Over the last five years, the adoption of artificial intelligence (AI) workloads has pressured colocation data centers and hyperscalers to expand and grow with the market. At the same time, data center operators face several roadblocks that can be challenging with respect to strategic site selection. A major challenge can be limited power supply, which sometimes delays construction by seven years or more, and complicates the question of where to build new data centers.
According to Goldman Sachs, the demand for data center power will increase by 160% by 2030. However, access to reliable power is a challenge in an already energy-constrained world, which can impact the ability to expand existing data centers and build new ones. With large data centers now consuming more than 200 megawatts of power, utilities, local regulators, and even the general public can be reluctant to support new connections to the grid. These grid connections must equally be balanced to support the demand for supply by other commercial and residential customers.
The power availability challenge can cause major delays in data center project approvals. What previously may have taken 2-3 years now takes an estimated 3-4 years. Where the power supply is especially constrained, for example, in Virginia, the Netherlands, and Ireland, the approval processes can potentially extend as long as 10 years. Utilities may lack sufficient personnel to study the full impact of the projects, which adds to an already lengthy local permitting process.
The demand for data center power will increase by 160% by 2030. – Goldman Sachs
Complicating the issue further is the ongoing energy transition to renewable sources. Coal-fired plants are being decommissioned, potentially creating a hole in the power supply because new sources aren’t coming online fast enough. For example, PJM is working to accelerate the deployment of replacement generation sources through its Reliability Resource Initiative (RRI). However, this ‘short-term’ solution would not bring the new generation online until 2029 at the earliest.
Securing future power supply for data centers
Securing future power supply in these conditions becomes especially challenging, with certain markets reticent to connect new data centers to the grid. Some utilities will agree to connect, but only if operators accept strict demand and load response terms, such as having to disconnect from the grid when a utility deals with extreme weather and other events that cause power disruptions.
Today, data center operators must work harder to find data center sites and get creative with alternative power sources. Behind-the-meter (BTM) installations like microgrids have become more common over the last decade. Microgrids, operating as distributed energy resources (DERs), generate and incorporate battery storage and consume power locally, easing the burden on the main grid. Another approach hyperscalers are exploring involves the selection of nuclear sources. Recent examples of this include Amazon signing a deal with nuclear power supplier Talen and Microsoft with Constellation.
Access a partner for data center site selection
To help colocation and hyperscaler partners meet the power supply challenge, Schneider Electric offers a host of consulting services to accelerate siting, permitting, and implementation globally. Schneider identifies target areas where the supply of electricity is enough to meet the demand created by data center expansion. A team of experts even identifies small utilities at a very local level with enough reserve margin (unused available capacity) to satisfy the demand for 50- or 100-megawatt facilities.
Schneider Electric site consultants can also assess future supply and demand in these locations by determining whether the utility can meet demand during extreme periods when the weather gets too hot or too cold. They may also avoid locations where the utility cannot handle those situations.
To help identify appropriate data center sites in the strategic site selection process, Schneider provides a comprehensive risk assessment for the near term (three years), midterm (four to six years), and long-term (10 years or more). A team of consultants evaluates variables such as current and anticipated reserve margin, percent of renewables contributing to power supply, planned generation retirements, and planned transmission upgrades and additions.
This growing suite of advisory services demonstrates Schneider Electric’s commitment to helping colocation and hyperscaler partners grow by meeting challenges such as energy supply constraints. In addition to providing power solutions and software management systems, Schneider offers access to technical teams that can help identify practical locations for data center expansion and construction. This approach streamlines the site selection process, enabling partners to effectively address the demand from customers who want to invest in AI to solve their business challenges.
Improve your data center site selection strategy
To keep up with the evolving infrastructure needs predominantly driven by the growth of AI-driven operations, data center operators today must find creative and strategic ways to scale while overcoming power constraints and construction obstacles. Working with a team of advisory experts can help with the careful planning of strategic site selection, as well as managing complexity in this highly niche field.
To learn more, access the new ebook, The Looming Power Crunch: Solutions for Data Center Expansion in an Energy-Constrained World, which offers guidance for securing permits, building reliable data centers, and exploring sustainable power solutions. To get help with your next data center site selection project, connect with the site selection services team today.
Guest Blogger: Ray Stuart is the Associate Director for Global Solutions and Emerging Markets within Schneider Electric’s Sustainability Business. In his role, Ray helps customers solve energy and sustainability challenges in a rapidly evolving market.
Add a comment