Sustainable and Renewable Power Generation for Global Data Centers
November 9, 2018 -- Note: The following is an excerpt from Navigant Research's recent report on global data centers. Reprinted with permission
Data centers are critical to a functional global digital economy and society. Investment in cloud storage, colocation, and hyperscale data centers has resulted in the construction of a large volume of new data centers globally, thus increasing energy consumption.
Meanwhile, edge computing has led to a shift toward more off-grid, small-scale installations closer to the point of use. The emergence of edge computing is one of the primary factors fostering new data centers in secondary markets around the world. In the past, data centers have been located near urban areas with greater access to grid-connected power. With increasing digitization across emerging markets (e.g., Asia Pacific and the Middle East & Africa), data centers are becoming more and more advanced. Extensive use of services such as big data, Internet of Things, cloud computing, and artificial intelligence is prompting data center operators to adopt high performance, mission-critical IT infrastructure across both mature and emerging markets.
Data centers are energy-intensive establishments that usually run 24/7 year round. The European Commission estimates data center power densities range from 538 W/m2 to 2,153 W/m2 and can reach up to 10 KW/m2. Power distribution, cooling, lighting, and IT demand are the primary use of energy. While the industry estimates that a 1-hour outage at a data center can cost $350,000 on average, this figure is expected to increase over the next 10 years. Increasing investments in big data, digital content, and e-commerce will continue to drive explosive growth in power demand for data center markets. Therefore, it is critical to understand the reliability and sustainability of power supplied to these facilities.
Most data centers are grid connected through substation links. Traditionally, data centers have relied on alternating current (AC) power sources from the utilities, which can be easily transmitted over long distances. AC power is converted into direct current (DC) when it reaches the servers at the data centers, a process that results in conversion losses. Sustainable power generation technologies, such as solar PV, wind turbines, and fuel cells, are DC power sources and therefore require standards and open grid infrastructures for DC power distribution. Emerging market trends offer a compelling case for DC distribution systems for the commercial and industrial (C&I) customer segment (e.g., data centers).
Key Market Trends
Navigant Research estimates that data centers currently consume up to 3% of global energy. According to recent estimates by the National Resources Defense Council, US data center electric usage is anticipated to increase by more than 50% to 140 billion kWh by 2025. This equates to the annual output of 50 power plants at nearly 100 million metric tons of carbon emissions per year. Power consumption is a critical key performance indicator across data centers; thus, power generation and supply have become increasingly important for data centers. Regional market dynamics are a critical driver affecting power generation models adopted by data center industry participants.
Increasing demand to deploy clean energy sources has also led to renewed interest in corporate renewable power purchase agreements (PPAs). However, renewable energy certificates are at best a marketing instrument that lets buyers claim they have used renewable energy to power data centers. Clean energy sourced from utilities and independent power producers varies widely across regions and may include a considerable proportion of electricity generated by fossil fuel plants. The perceived benefits of distributed and renewable resources (like wind and solar PV) for both primary and critical power supply are gaining attention among data center operators.
There is a compelling case for data centers to evaluate distributed generation along with demand response (DR) and grid interactivity. This strategy is gaining market acceptance and offering rapid ROI across the globe.
Global Outlook
Navigant Research expects the global market for sustainable power generation in data centers to reach a cumulative total of $50.7 billion in revenue between 2018 and 2027. Substantial new capacity additions in Asia Pacific will likely drive growth. Global revenue for power generation in data centers is expected to increase from $3.9 billion in 2018 to $6.7 billion in 2027.
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