IT companies and utilities are facing common operational and environmental demands. Utilities are responding by replacing parts of their large coal fleet with cleaner generation and IT companies are responding by energy efficiency and encouraging the adoption of renewable energy (RE). These current myopic strategies are flawed. If the trend continues electricity will become more expensive and the grid less secure. A more sustainable outcome could be realized if they worked together by developing a mutually beneficial strategy for a data center’s onsite power. This solution could accommodate increased RE penetration, support grid reliability, and minimize capital expenditures.
Electric consumption in the U.S. has remained flat the last five years. During that same period, device connectivity has proliferated, media streaming has become ubiquitous, and data center electric consumption has nearly doubled to over 3% of demand. To keep costs low, data centers are typically located in areas with cheap electricity on grids dominated by coal-fired power plants. Concerns of electric price inflation and increasing pressure to reduce their carbon footprint are causing a growing number of IT companies to sign RE power purchase agreements (PPAs). With the price of electricity from these long-term agreements approaching grid parity, they not only provide low-cost insurance against price shocks, but also earn them kudos for “greening the-grid.”