One of the leaders in sustainability for hyperscale data centers – Google – shared in 2017 that they had achieved their goal of purchasing 100% renewable energy, having procured more than 7 billion kilowatt-hours of electricity. This is equivalent to the amount of energy used by small countries or states in the U.S. This accomplishment was outlined in their report, "Moving toward 24x7 Carbon-Free Energy at Google Data Centers: Progress and Insights." Now, years later, there are still considerations for how renewable energy supports data centers.
Google admits that there is a difference between achieving their goal and operating on renewable energy 100% of the time. The company uses power purchase agreements (PPAs) to purchase renewable energy, so the total kilowatt-hours used were equal to the renewable energy purchased through the PPA. While this is a significant milestone, Google acknowledges that it is not the same as operating exclusively on renewable energy during a full 24-hour cycle.
The past report included various graphs that depict the number of hours of carbon-free energy (CFE) throughout the years, in relation to carbon-based energy sources. Despite achieving their goal contractually through PPAs, the report acknowledges the difference between purchasing renewable energy and operating entirely on it. This is something the industry should be as transparent about in the future as well.
Energy storage systems seem like an immediate solution, especially with advancements in battery technologies that have improved performance capacity. However, it is not as simple or cost-effective as it appears. Many who have delved into this approach have developed similar reports and studies that reveal that even if they invested in large-scale on-site storage capacity, it would not guarantee the avoidance of non-carbon-free energy sources.
Performance charts provided by Google for some of their significant locations, such as their North Carolina data center, which uses regionally generated solar energy, show that only 67% of the data center's electricity use matched carbon-free sources on an hourly basis, despite midday electricity use averaging with solar sourced energy. Google notes that this is still carbon-free energy, owing to North Carolina's nuclear generation. The past report acknowledges that "a single source of renewable energy is generally not sufficient to provide a 24x7, 100% match with a data center's load.” It goes on to state that while the power supplied can be many times more than required, there are low renewable energy supply hours and days.
Microsoft, AWS, and others also use PPAs as a practical mechanism to purchase renewable energy and actively promote buying and selling renewable energy to reduce the risks of intermittent sources. Companies partner with other organizations to create a volume firming agreement (VFA), which makes it easier to buy renewable energy. More companies are aiming to use such a vehicle to procure verifiable renewable energy in an easier manner.
Overall, these are financial transactions that benefit everyone by lowering the cost of renewable energy sources. This helps increase the percentage of renewable energy generation capacity being added, based on increasing demand, making it more available to other data centers as well as holistically for the energy grids. This indirectly drives adoption and promotes the benefits of lower-cost renewable energy sources for everyone, since in more locations the cost of renewable energy is becoming lower than fossil fuel-based generation.
Like most data center operators, energy costs are a significant element of their operating expense, regardless of how it is generated. Therefore, each company closely monitors and strives to optimize facility and IT energy efficiency (with PUEs well under 1.2 peak and annual). However, until recently, purchasing renewable energy was more expensive, so promising to go 100% renewable energy was costly and not a commitment that most other businesses were willing to make. So the adoption of a means to aggregate renewable energy for consistent costs and reliability is bound to be attractive to data center owners and operators.
With a VFA a data center establishes a contract with a renewable energy provider or aggregator, with the goal of ensuring a more reliable and stable energy supply by compensating for the intermittency of renewable sources like solar or wind power. The VFA helps mitigate the risk of potential gaps in power availability during periods when renewable energy generation may be limited. The renewable energy provider or aggregator is committing to deliver energy to the data center over a given period, and this is achieved by utilizing a combination of renewable energy sources, energy storage systems, and traditional grid energy sources. The key objective is to balance the intermittent renewable energy generation with a consistent and continuous power supply to the data center.
By utilizing a VFA, the data centers can maintain a high level of reliable power while maintaining a commitment to renewable energy sources. VFAs effectively address the challenge of matching energy demand with intermittent renewable energy supply, thereby supporting the data center's goal of operating on a 24x7 basis with a high percentage of carbon-free energy.
VFAs not only benefit data centers but also contribute to the growth and stability of renewable energy markets. By providing a mechanism to balance intermittent generation, VFAs help increase confidence in the grid's ability to handle larger volumes of renewable energy year over year, for data centers as well as everyone connected to the grid. This, in turn, encourages the expansion of renewable energy infrastructure and reduces the reliance on fossil fuel-based generation locally and regionally. As more data centers and renewable energy providers explore this approach, VFAs could become an important tool in achieving sustainable and resilient energy systems for data centers and the broader energy landscape.