The data centre industry is witnessing immense growth, buoyed by the increasing need for storage and computing capabilities, and the rising adoption of cutting-edge technologies such as 5G, artificial intelligence, big data analytics and internet of things. As a result, power consumption by data centres is also rapidly rising. As per industry reports, data centres are responsible for up to 3 per cent of global electricity consumption today. This is projected to reach 4 per cent by 2030. Moreover, the average hyperscale facility consumes 20-50 MW annually, which is theoretically enough to power up to 37,000 homes. This surge in power consumption by data centres is now driving the focus on environmental awareness and sustainability.
According to CRISIL Ratings, electricity accounts for 45-50 per cent of the operating expense of data centres. As a result, there is now a sharper focus on having an optimum mix of grid power and renewables. The share of renewables in data centre power consumption is expected to increase to 35-40 per cent by fiscal year 2025 from less than 15 per cent now. As renewable power is cheaper, it will improve the operating margins of the sector by 200-300 basis points by fiscal year 2025, and help sustain the project’s returns on capital employed at 13-15 per cent.
A look at the key trends shaping the energy consumption of data centres…
Global efforts
According to the US Department of Energy, the water usage effectiveness of an average data centre using evaporative cooling systems is 1.8 L per kWh. This type of data centre can consume three to five million gallons of water per day, close to the capacity used by a city of 30,000-50,000 people. Recognising this, a number of countries across the globe are stepping up their efforts to control energy consumption at data centres. For instance, Dublin, Ireland and Singapore have taken steps to control data centre energy use and data centre water consumption, especially in areas prone to drought.
Doing away with diesel generators
For a long time, data centre operators have been using diesel generators to power servers across the ecosystem. However, a key issue with these generators is that they produce carbon emissions, which is not in line with data centre operators’ sustainability goals. As a result, organisations are either relying on batteries for longer load support or designing data centres with minimal generator capacity. These steps are aimed at minimising the role of the generator as the industry moves towards options such as new battery technologies for extended power backup.
Designing sustainable data centres
Recent geopolitical events, as well as scarcity and soaring cost of fossil fuels along with the increase in the effects of the climate change phenomenon, have propelled the need for investments in carbon-free energy to avoid future energy crises. Specifically for data centre operators, this means an increasing inclination to transition from being carbon-intensive to carbon-neutral and sustainable by design.
According to the suggestions of the United Nations Sustainable Development Goals on future construction, builders of new data centres must be responsible when it comes to extracting natural resources both directly and indirectly, and must aim to power facilities with energy from 100 per cent carbon-free sources. To this end, data centre operators need to seek ways to better manage waste streams, and optimise assets and resource lifecycles, by transitioning away from single-use designs towards a model of recycling, reusing and remanufacturing. This helps eliminate the impact of landfills and creates a self-perpetuating life cycle for materials and equipment. To this end, signatories of the Climate Neutral Data Centre Pact have made clear commitments to achieve low power usage effectiveness and responsible water usage, and repurposing waste heat.
Moving towards carbon-neutral technologies
Data centres, being some of the largest consumers of energy among the infrastructure sectors, are now moving towards carbon-neutral technologies following the ongoing disruption of traditional energy supply lines. The sector is working collaboratively to decarbonise international grids. A number of data centre providers are on their way to reducing demand for fossil fuels by covering 100 per cent of their annual electricity consumption with renewable energy purchases. Some, including Iron Mountain Data Centres, have taken decarbonisation even further, by committing to match their energy consumption with local, clean energy every day by 2040.
Meanwhile, investment in research into alternative energy sources to provide backup power during outages will increase, with the recent testing of hydrogen fuel cell systems achieving positive results. According to the International Energy Agency, hydrogen will play a role in our carbon-neutral energy future, but with around 99 per cent of hydrogen still derived from fossil fuels, maintaining sufficient capacity of on-site energy storage is a challenge. Hence, work needs to be done to develop clean hydrogen alternatives, so that reliance on backup diesel generators can be phased out completely.
Greening the supply chain
As data centre operators become aware of efforts towards decarbonisation, they are also recognising the need to implement improvements in their supply chain to cut Scope 3 emissions, and seek partners with less carbon-intensive solutions. This is also due to the increasing awareness of the fact that the power consumed by their IT equipment is part of their own energy footprint. To this end, data centre operators are now looking to adopt solutions and products with lower carbon footprints across their supply chains, and build strong partnerships.
Powering the future
Net, net, capping the energy consumption of data centres has become paramount amidst the growing energy crisis. However, this will require all key stakeholders, including the government, data centre providers and original equipment manufacturers (OEMs), to work together. While the government on its part has initiated many measures, it needs to further adopt flexible green power procurement regulations and a long-term policy framework to increase the green mix in data centres.
Meanwhile, data centre operators, OEMs, industry, academia and other stakeholders across the supply chain need to work together to increase the adoption of innovative solutions. For instance, while solar energy alone can increase efficiency by 70 per cent, mixing two sources of energy such as solar and wind can hike the efficiency rate by up to 85 per cent. Other innovations pertaining to battery storage efficiency and production of green hydrogen can help further improve the green energy mix of the industry. This will enable the industry to collectively reach a high level of green energy, with all stakeholders working towards a common goal.
However, there are constraints in the form of the charges imposed by discoms. The government can only provide cross-subsidies up to a limit. Subsidising discoms for the transportation of renewable energy is financially unviable. Until a solution to this is found, it is going to remain a farfetched dream. Therefore, it has to make financial and economic sense for data centre operators to shift to renewables.
Further, data centre operators should evaluate the various sustainable energy options from a technology standpoint. For instance, if companies are using liquid gas in a particular region for an industrial process, it may be generating enough cooling for them to establish an adjacent data centre. These newer options need to be evaluated as well.
Together, these measures will go a long way in improving the power consumption of data centres and enabling sustainable operations across the industry.
