Why sustainable on-site generation is a must for data centres
By Anthony Ainsworth, COO, npower Business Solutions (nBS)
As an energy-intensive sector, it has always been a challenge to find the most effective ways for data centres to decarbonise. Over recent years, technological developments have provided increasingly smart ways for data centres to reduce their energy consumption and lower carbon emissions. However, recent volatility in wholesale energy prices across the UK and Europe has raised the additional concern of how to manage the inevitable rise in costs without disrupting supply.
For mission-critical sectors such as data centres – where any downtime can be hugely costly – the need to look for solutions that are sustainable, reliable and increase resiliency are becoming even more urgent.
One solution is installing sustainable on-site generation.
Firstly, it is important to dispel one of the most common myths – that the intermittency of renewables means that on-site generation isn’t suitable for industries, such as data centres, that require uninterrupted, 24/7 supply.
The technology has evolved considerably, meaning that on-site generation, particularly when paired with storage or other power sources, is now a reliable option that comes with many advantages. As well as helping data centres decarbonise, it also provides greater resiliency, protecting operators from the hugely volatile wholesale energy market we have seen in recent months. In short, it puts them in control of their own energy generation while also reducing carbon.
However, at a time when competition for capital expenditure is high, making the case for larger investments, such as renewable on-site generation, can prove to be difficult.
With this in mind, we have developed a guide on the important role sustainable on-site generation can play in helping organisations plot their path to net-zero to help operators make the business case for the investment. This report – ‘Plot Your Path to Net Zero: A Focus on Sustainable On-Site Generation’ – includes information on the different kinds of generation available, from solar photovoltaic (PV) to combined heat and power (CHP), as well as the views of over 60 organisations of their on-site generation plans and the kind of support they would welcome.
Encouragingly, the research showed that, despite the challenges posed throughout the Covid-19 pandemic, over 50% of our respondents said they had already invested – or were planning to invest – in ways to generate their own supply.
That said, despite the positivity around plans to invest in on-site generation, businesses also raised some of the issues they face when it comes to building a case for the investment. The primary barrier is proving the return on investment (ROI) of an on-site asset, closely followed by access to funding. Nearly a quarter (24%) also questioned the suitability of on-site generation for their organisation.
So, how can data centre operators make the business case for an on-site generation asset?
There are five reasons why on-site generation should be a key part of an operator’s carbon reduction strategy:
- It reduces carbon emissions
As we are all aware, the UK government has set some very ambitious targets for the reduction of carbon emissions. As well as committing to net zero emissions by 2050, it also announced a mid-point commitment of a Greenhouse Gas (GHG) emissions reduction of 78% by 2035 compared to 1990 levels.
The most effective way to reduce emissions is by switching to a zero-carbon supply. On-site generation options that use 100% renewable sources – such as solar PV or wind – will help a data centre significantly reduce its carbon footprint.
- It lowers energy costs
Installing on-site generation technology can make a real impact on the bottom line through a reduction in energy costs. As a site will only generate the energy it needs to use, it will naturally operate in a more efficient way.
There is also the opportunity to avoid non-commodity costs, such as the third-party costs required to maintain and balance the grid, if a data centre is generating its own electricity.
- It protects against price fluctuations
Linked to a reduction in energy costs, on-site generation helps to mitigate against price fluctuations in the market, which has been a huge issue in recent months, where wholesale energy prices have reached record highs. Having an on-site supply helps to protect data centres against this price volatility and increase resiliency, meaning operators can plan ahead with greater certainty.
- It provides increased stability of supply
Any loss of energy – no matter how brief – can be costly, particularly to those mission-critical industries like data centres that rely on 24/7 supply.
Hitting net zero emissions by 2050 relies heavily on mass-electrification, putting increased pressure on the central grid. This means that we will see a move to a more decentralised system, with multiple energy sources contributing to the overall stability of the grid.
Installing on-site generation – particularly if combined with battery storage – helps to protect data centres from any downtime by increasing self-sufficiency and minimising the reliance on the grid. It can also provide additional revenue opportunities, allowing operators to sell any excess energy they produce to the grid.
- It improves reputation and sustainability credibility
The recent COP26 climate conference saw several announcements that focus on ensuring businesses adhere to stricter standards when it comes to publishing sustainability pledges. There has also been an increase in exposing instances of so-called ‘greenwashing’ – where a company’s zero-carbon commitments do not stand up to scrutiny – particularly as the public become more climate aware.
Installing on-site generation is a clear signal that your operation is serious about sustainability, particularly in the eyes of stakeholders and throughout your supply chain.
Plotting your path to a more sustainable and resilient future
When it comes to making ambitious, yet robust, carbon reduction plans, on-site generation needs to be a key consideration for data centre operators. However, where cost barriers are an issue, one route to consider is a Power Purchase Agreement (PPA). These can be arranged via a third party funder, who can install and manage the on-site asset – the organisation then buys the energy from the funder over the course of the agreement, negating the need for up-front investment. Encouragingly, this was a route that the majority of our respondents (73%) were either already taking, or were considering.
From solar PV to wind power, there is now a great deal of choice for data centres, with more innovative technologies on the horizon. The time to act is now – as well as reducing emissions, it reduces reliance on the grid, mitigates against price volatility, enables greater control of energy consumption, and provides future revenue opportunities by becoming a flexible asset. That is why investing in on-site generation really does make financial, environmental and reputational sense.