The Growing Connection between Data Centers and Renewable Energy

Utility scale renewable energy is advancing rapidly in the United States. According to data from the U.S. Energy Information Agency, at the national level the net amount of electricity generated by utility scale solar and wind facilities increased from 74.8 million megawatt hours in 2009 to 372.3 million megawatt hours in 2019—an increase of almost 400 percent over 10 years. As a result, utility scale solar and wind facilities went from producing only 2 percent of all electricity nationally in 2009 to 9 percent in 2019. And more utility scale solar and wind facilities are coming online every day.

Why the sudden interest in renewable energy? Mainly because of increased concerns about the environment. It is important to realize that electricity production is the United State of America’s largest source of greenhouse gas emissions. Nationwide in 2009, electricity production generated 2.2 billion metric tons of carbon dioxide emissions, with 1.7 billion metric tons of that total coming from coal-fired plants. But, where nationwide coal-fired plants produced 44 percent of electricity in 2009, by 2019 that figure had dropped to just 23 percent.

Approximately two-thirds of that drop in electricity from coal was attributable to the increased use of natural gas. However, the remaining one-third came from the increased use of solar, wind, and other renewable energy sources. Bottom line, as a result of that shift to cleaner energy sources, carbon dioxide emissions from electricity production dropped from 2.2 billion metric tons nationwide in 2009 to 1.6 billion metric tons in 2019.

Data centers have emerged as a driving force in this transition to clean energy sources. According to a recent analysis by the U.S. Chamber of Commerce, the average data center spends about $7.4 million a year on energy costs. That high demand for electricity has made data centers increasingly sensitive to how the electricity they use is produced, and how they can reduce energy usage through greater efficiency.

For example, Amazon Web Services (AWS), Facebook, Google, and Microsoft, the four largest hyperscale data center operators, have all publicly committed to move toward sourcing 100 percent of their power needs from renewable energy as a way to reduce their environmental impact and in some cases have already met that objective. In February 2020, the Renewable Energy Buyers Alliance released a list of the top ten renewable energy buyers in the United States in 2019. All four of these companies made that top ten list. Facebook was in the first place with over 1.5 GW of renewable energy purchases, followed by Google in the second place with 1.1 GW, Microsoft in the fourth place with 0.6 GW, and Amazon in the seventh place with 0.5 GW. And it’s not just hyperscalers, major colocation providers such as Aligned, Digital Reality, Iron Mountain, and Switch are also making great strides in moving toward 100 percent renewable energy sourcing.

A. Fletcher Mangum CEO & Founder, Mangum Economics

In addition to increased concern about the environment, there are also some important economic motivations behind this trend. For starters, even taking into account differences in capital costs and production capacity, the levelized cost of production of renewable energy is increasingly competitive with natural gas, currently the lowest cost fuel for producing electricity.

This story is part of a paid subscription. Please subscribe for immediate access.

Subscribe Now Already have Subscription? Login