How do data centres consume energy?

data center

Economic progress inevitably brings increased demand for electric energy. In a historical context, coal fuelled growth in the 19th century, oil facilitated expansion of the global economy in the 20th century and data is stoking today’s economic progress. Data centres are the most rapidly growing segment of real estate and operating them requires an enormous amount of energy. Janusz Gutowski, CEO AXI IMMO Services at the AXI IMMO Group highlights the key issues around data centres’ demand for energy and explains what the alternative sources of energy for the sector are.

For decades, companies from the heavy industry have been the main consumers of energy in Poland. However, over time, a significant proportion of production had relocated outside of Europe, thus also disappearing from Poland’s industrial map. This was mainly the result of rising energy costs and environmental restrictions. It is worth bearing in mind that today’s transmission infrastructure (the 400kV and 220 kV grid) and the distribution network infrastructure (the 110kV high voltage and medium voltage grid) were created to suit the energy consumption and demand at the time it was built. Therefore, practically the entire national electricity grid existing today is a legacy of the communist era and, in many places, does not match the current consumption structure.

With the rapid digitization of virtually all areas of life, the rising demand for processing and storing data resulted in the emergence of the Cloud, which in simple terms is a system of servers integrated via the Internet. Let’s link it back to real estate. Each of these servers is located within a data centre, which in turn has a location, i.e. a specific plot of land and building. The main criteria for choosing the location for a data centre are the availability of energy and access to the fibre-optic network.

Therefore, locations that had already been equipped with power infrastructure allowing for the delivery of large capacities are the first choice for data centre operators. These include sites previously occupied by steelworks, ironworks or large production plants, where the structure of the economy have more recently shifted towards services. Nowadays, it seems that these locations can be almost fully reclassified as data centre sites. In the face of a changing market and exponentially increasing digitization of all sectors of the economy and nearly every aspect of our lives, the requirements of the Data Centre sector are becoming increasingly important. The pace of technological progress will therefore in large part depend on how well a given economy will adapt to new market standards by improving the efficiency of its energy supply system.

Currently, Warsaw is the key market for the data centre sector. A vast majority of global operators want to operate close to the capital city due to greater access to data exchange points with the worldwide Internet network. Warsaw’s advantage also stems from good availability of energy reserves. Historically, energy distribution in the capital city has focused mainly on households and several large enterprises, such as the FSO automobile factory, Huta Warszawa steelworks, the Ursus machinery plant or production facilities located in Wola. The infrastructure at these sites enables energy distribution at a level that is acceptable to the Data Centre sector. Therefore, former factory sites are good locations for Data Centres. Interestingly, in terms of available power the infrastructure has not changed over the last 20-30 years.

The current level of demand for energy from data centres and the locations this sector has a preference for do not fully correspond to the old energy infrastructure. Data centres require specialists to take care of both the operational and technical maintenance side of the entire facility. This is why companies are more interested in locating in Warsaw, where access to highly qualified staff is greater, and the available infrastructure requires only partial modernisation.

Table of Contents

Rapid increase in demand for energy

Consumption of electricity at data centres will continue to grow, despite impressive improvements in energy efficiency. Artificial Intelligence and Internet of Things process enormous amounts of data in real time. For example, the amount of data processed by a driverless car in one hour is comparable to watching 1,300 hours of films on platforms such as Netflix. And the demand for services or products using artificial intelligence will only go up.

The price of energy is the main cost component of processing data. For this reason, companies seek solutions to improve the energy efficiency of their data operations. The cost of distribution and consumption of energy in 2021, after taking into account the new ‘capacity fee’, is estimated to go up to PLN 450 (approx. EUR 100) per megawatt-hour. Let’s illustrate how high the costs of operating a Data Centre is. If the power installed in a Data Centre is 20 MW and the facility operates 24/7, the monthly electricity bill for the operator will be approx. PLN 6.5 million (EUR 1.4 million).

Green energy in data centres

One cost-saving alternative to energy obtained from coal is renewable energy, e.g. wind turbines on land or on sea. However, these energy sources are unstable as they require specific weather conditions. When considering the use of ‘green energy’, it is important to remember that data centres must operate incessantly during the day and at night. Energy generated during the day through photovoltaics would only last several hours. For example, one square metre of solar panel currently generates around 300W, of which around 20% can be used as a source of direct energy, and the remaining 80% on recharging the batteries that power the circuit during the hours when energy consumption is low. So if we want to use photovoltaics as the primary source of energy for a Data Center, a PV farm large enough to supply a 20MW Data Centre would have to occupy an area of hundreds of hectares, which is simply impossible in the Warsaw area. Currently, it is possible to buy energy from certified suppliers of green energy from renewable sources. However, the energy from such suppliers will be delivered through the power grid, which is made up mainly of energy from coal combustion.

Is self-generation a solution?

Another possibility is self-generation of energy, i.e. electricity production by gas turbines or high-power gas generators. Manufacturers of such devices – originally aviation or marine propulsion – can supply power ranging from several to a few dozen MW. However, the price may be a problem. Gas turbines are very expensive devices. They can ensure continuity of energy supply in the long term, but they require servicing during their operation period (due to the service life, devices must be duplicated). There is not much experience of using energy self-generation in the Data Center sector.

The structure of energy consumption by a Data Centre

The two main areas of energy consumption in the core data centre business are data processing and maintaining the appropriate temperature in the facility (within very narrow limits, using precision air conditioning systems).

The amount of energy used for data processing purposes depends on the energy efficiency of servers and installations. In contrast, energy consumption for air conditioning purposes depends on the outside temperatures, the architecture of the Data Centre, and the energy efficiency of the devices and installations.

The cost of maintaining the temperature of 24 degrees Celsius in Norway near Bergen will be different than in Warsaw or Vienna. Thus, of the total of 10MW power supplied, as much as 6.5 MW or as little as 4.5 MW can be allocated to data processing, i.e. something that is the subject of the sale, depending on where the centre is located and how it is built.