Why AI & Net Zero Could Be on a Collision Course

Is it time to sound the alarm on data center power consumption? The recent power outage at Cloudflare’s Oregon data center and reports that AWS has to ration compute resources are just the latest reminders that national power systems in the US, UK, and Europe are pushed to the brink. Large energy consumers are in the spotlight, and experts say grids will need an overhaul to keep up with demand.

Data centers are the literal nervous system of the cloud, so their operational stability matters. Yet discussions about the future of national energy infrastructure tend to focus on renewables.

Can wind and solar really deliver enough electricity to power the digital economy? And if they can’t, will necessity force us to stick with fossil fuels and sideline new green generation projects?

Table of Contents Table of Contents

1. Key Takeaways
2. Stressed Grids & Surging Demand
3. Why Are Data Centers So Power Hungry?
4. Not Just Generation, Distribution
5. Could It All Derail the Energy Transition?
6. The Sustainable Option
7. The Final Verdict: Balance Sustainability With Stability
8. FAQs
9. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. Stressed Grids & Surging Demand
3. Why Are Data Centers So Power Hungry?
Show Full Guide
4. Not Just Generation, Distribution
5. Could It All Derail the Energy Transition?
6. The Sustainable Option
7. The Final Verdict: Balance Sustainability With Stability
8. FAQs
9. References

Stressed Grids & Surging Demand

So much has been written about surging data center energy use that it’s tempting to say they’re the source of their own ills. The real culprit, however, is the ongoing electrification of everything. Power grids are being tested by e-vehicles, extreme weather, exploding use of personal and household electronic devices, coupled with the push to heat buildings and power public transport electrically.

Still, the growing demand from large energy consumers like data centers is part of the picture. In an address to the Aurora energy industry forum in March, UK National Grid CEO John Pettigrew singled out data centers as a source of systemic stress, saying their power demands are expected to increase by 500% over the next ten years.

Describing 2024 as a pivotal moment for Britain’s energy infrastructure, he told attendees:

“We find ourselves with a network that’s constrained. Demand on the grid is growing dramatically, and forecast to double by 2050 as heat, transport and industry continue to electrify. Future growth in foundational technologies like artificial intelligence and quantum computing will mean larger scale, energy-intensive computing infrastructure.”

Why Are Data Centers So Power Hungry?

The intuitive answer is because they are field-sized warehouses stacked with heavy-duty electrical appliances. True, but they are also evolving: getting bigger, more numerous, and increasingly called upon to deliver new capabilities.

Data centers are now routinely built to cover an area of millions of square feet, and there are more and more of them.

In January 2021 there were an estimated 8,000 data centers globally. Today, there are more than 10,500. The systems they house, meanwhile, are becoming more demanding.

Generative AI is clearly making data centers even hungrier for power. How much?

A peer-reviewed study from October 2023 estimates that AI power consumption could reach between 85 and 134 terawatt hours (TWh) annually by 2027. That’s in the range of what Sweden and Argentina each use in a year and would constitute about 0.5% of what the world currently uses.

When the million square feet of servers and appliances in a hyperscaler’s data center start humming, and their GPUs heat up, they’re going to need more power for computing and cooling. That’s not going to change anytime soon.

Not Just Generation, Distribution

For all the concerns about power consumption, there seems to be enough of it. In the UK, renewables alone accounted for enough generation to power every household in 2023. Addressing electricity demand is as much about access as generation.

In his March 2024 speech, National Grid’s John Pettigrew argued for major investments to create a future-proofed power distribution network. That means building in measures that address the complexities of geography and intermittency that come with renewables.

Luisa Cardani, Head of Data Centres at techUK, told Techopedia:

“There is plenty of renewable energy generated in the UK, however, it is not adequately connected to customers such as data centers. There is an urgent need for upgrading the National Grid to increase efficiencies and better distribution of clean power.”

Depending on the jurisdiction, the transition to renewables could actually contribute to overstressed grids.

A 2018 article from Germany’s Federal Ministry for Economic Affairs and Climate Action explains the issue of Grid Congestion, where the uneven geographic spread of green generating plants means power often has to be transported over long distances, sometimes creating bottlenecks.

Could It All Derail the Energy Transition?

Planning the future development of vital national infrastructure is important, but what about right now?

Data center power use was already on the up before ChatGPT and others arrived on the scene. What should operators do when the pressure is on and operational stability is threatened?

One is to implement emergency rationing of computing resources. The other is to keep doing what they’re doing — procuring power from plants that burn fossil fuels.

For all its faults, carbon-intensive generation works. Could the urgency or frequency of demand spikes push new clean-generation projects to the backburner?

The Sustainable Option

Data centers naturally take reliable access to energy into account from day one, says techUK’s Cardani.

“They have security and resilience built-in in their business model. They are a 24/7 service, meaning they must balance resilience, affordability and sustainability.”

Knowing that they’re under increasing scrutiny by regulators and customers, data centers are also giving that third requirement more emphasis.

“When it comes to renewables, data centers have historically used power purchase agreements (PPAs) to stimulate additional renewable generation. PPAs are contracts between customer and generator and stimulate additional renewable capacity by providing long term funding for utility scale renewable projects,” Cardinal adds. “In the UK, over 75% of the energy that commercial data center operators procure via PPAs is renewable energy.”

Another option is to use renewable energy certificates. These allow large energy users to offset their fossil fuel power consumption with an equivalent volume of clean energy.

Juan Pablo Cerda, CEO of clean energy startup Renewabl, told Techopedia this is becoming a popular option again.

“Traditional RECs were matched on a monthly or yearly basis, meaning that the renewable energy production credited might not occur at the same time as the energy consumption it was meant to offset.

 

“The arrival of hourly matched certificates alleviates that problem by ensuring that a data center’s renewable energy generation and consumption are synchronized on an hourly basis.”

Another consideration is on-site generation, whereby data centers use part of their huge real estate footprint to install wind or solar units.

There are obstacles, however.

“Onsite is generally restricted to new builds with available land,” says Luisa Cardani. “It’s mostly used as a supplementary measure rather than the main source of power. Retrofitting is likely to be impractical on legacy sites and in urban areas.”

The final piece of the puzzle is to compel data center equipment vendors and chipmakers to create kit that’s less power-hungry.

Dell and NTT are on a joint global push to create sustainable multi-cloud data centers, while AI giant Nvidia has already heeded the call for energy-efficient processors.

The Final Verdict: Balance Sustainability With Stability

Will AI, data centers, and renewable energy find themselves battling it out for the grid’s available electrons? Both Cardani and Cerda say new technology investments will be vital to making energy infrastructure more efficient, resilient, and sustainable.

“Energy storage systems are crucial for managing the intermittency of renewable resources,” says Cerda. “While the expansion of software-driven (and increasingly, AI-driven) smart grids are vital for optimizing electricity distribution and managing diversified energy sources effectively.”

“More and more data center operators are deploying analytics to help them and their customers make better decisions regarding data storage and management,” ads techUK’s Cardani. “This is resulting in improved efficiency and sustainability.”

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