Procuring power for a carbon-free or low-carbon data center has become increasingly complex. As the demand for data center capacity skyrockets, developers are collaborating with energy retailers and utilities to craft bespoke power packages, optimally situated near renewable resources like wind farms or solar arrays.
The rapid construction of large data center campuses, driven by heightened AI demands, has intensified concerns that the traditional power grid may falter under this pressure. This situation adds to the urgency for organizations to secure sustainable power sources, which further complicates the landscape of energy procurement.
A recent webinar hosted by the Uptime Institute highlighted three effective strategies for managing power demands sustainably at new data centers. Andy Lawrence, the executive director of research, and Jay Dietrich, the research director of sustainability, outlined these approaches.
Data center growth is projected to dramatically increase, with estimates showing a jump in power demand from 400 terawatt hours (TWh) in 2023 to as high as 1,400 TWh by 2030. While AI-related requirements will grow substantially—AI inference needs rising from 17.5 TWh to 162.5 TWh by 2030, and AI training from 17.5 TWh to 87.5 TWh—the traditional power grid is unlikely to match this explosive demand.
The data center industry’s adaptation to these new realities includes developing novel power supply strategies, which the Uptime Institute categorized as follows:
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Tailored Power Packages: In deregulated markets, data center operators can establish long-term contracts with energy retailers. These contracts involve collaboration among operators, developers, and retailers to create customized plans based on energy forecasts, which also include on-site generation solutions.
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Co-location with Power Generation: By situating data centers next to clean energy sources, such as wind farms or solar installations, and supplementing this with on-site natural gas turbines, operators can achieve a sustainable energy mix while meeting their power needs.
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Collaborating with Regulated Utilities: Forming partnerships with regulated utilities enables data center developers to negotiate special pricing structures or even establish dedicated power supply agreements for their operations.
Each path presents unique challenges, particularly as energy sources like wind and solar support only a portion of the power requirements. Alternative energy technologies, such as geothermal and nuclear energy, represent promising future options, but practical implementation remains at least a decade away.
In the current energy landscape, natural gas emerges as a reliable interim solution, preferred for its permitting advantages and consistent supply. Overall, the transition to carbon-free data centers will require significant collaboration between various stakeholders, including energy retailers, utilities, regulators, and data center operators.
For further insights on the evolving energy landscape for data centers, refer to the following articles:
