About 20 years ago, energy experts predicted a major challenge with producing the amount of electricity needed to accommodate the huge growth of the internet and storing companies’ data on energy-intensive servers.
And in the context of climate change and growing corporate interest in sustainability, they also questioned how much of that new electricity would be generated with fossil fuels.
However, these data center facilities — which range from the size of a closet to an airplane hangar — have undergone a noteworthy shift in operating more efficiently.
In a June 2016 report, the U.S. Department of Energy’s Lawrence Berkeley National Laboratory found that electricity consumption by data centers nationwide began to plateau seven years ago, growing about 4 percent between 2010 and 2014. The report — which was the “first comprehensive energy analysis of data centers” in nearly 10 years — also projected the same energy growth rate through 2020, even as the number of installed servers is projected to increase 40 percent over that time. Comparatively, energy consumption from data centers grew by 90 percent from 2000 to 2005 and 24 percent from 2005 to 2010.
Researchers have found that over the past decade, data centers are paying more attention to cooling and powering options that aren’t energy hogs, as well as sharing resources known as “virtualization” that have led to growth in cloud services.
“Until (the Department of Energy report) came out, everyone in the industry assumed that data centers and the energy used by them was still exploding — that was the trend of the previous decade,” said Pierre Delforge, director of the Natural Resources Defense Council’s High Tech Sector Energy Efficiency, Energy and Transportation Program. “We found that, essentially, growth had been slowing down while data center volume and traffic itself is increasing explosively.”
The Department of Energy report added that energy efficiency efforts between 2010 and 2020 are expected to save $60 billion in energy costs.
A RENEWABLE SUPPLY
Despite this encouraging trend for clean energy supporters like the NRDC, Delforge says it’s “important to not be complacent,” and that plenty of low-hanging fruit still exists for energy efficiency, particularly among small and mid-sized data centers.
Delforge added that data centers are increasingly being consolidated into major “hyperscale” facilities where energy demand is less distributed. While this is positive from an efficiency point of view, Delforge says it raises concerns about the source of the energy to power these operations.
“In this case, maybe you have to build new power plants to build (new data centers). From a clean energy perspective, that’s where you have impacts, depending on what plant is built,” Delforge said.
To address this concern, large data companies are showing greater interest in sourcing their power from renewables like wind and solar. Amazon and Facebook are prioritizing renewables as they build new data centers in the Midwest. In fact, the prospect of being powered by 100 percent renewables was one of the key factors in drawing Switch Ltd. to the Grand Rapids area.
Switch will be served by Jackson-based Consumers Energy. Both companies declined to say what Switch’s energy demand will be at its Gaines Township facility.
Right now, Switch is enrolled in the utility’s Green Generation program, which buys Renewable Energy Credits on behalf of the company, according to a Consumers Energy official. The utility is also asking for approval from the Michigan Public Service Commission for a green tariff program.
Adam Kramer, Switch’s executive vice president of Strategy, told MiBiz that while the company’s facility has been 100 percent powered by renewable energy since “day one,” the green tariff will lead to a new renewable project in the state, large enough to meet the facility’s needs. Details on that project will be announced later this year, Kramer said.
“Switch was founded on the principles of making sure we could sustainably run the internet of the future,” Kramer said.
While Consumers does not know how many data centers are operating in its service territory, the utility is seeing “increased interest in Michigan by data center prospects and potential investment,” said Jeff Mayes, the utility’s economic development director.
Going forward, it’s uncertain whether Michigan will see a spike in energy demand as a result of growth from the data center sector. About 40 data centers operate across the state and employ roughly 1,000 workers. The Michigan Data Center Alliance projected in 2015 that its nine Michigan-based companies will employ another 1,000 in five years.
Dan Scripps, president of the Institute for Energy Innovation and a senior adviser with the Michigan Energy Innovation Business Council, says Michigan is well-positioned with relatively low electric rates for the industrial sector and strong grid reliability.
Also, the new energy legislation signed into law last year allows for voluntary green-power pricing programs, accommodating corporations seeking more renewable energy generation.
“Simply having to pay more (for renewables) isn’t the kind of program we’d like and isn’t best practice,” Scripps said.
Moreover, he said that companies shouldn’t be forced to the electric choice market — as Switch was in Nevada and as other corporations in Michigan have had to do — if they seek renewables from power companies. Demand from companies like Switch should result in more than shifting renewable energy credits, Scripps said.
“These should be focused on providing low-cost options to customers and not simply be an additional utility profit center,” Scripps said. “When there’s customer demand, it should result in the development of additional renewable resources.”