Bob Collinson, MD – Noveus Energy, considers the UK grid’s available capacity and the situation with new connections. He then looks at the on-site self-generation of energy through renewable options to mitigate the risk of not getting connected. He concludes with a look at related pressures on data centres, including hedging market costs, tenant expectations and regulatory constraints soon to come into play.
Within the tight constraints of the UK grid and regulatory and market pressures, data centres must think cleverly about ensuring a secure energy supply for new developments or increased capacity at an existing site.
The UK grid’s available capacity and connections
First, let’s look across the water to Ireland at an unprecedented current development.
Microsoft plans to build a large-scale gas power plant for its new €900 million data centre in Dublin. The technology corporation decided to build its own power plant due to its concerns about severe constraints on Ireland’s energy grid after the Commission for Regulation of Utilities (CRU) and EirGrid introduced a moratorium on new data centres in the greater Dublin region until at least 2028.
Back in the UK, the demand/capacity debate is simmering. Last summer, the Greater London Authority announced that new housing projects were being rejected in three west London boroughs because the grid had run out of capacity for new homes. Questions were asked by London’s Mayor and in government.
The latest news likely makes for sombre reading if you’re considering a new data centre or looking to increase your capacity at an existing site. Such reports certainly bring to the fore questions you may well ask:
Will data centres be considered ‘top of the pile’ critical infrastructure? Where would our new data centre stand if it came up against a new hospital or housing development and what should we expect in such circumstances?
As was likely the case with Microsoft in Ireland, the central question you’d ask is: can we get a grid connection?
The reality is that it’s challenging to get one for a new development or to increase capacity at an existing site.
Gone are the days when you’d be guaranteed a grid connection and your data centre’s power supply would be up and running. Today, new data centres need to show greater creativity and be savvy and flexible in achieving diversity of supply to reach their required capacity endpoint.
What might this look like? Starting with self-generation, like Microsoft, and running energy from an on-site power plant, meaning your immediate ask from the grid isn’t so demanding, with solar generation and batteries in the mix.
Each new data centre’s solution might look different to what I’ve just described. Either way, it would require an integrated mobilisation plan, which accounts for where energy will come from and when. Such a plan would need to demonstrate more resilience to the grid via on-site or own generation.
Renewables will undoubtedly play their part, so let’s consider the options.
Hierarchy of renewable needs
At a recent DCA event, I introduced a pyramid showing the renewable options available in the market in the form of Maslow’s Hierarchy of Needs, showing the progression to better and more developed renewable options the further you go up the pyramid.
[Insert diagram: Hierarchy-of-renewable-needs-triangle]
All the options detailed here are included in the hierarchy from the mid-section to the top – where all options deliver additionality, meaning they add energy to the grid rather than further stressing an already stretched system.
- In the mid-section are Corporate and Hybrid Power Purchase Agreements (PPAs). These are similar in nature – the only difference being a hybrid is procured through an energy supplier where the main energy contract is combined with the renewables contract rather than directly with a developer.
- A Time of Use PPA is a new development in the market that aims to match when renewable energy is produced to actual demand in the period. For example, solar energy can only be matched to demand during the day rather than smeared across the 24-hour period as it is now. This is currently in a trial phase, which Noveus Energy is participating in with one of our customers. The UK Government is keen to see these types of initiatives established in the renewable space.
- A hot area is Private Wire, such as direct connections to solar farms. The financials are solid, so if you have a site next to a large plot of land, there is no shortage of developers wanting to get involved and I strongly urge you to investigate opportunities.
- At the top of the pyramid – the holy grail in renewables – is on-site generation like a solar plant or rooftop solar.
Conclusion
The constraints of the UK grid should be a central consideration for new data centre developments and those looking to increase supply.
Renewables should be your friend, with on-site self-generation at the top of the hierarchy to ensure a secure energy supply.
But renewables can also address a host of other pressures you’re likely experiencing.
Having renewable projects incorporated into your data centre may become a requirement when trying to connect to a national grid – specifically, being self-sufficient and able to give back to the grid as and when required.
At this moment, renewables also provide cheaper energy and hedge market risks, providing good value relative to wholesale prices recently experienced. They also address other operational pressures, such as the need for net-zero reporting and credentials, which you must deliver.
Added pressure is likely coming from your tenants – who will feel similar net-zero and cost constraints too – turning to you for reassurance that renewables are part of your centre’s plans and forward-thinking strategy.
Elsewhere, new regulatory constraints are on the way. In his recent article, John Booth, Chair of the DCA’s Energy Efficiency Group, writes that the EU’s energy efficiency directive requires mandatory registration and reporting as part of the organisation’s 2030 carbon-neutral goal. This is EU legislation and it is debatable whether it will be enshrined in UK law. However, we can expect UK commitments to climate change and net zero laws applying to energy efficiency ‘will be maintained in some capacity or new laws introduced. Global operators want consistency in reporting regimes across jurisdictions’.
Finally, in his article, John Booth namechecks PPAs and direct ownership of renewable energy schemes and asks: ‘will this be enough?’
In my view, it’s a good start. The closer you get to the top of the hierarchy of renewable needs, the more credible these options become. Rather than further stressing an already stretched system, top-level energy self-generation brings additionality by adding energy to the grid. And right now, that’s a good thing.
