Are data centers causing the energy crisis?

Keeping our digital society running is extremely energy-intensive. Everything we do online has to be stored and processed somewhere, and the volumes are huge. Data centers – the physical location of the Internet we use on our digital devices – account for approximately three per cent of the global annual energy consumption. By 2030, the consumption is expected to rise to more than ten per cent. What is the effect of data centers on us in the context of the energy crisis?

A lot of electricity is needed to run data centers. Photo by Pixabay.

Electricity and its availability are increasingly affecting our business and living environments

The energy demand of a larger data center can easily match that of an average city. They use as much electricity as tens of thousands of households combined. While there is currently only one large-scale data center in Estonia, there are many more of them abroad. In some places, there are so many of them that the construction of new ones has been banned, as there is simply not enough electricity. The Netherlands and Ireland, for example, have already implemented short-term bans.

Just like many people and businesses, data center operators also want to be located near the hotspots of life. The concentration of large-scale complexes is creating a new type of electricity shortage, which, in turn, is affecting the development of regions, reports the Financial Times. Once the limit of the transmission grid is reached, nothing more can be built, not even residential houses. Therefore, our digital footprint has a direct influence on the physical living environment.

For example, West London and the area known as the ‘M4 corridor’, which has become a high-tech hub, are faced with this issue. The ‘corridor’ is home to the data centers of Microsoft, Amazon, Dell, Huawei, HP, Sony, and many other tech giants, putting a huge strain on the power grids. This is why the construction of new data centers has been put under close scrutiny in many regions.

Ireland, for example, which already has more than seventy data centers, is considered the fastest-growing data center market in Europe, Gizmodo reported. Last year, it was reported that the data centers in Ireland already use around 900 megawatts of electricity, which forms at least 11% of the total electricity supply of the country. If data centers (or more specifically, keeping the modern digital society and businesses running) alone consume as much energy as several cities, this will inevitably start to affect the security of supply.

Taking into consideration the global boom in the possibilities available online, there is no reason to assume that things will get any easier in the future. The projection of Eirgrid, the national grid operator of Ireland, for last year showed that if things continue at the same pace, local data centers will take up almost 30% of the annual electricity consumption of the country by the end of the decade.

Climate change is also contributing to this. During the heatwave of this summer, the cloud servers at the data centers of Google and Oracle in London had to be shut down, Gizmodo reported. This means that, as the climate is warming, more energy will have to be allocated for cooling. It also shows that moving to the cloud is not the answer, as these services will also eventually rely on data centers.

Conclusively, we should keep in mind that the energy consumption of data centers is a problem in certain cities that have become the communications hubs of the world.

The solution is energy efficiency, not banning

As mentioned above, some countries have temporarily banned the construction of new data centers to ensure energy security. For example, in Singapore, data centers currently form about 7% of the electricity consumption of the country, AKCP.com reported. However, as cloud companies, telecoms, and multinational organisations are expanding to South-East Asia and to the rest of Asia, the demand for data centers is undeniable. What was done in Singapore?

In the beginning of the year, the government announced that it would lift the ban on new data centers. Not unconditionally, however. The new centers built will have to pass stringent inspections and meet high energy efficiency standards. The aim is to make data centers truly green and sustainable.

As data centers are essential and consume huge amounts of energy, we quickly get to energy efficiency. One of the indicators for measuring this and for comparing different complexes is power usage effectiveness (PUE). The lower the PUE, the better. For example, in Europe, new data centers that have joined the Climate Neutrality Pact must meet the target PUE of 1.3 in cool climates and 1.4 in warm climates by 2025.

What does this mean? If the PUE is less than 1.3, then for every kWh used directly for running the IT equipment, less than 30% is added for ensuring the cooling, communications, security, and reliability of the equipment. In 2021, the respective global figure was 57%, on average (that is, the PUE was 1.57).

Is it possible for Estonia to run out of electricity?

Even though the sustainability of data centers has become an important issue in the last few years and progress has also been made, the planning, development, and operating of completely green data centers still remains a huge challenge. This applies to the wider world as well as Estonia. The transition to carbon-free data management calls for changes in the planning and construction of the infrastructure. Upgrading many older data centers so that they would meet the modern requirements is not economically feasible, as this would mean replacing the majority of the systems or even starting from scratch. This particularly applies to the server rooms in the offices of organisations, which were never designed to meet specific requirements. This inevitably also means higher energy consumption. The higher demand for electricity will, in turn, affect the price, which is formed on the free market by the comparison of supply and demand.

Bringing the energy efficiency of data centers to the forefront largely depends on the market. If the smallest possible ecological footprint is demanded by the customers, that is what is offered. If it remains on the back burner, the changes towards a greener digital infrastructure will be slower. The climate policy of Europe, which will get more stringent in the coming years, will also play a role, with stricter requirements to be imposed on data management.

The largest data center in the Baltic states, Greenergy Data Centers (GDC), targets a PUE of not more than 1.2. This means electricity consumption which is a quarter lower than that of an average data center. GDC aims to use electricity as efficiently as possible, and work is also underway to create green energy generation capacity next to the data center. All in all, this is smart from the perspective of nature conservation as well as lower electricity bills.

Returning to the issue of security of electricity supply mentioned in the beginning of the article, data centers do not yet play a major role in Estonia or, more generally, in the Baltic states, and still account for a very small share of overall electricity consumption. Nevertheless, the complex of GDC was built in the location with probably the best electricity supply in Estonia. One must be prepared for any future scenario.

The availability and efficient use of electricity will be key for data centers and their clients in the long term. In the big picture, this is shaping the development of our digital society, as data centers are the foundation of everything that resides on or is operated over the Internet.