Author: Shane Touhey, Commercial Analyst, Electron
Data processing is behind many of our day-to-day activities as we digitalise our lives, from cloud computing to AI. The demand on data centres to deliver that service is high, as one of the most energy intensive activities on the planet. So how can load flexibility help in this scenario?
Data centre electricity demand is forecast to soar
Mckinsey estimates that, in Europe, electricity demand from data centres is expected to triple by 2030, hitting 150 TWh. This would account for five percent of Europe’s power consumption within those six short years.
Even that growing demand lags behind the USA, where data centres accounted for 4.4% of the total electricity consumption in 2023 – and this could jump to 12% by 2028, from 176 TWh to up to 580 TWh.
So, the increasing demand from data centres is causing strain on the grid. Yet, it also provides an opportunity to boost grid resilience through controllable and flexible loads.
Location is the key to unlocking flexible loads in data centres
Network operators can strategically use the energy in data centres at different times through demand response. This means asking data centres to distribute their consumption across various locations to benefit the grid.
For example, data centres can manage AI processing in any location; it does not need to be located near demand. If there was congestion on the grid in a daytime data centre location, due to electricity demand being higher during the day, the AI data centre operator could be incentivised to turn down its electricity consumption.
It then would have the option to turn up its use in a night time location, where electricity demand is lower in that local area, to ensure it can continue processing. This will therefore mean the grid constraint is reduced in the first location.
Whether data centres are buying energy directly from the grid or building their own on-site facilities to connect to the grid – like zero-carbon generation and batteries – this leads to opportunities to sell those flexible loads.
Market signals can incentivise flexibility
Coordinating any demand response activity requires a nuanced understanding of energy demand patterns and grid conditions. That information is vital to help data centres optimise their energy consumption based on real-time data and forecasts.
Data centres would also need incentives to shift their load.
Effective market signals can help in both areas.
Markets coordinated through a neutral platform can help shift energy-intensive tasks – such as data processing or cooling operations – to off-peak hours. Utilities can therefore reduce strain on the grid and take advantage of lower electricity rates during these times.
This flexibility can therefore lead to cost savings, making it a financially attractive option for operators and data centres.
Smart connections can fast-track new data centre development
The other benefit of load flexibility to data centres comes with the speed of the connection itself – and the speed of data centre development.
Data centres often need to wait for a connection approval before they can start development. Interconnection queues hit 2.6 TW in the US alone in 2023. As more renewables connect everyday, these queues will grow, slowing the development of new centres.
Alternatively, data centres can agree to a flexible or non-firm connection. This is where a certain amount of capacity is firm or guaranteed, while the remaining capacity as non-firm and subject to curtailment when required.
This can help accelerate not only the connection but the build of the data centre itself – and ensure more load flexibility for utilities to procure.
With a neutral market platform to facilitate trading of the load flexibility, grid operators can enhance the overall resilience and sustainability of the energy ecosystem while data centres can earn more and develop faster.
If you’re interested in learning more about how energy flexibility can help data centres ensure faster connections, get in touch.
