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Data centres and the grid part 1: volatility and innovation

The first part of this report series looks at how energy grids are evolving and the opportunities and challenges these changes present for data centre operators.

Data centre operators have historically had a close but cautious relationship with utilities and the energy grids they provide and maintain.

Most large facilities depend on grid power for more economical operation but not exclusively for uptime. Multiple power feeds, UPSs and diesel generators provide an insurance policy against spikes, brownouts and power cuts.

However, an increasing number of progressive operators are now reevaluating how they consume energy, interact with utilities and develop resilient power systems.

These measures can take a variety of forms from participation in demand-response schemes to investing in new generating capacity and integration into micro-grids. These approaches will be examined in more detail in the second part of this series.

Changing grids

Before looking at the data centre industry’s response, it is important to understand some of the context. This includes how grids in some locations may be becoming unstable or volatile but also how utilities are updating generation, transmission and storage infrastructure to improve quality of service and efficiency.

Electricity grids obviously vary greatly in design, operation and quality of service by region. In previous articles, we’ve addressed how instability in electricity supply across Africa, as well as countries such as India, have impacted the design and operation of data centres in those areas.

But unstable grids aren’t just an issue in developing countries. Data center operators in Europe and the US have also faced issues with grid stability as well as concerns over the future of supply.

The design and operation of electricity grids will continue to face disruption from a range of factors. These include:

Smart and distributed infrastructure

Utilities have invested considerable sums in the recent past making infrastructure more intelligent. This is in order to prevent outages and improve efficiency but also to generate more income per customer or identify those that aren’t paying what they should. This process is set to continue and will have implications for end-users including the installation of smart meters that can more accurately measure energy usage.

As well as becoming smarter, energy grids are also becoming more distributed. There is likely to be a continuation in moving away from monolithic, centralized generation to more distributed generation and storage, driven in part through investment in renewables including wind and solar

Lack of investment in new capacity

Countries such as the UK have faced a potential shortfall in future generating capacity as fossil fuel, as well as nuclear, power stations go offline without being replaced. Some of the shortfall will be made up more small-scale, distributed generation but it will not be sufficient to meet all future demands. Investing in new centralised capacity is massively capital intensive and may require outside investment. A good example is the controversial new nuclear facility – Hinkley Point C – in the UK that will be funded in part by China and France. At more than £20 billion it will be twice the cost of the UK Olympic games.

Volatility from renewables

According to Bloomberg New Energy Finance (BNEV) study released in late 2017, intermittent renewables – such as wind and solar – will have a significant impact on grid operations in the near future.

The cost of generating energy, for most wind and solar technologies across Europe, is expected to more-than-halve from 2017 to 2040, according to the BNEV. As a result, renewable technologies will become the largest source of electricity generation by the mid-2020s.

But while the introduction of more renewable energy will help countries such as the UK to achieve carbon emission reduction targets, it will also introduce more volatility into the energy grid according to the BNEV. “As wind and solar production rises and falls, other flexible resources will need to ramp up or down to balance them from hour to hour. The need is greatest at times when demand is also rising or falling,” the organization states.

The result could be that the requirement for, and investment in, conventional base-load generation could be undermined with uncertain consequences. “The increase in volatility means that as early as 2030, there are whole weeks where wind and solar generation exceeds demand at some point every day. This leaves no room for ‘baseload’ technologies that need to run flat-out, such as nuclear power,” the BNV report states.

Changing patterns of demand

Experts are in agreement that demand will be changeable over the coming decade but the direction of travel will be upwards. The UK National Grid’s Future Energy Scenarios Report 2017 predicts that peak demand could be as high as 85GW in 2050, compared to around 60GW in 2017. This increase will be driven by a number of factors including a growth in electric vehicles. The number of electric vehicles is expected to reach around one million by the early 2020s growing as high as nine million by 2030. Smart charging technologies need to be developed to avoid this up to 8GW of additional demand at peak times, according to the National Grid. There is also the potential that the batteries in electric vehicles could be used to supply energy back to the grid in periods of peak demand but this remains a nascent technology currently.

Another factor affecting demand is climate change. Rising temperatures in the UK could drive up demand from air-conditioning systems to up to 17GW by 2050 on very warm days, which could also place additional demand on the grid.

Attacks against critical infrastructure

Security and data center experts also believe that critical infrastructure including energy grids could be the target of physical or cyber attacks.  For example, in December 2015, hackers shut off power to more than 250,000 Ukrainian households. “The energy sector in Europe and North America is being targeted by a new wave of cyber attacks that could provide attackers with the means to severely disrupt affected operations,” security company Symantec warned in 2017. There have also been warnings of attacks on the electricity grids in some European countries, as well as reports of companies that manage nuclear facilities in the U.S. being compromised by hackers.

Energy storage

Most utilities are in agreement that energy storage will be an important feature of new grid developments in the near future. One of the main drivers will be to balance out the intermittent supply from renewables. According to the UK National Grid’s Future Energy Scenarios report 2017, electricity storage capacity reached 4GW in 2016 but this could grow to almost 6GW by 2020.

Future outlook

As described previously, there will be new demands on the grid in the future but also new technologies that will help to offset and smooth-out some of this demand.

For example, blockchain technology – developed to underpin crypto-currencies – could be used to improve the efficiency of distributed generation and storage. For example, peer-to-peer electricity trading using smart contracts via blockchain have already been developed in the US. Homes that produce energy through solar power can transact securely with consumers who want to purchase the excess energy.

How data center operators are responding to this uncertain energy future will be outlined in the second part of this series.

Read part 2 of data centres and the grid by clicking here.

Future-tech has experience and expertise in all aspects of data centre energy management and provision.  For more information contact us at: