Innovative Ways Data Centers can Supplement Electricity from the Grid

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An electric utility has traditionally been defined as "a company that generates, transmits, and distributes electricity for public use."

Data center customers are public users, and their facilities are filled with IT equipment, power systems, and cooling systems that all run on electricity as the prime power source. Prime power is defined as the main source of power for the data center, whereas back-up power (emergency power) is to be used when the prime power source fails.

For Forbes, I have written about the growing number of and complexity of back-up power systems for data centers. Back-up power is a hot topic as the electricity coming out of the grid is becoming more distributed, unreliable, and harder to find. Emerging as an even hotter topic is the mismatch of the exponential growth for data centers driven by AI computing vs the growth of electric utilities.

Electric utilities as an industry have benefited from years of little or no growth in demand while rolling out low carbon power sources (wind, solar, hydro) and decommissioning coal plants and nuclear plants. Today, they are shifting gears into fast growth mode, adding or extending electric generation capacity. However, the capital expenses, regulations, access rights for distribution and substations, and planning cannot keep up with emerging electricity demand.

Data centers are mainly business critical, but they are quickly becoming more and more life critical as more industries digitize and automate core processes and systems. Remember the recent global IT outage that brought many industries to a halt? Data center developers are now going to extraordinary lengths to source reliable power sources at scale. With increasing grid constraints, exploring on-site power or adjacent power is often the only way a data center development will be able to get approval. In my opinion, there are three paths developers can take to provide prime power in the short, medium, and long term.

Short Term - Deploy existing solutions on-site

• Natural gas power turbines: While the turbines exist and can supply a high level of electricity, the natural gas power grids across the globe are certainly not as ubiquitous as the electric grid. Additionally, natural gas providers today do not have to meet the same reliability standards as the electric grid, but this is evolving. For example, U.S. Energy Transfer and Williams Cos., are in discussions with data center operators about the possibility of building pipelines directly to their facilities. In Ireland, several data center projects are proposing connections to the gas network instead of the electrical grid.
• On-site solar and wind with battery stabilization: These solutions are site dependent as real estate for solar and wind are needed for operation. While low carbon, these systems operate intermittently but can be integrated into a prime power ecosystem cooperating with electric utilities.
• Fuel cells: Fuel cells have been around now for a few decades and there are many plans and proposals in the works for them as prime power sources for data centers. Unfortunately, hydrogen, the power source for fuel cells, needs to be derived from water or natural gas and is dependent on large amounts of electricity, which kind of defeats the purpose.

Medium Term - Purchase and rejuvenate existing power plants

Microsoft is partnering with Constellation Energy on a power deal to help resurrect a unit of the Three Mile Island nuclear plant in Pennsylvania that was closed in 2019. While no permits have been issued, the expectation is the plant will be operational in 2028 with a cost of slightly less than $2 billion. Amazon Web Services (AWS) recently bought a 2.5 GW nuclear-power plant from distressed Talen Energy for $650 million and Google is in talks with utilities in the United States and other countries to assess nuclear power as a possible energy source.

Long Term - SMRs (Small Modular Reactors) on-site

There has been incredible enthusiasm from the data center industry for the promise of SMRs - safe, reliable, efficient, small footprint, air cooled, and runs on used, discarded uranium that has been refurbished - but SMRs still need to go through testing and regulatory approval. Additionally, while not the same nuclear technology, they come with a negative perception that must be overcome. Google announced recently that it has signed a deal with nuclear startup Kairos Power to build seven small reactors to supply electricity to its data centers by 2030, which seems quite aggressive and speaks to the strong desire for SMRs.

Emerging ecosystems of prime power sources

While there is no silver bullet to supply prime power to the data center market, data center power demands will continue to grow very quickly, and many data center developers are looking at on-site or adjacent power generation as a solution. I predict we will see ecosystems emerge of prime power sources where the simple electric grid as the source morphs into a complex ecosystem of power systems including: electric utilities, natural gas utilities, on-site natural gas turbines, on-site fuel cells, on-site or adjacent wind and solar, adjacent nuclear and on-site or adjacent SMRs. Of course, this much power complexity will need software controls and automation to match the power delivery to the desired data center operators' criteria whether it's lowest cost, lowest possible carbon emissions, or the highest reliability. Rest assured, these software automation solutions are being developed by Schneider Electric.

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