbonization: Data centers have significant energy consumption through requiring large amounts of electricity to power servers, cooling systems, networking equipment, and more. Additionally, emissions from the production and disposal of IT equipment add to the carbon footprint of this market. In tandem, renewable energy sources, while crucial for decarbonization objectives, are intermittent – posing challenges for data centers that require a constant flow of power.
Water Usage and Sustainability: Data centers are notable consumers of energy and water, and there’s a consequent need to address the environmental impacts associated with this water use.
Cooling Requirements: Cooling systems account for a large majority of data center power consumption. Finding sustainable cooling solutions that allow for operations without relying on energy-intensive power is essential.
Scaling-Up Challenges: Data centers are facing multiple challenges with regards to scaling up such as anticipating demand to take investment decisions, strategic technology development choices, and the need for a skilled taskforce if we are to accelerate projects. Additionally, improving processes in alignment with changing regulations can allow for faster decision-making for grid expansion and flexibility as well as the supply chain tension not capable of responding to the exponential growth.
How Data Centers Need to Address These Challenges
To face the challenges data centers are experiencing will take a multi-faceted approach that includes technological innovation, industry collaboration, and support in policy and regulation. Virtualization, more efficient cooling systems, power usage management, energy monitoring, and renewable energy sources make up some of the required solutions.
The increase in renewable energy will require an expansion of grid infrastructure with a focus on digitalization and the development of new approaches to finding alternatives. Hybrids, aero-derivative gas turbines, power batteries, and microgrids are all leading the way to more sustainable data center development. With that said, there is a need to, in tandem, harmonize policies and regulations across the globe. Governments can incentivize and/or regulate sustainable practices in the data center market through the implementation of things like tax incentives, investments in renewables, carbon pricing, and more.
We know that data centers have the potential to drive the energy transition forward by delivering grid services and energy storage solutions. To attract investment and remain competitive, data center providers will need to adapt to the changing trends of the industry and navigate these trends strategically, ensuring they can meet the evolving needs of the digital economy while maintaining sustainable and efficient operations. While data centers are large consumers of energy, they also have the ability to push innovation within the industry. Done properly, data centers can be the catalysts for progressive change within the new era of energy.