Data centers have become critical infrastructure for many services that function globally, and yet, at the same time, they are under close scrutiny for their high, and sometimes inefficient, energy consumption. To service the demand and improve the reputation of data centers as a more sustainable resource, developers are looking for new ways to source energy while also reducing each data center's energy consumption.

Demand for power

Data centers consume about 3 percent of the world's electricity. This substantial energy consumption is set to increase in the future as more data is stored and processed in data centers. The developer and construction industry has shown continued confidence in the growth of data centers. For example, during construction procurement, it is not unusual to see preparatory design, procurement and sometimes construction activities commencing well before an end-user of the data center is secured.

There is also an increase in the frequency of construction contracts within the sector being split into sections, with multiple options to instruct additional sections to expand capacity if and as additional power is sourced, which further highlights the need for developers to consider alternative ways to source power and reduce energy consumption.

Key challenges

The focus on reducing energy consumption in data centers is not new; many within the industry are well aware of the need to promote and implement greener and more sustainable ways of operating. This topic has gained increasing attention and momentum recently, brought about in part by many global initiatives aiming for net-zero driving an ethical incentive, but also runaway energy pricing underlining the commercial requirement to bring down energy use.

One of the key issues is that data centers require a continuous and stable supply of energy in order to operate. This is necessary not only to operate the servers, but also to maintain the core operational equipment to maximize operational efficiency and avoid downtime. Any outage or downtime can have significant financial repercussions for data center developers by way of damages payable to tenants who may be leasing the data centers, as well as direct losses to end-users.

Options to increase sustainability and reduce carbon emissions

In the drive toward greener data centers, two key strategies emerge: the use of renewable power and the reduction of power usage through more efficient technology.

There has been a notable rise of co-location of data centers constructed with renewable energy-generating assets. In addition, following recent improvements in battery technology, energy storage options are being used more frequently to reduce the risk of outages and provide power supply stability while avoiding the need to draw energy from the grid at peak times.

For example, a major hyperscale developer in Belgium is working in partnership to develop the supply and optimization of a zero-emission energy backup system at a hyperscale data center. Relatedly, this increased colocation with renewable assets has focused attention on the location of data centers and whether natural resources can be harnessed as a renewable power source. Currently under development are projects in Australia running off of 100 percent solar power, and projects in the Nordics using geothermal and hydroelectric resources as their only or main source of power.

However, switching the energy source to renewable energy is not a complete solution. With data center energy needs expected to continue to increase, together with the general demands for power across all sectors, draining the grid of renewable power will only cause shortfalls elsewhere.

This leads to the second option: Data center developers are looking to other technology to improve energy efficiency in the operation of data centers, such as alternative cooling technology.

Cooling data centers accounts for a vast portion of a data center's total energy consumption, and alternative methods of cooling is one of the key areas of focus in the challenge to improve energy efficiency. Various methods being tested and employed across the globe harness natural resources for cooling. For example, projects in Japan are testing the use of snow; sea water is being used in Finland; and geothermal techniques are in operation in locations such as Iceland and Norway.

Separately and while not a natural resource, there are also efforts to reduce energy usage through developments in the use of liquid cooling and two-phase immersion cooling techniques.

Integrating energy solutions into the contracting structure

To date, data centers have typically been let using a two-stage procurement process with separate contracts for the shell and core, and then the fit-out of the data center, in each case often on a design-and-build basis. Further ancillary works, such as cable routing or substation construction, are then often contracted for separately, with some but limited interface obligations with the main contractor.

However, for projects with energy-producing assets or energy storage assets constructed as part of or in conjunction with the data center, there is a trend toward multi-package construction contracts with enhanced integrated interface obligations between the power generation asset and the data center.

In addition, as is more common with power-generating assets or energy storage assets, further focus on performance warranties for the data center (such as energy consumption and heat production) is developing.

Shift toward greener data storage solutions

The dependency and need for data storage is only increasing, and there is growing pressure across the industry to become greener and more sustainable.

At a corporate level, many key data center users have published sizeable targets for renewable energy sources for their data centers.

At a governmental level, growing energy consumption, in particular, by the sector has drawn increased scrutiny. Data center developers that are able to make the transition to renewable energy or utilize innovative technology developments to re-brand as efficient and sustainable energy users will anchor themselves as key players in this ever-growing industry.

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