Hyperscale Data Center Operators Are Driving Growth of Renewable Energy in Facilities, IHS Markit Says

Both internal and external forces are motivating data center operators to seek renewable energy sources, according to new research from IHS Markit. Internally, they are driven by potential energy cost savings or internal sustainability policies. Externally, they are motivated by their customers’ desires for companies to have environmentally friendly practices or tax incentives or subsidies from governments.

Between 2 percent and 3 percent of developed countries’ electricity consumption is currently attributed to data centers. For most data centers, the largest operational cost is the electricity used for cooling. On-site generation is the ideal way to implement renewable energy in data centers. The two most popular renewable energy methods are solar and wind power, due to their high-energy production and relative ease of implementation.

Offsite renewable energy sources -- primarily utility companies and renewable energy suppliers -- are typically the easiest way for data centers to obtain renewable energy. Offsite generation removes the large upfront capital expenses to produce onsite renewable energy and the geographical limitations of renewable energy production methods.

Although small data centers have a distinct advantage in using onsite options, owners of hyperscale data centers (i.e., Apple, Google, Microsoft, Amazon and Facebook) are driving the growth of renewable energy for data centers.

Another key factor for using renewable energy are the technology and designs inside the data center, which allow facilities to store energy more efficiently and reduce their overall energy consumption. As these technologies continue to advance and develop, data center operator interest will grow.

The large upfront cost to decrease their energy usage by investing in these technologies and renewable energy, in general, will reduce the operational expense of powering data centers. As a result, IHS Markit expects to see customers willing to pay more for products and accessories that allow their data centers to be more efficient.

While existing data centers likely will continue to use methods like renewable energy credits (RECs) that do not require an on-site source of renewable energy, on-site generation of renewable energy is likely to become an increasingly important element in data center design.

The location of the data center also will increase in importance, because the biggest hurdle to having local renewable energy is whether the facility is located in an ideal climate to generate renewable energy.

(For more information visit https://ihsmarkit.com).