Energy Utilities hold the Ace card for Urban Hyperscale Data centers

This is the fourth article from our series dedicated to the release of the SDIA report:
The Utility of the Future – Where digital and energy infrastructure combine.
Download the executive summary here and stay informed about its full releases here.

Low latency, high resiliency urban data centers are critical extensions to the underlying infrastructure of the digital economy. However, urban environments will struggle to integrate hyperscale data centers because suitable sites are in short supply. The answer lies in coal, or at least the absence of it. Confused? All will become clear in 800 words.     

Challenges facing urban Hyperscalers

The need for lower latencies and data sovereignty compliance will force hyperscale data centers to urbanize. This is particularly true in the developed markets of Frankfurt, London, Amsterdam, Paris & Dublin, but other population centers are not far behind. The resulting architecture will include multiple, centralised urban hyperscalers and a mesh of fiber – the redundant urban Digital Gridiron. Without the Digital GridIron, the resulting digital economy will never be fast enough, compliant enough or reliable enough. For more on this check out my last article.

There are reasons Hyperscalers moved out of town, and moving them back will not be without significant difficulties: 

  • Access to sufficient power: Foremost on the list of concerns is access to sufficient, reliable power. Grid capacity in urban areas is already strained and continued growth in the data center industry will further strain it (UptimeInstitute, 2019). “In this sector, you can run out of power before you run out of space. Valuations are based on power” says Patrick Lynch, managing director for data center solutions at CBRE.
  • Access to reliable, clean power: Hyperscale Data centers have significantly increased their share of renewable energy in their consumption mix through power purchase agreements (PPA’s). However renewable energy, and therefore the number of PPA’s, is limited and demand for renewable PPA’s is growing very quickly. FLAP markets don’t have Nordic levels of renewables, and the renewables they do have are of higher cost (Jakob Dybdal et al., 2018).
  • Ability to remove residual heat: Hyperscalers have increasingly been built across Nordic countries because the climate is cool and significant sums of money can be saved through the use of free-cooling. Free cooling is not always applicable to the urban environment, and urban hyperscale data centers must find novel ways to dispose of large amounts of heat. 
  • Expandability: Hyperscalers prefer to build self-built greenfield data centers in easily defended locations, where halls can be added as needed. Such an approach is difficult in urban areas where space is limited and sites far more difficult to defend.

Coal power station, meet Hyperscale data provider

Coal consumption is collapsing in Europe. Air pollution rules, ageing capacity, stagnant demand, competition from gas, and general political hostility spells the death knell for EU’s coal fleet. Europe will see energy generation from coal fall below 50GW this year – to barely a quarter of what it was in the year 2000. 66GW of coal capacity has been shuttered since 2010. Most countries in Europe have plans to completely phase out coal before 2035, and some much sooner.  

The State of the phase-out of coal in 2019

Hyperscale data centers require secure, defendable, expandable sites with access to power and the ability to recycle waste heat. Energy Utilities are evacuating secure, defendable, expandable coal power stations with access to power. The timing is perfect. 

“One of the really cool things about retired coal-fired plants is they have built-in infrastructure and components that can be repurposed for new industry,” said John Kowalik, director of marketing and public relations for Environmental Liability Transfer. “Like access to rail, ports and waterways … and good highway transportation. Typically the grids can be reused for another purpose too, like solar or wind. There’s a direct grid connection at the power plant.”

For Coal Power stations to be suitable for hyperscale use, they must solve the challenges of the urban hyperscaler laid out above. They must be proximal to the consumers they serve i.e. proximal to population centers. The sites must have access to power, access to renewables, be defendable & expandable and proximal to district heating grids. Let’s take it one by one.

Proximity to Population centers

Are coal fired power stations truly proximal enough to population centers to be of significant value to the hyperscale provider?

Diagram of the state of coal plants in 2019, and their relative size

As the graph above shows there are a large number of coal plants, particularly in northern Europe, that serve large population centers (Hamburg, Manchester, Belfast, Madrid, Berlin… and those are just the ones I can name! For a more comprehensive list look here). 

Proximity to District Heating

Demand for district heating in almost all urban areas across Europe is increasing. Additionally, policy makers are beginning to understand that energy sustainability must apply to the heat and transport networks as well as the electricity network.

European Heat Atlas Heat Demand Density

You’ll note that between the two graphs there is significant overlap between coal plants and district heat grids in Germany and the Netherlands. This is especially true for sites known as Combined Heat and Power plants (CHP), where a route into the district heat grids already exists. 

Access to Power

This is perhaps the hardest and most crucial element. Can the Energy Utilities and grid operators afford to have 500MW stop, drop and set up shop just anywhere? The answer is no. The graph below is indicative of energy availability in the North of the UK. Red denotes areas of low generation capacity, green denotes areas of high generation availability, and the nodes are substations along the electricity network. Citing near GW-scale data centers is the greatest challenge that the urban hyperscale faces. The graph below is indicative but the real world calculations are complex and need to involve grid operators, because GW-scale consumers materially change the structure of the grid, potentially putting grid integrity at risk.  

Northern Power Grid Generation Availability Map

Expandable and Defendable

Most centralised power stations are in effect an island system with huge, redundant grid connections, on-site cooling and enough land for fuel storage. Hyperscale data centers don’t require such an extensive built environment, but they follow similar design principles. Importantly, coal power stations are built in large plots of land (which the urban hyperscale could use to expand on) and physical security is provisioned nearly identically for both industries.

Don’t get left behind

Don’t believe me? Well it’s already happening in the US where coal generation has also collapsed:

  • The Cayuga Power Plant, New York, announced that instead of overhauling the plant to run on natural gas, they would outfit it to house a data center deriving at least some of its power from a solar array on-site.
  • Another data center is planned on the site of the Somerset Operating Company’s 586 MW coal plant on the shore of Lake Ontario near Buffalo, New York.
  • Plans are underway to convert nine shuttered coal plants in Pennsylvania. 
  • The Fisk Generating Station, a disused coal-fired power station in Pilsen, Chicago is being eyed up to build data centers covering some of the site’s 350,000 sq ft (32,500 sq m) of land.
  • Widows Creek coal-fired power plant in Alabama was Google’s first, and Google have recently pledged $600 million to develop the 1.3GW Sherco Coal power station in Becker, Minnesota

The Beating Heart of the Smart City

It’s very important symbolism to take an old coal plant that is a relic of the old energy system and convert it into a data center that will be powered by renewable energy” stated David Pomerantz, a Senior Climate and Energy Campaigner for Greenpeace. Data centers are the utility of the future. They create the Digital Power that society requires, and are as important to the 21st century as electricity was to the 20th century. It’s only fitting that the power stations that powered the 20th century be turned over to the critical utility that will power the next century. 

“We want to become the coal transition model for other communities across the nation,” says Pruszinske, Administrator for Becker, Minnesota   

Summary 

Proximity to population centers, access to power and renewables, expandability and proximity to district heating are the challenges facing urban hyperscale data centers. If coal power stations can solve these challenges, they could house the future beating heart of digital infrastructure – the urban hyperscale data center. 

Mohan Gandhi

Mohan is Head of Research & Policy at the Sustainable Digital Infrastructure Alliance. The SDIA’s mission is to ensure digital infrastructure has a net zero impact on our environment, and is accessible and affordable to the next generation of innovators. As Head of Research & Policy Mohan leads the working groups in their attempts to solve major technical barriers to a truly sustainable digital infrastructure. Mohan authored the report “The Utility of the Future – Where Digital and Energy Infrastructure Combine”.

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