A Winter Of Power Problems Looms For Data Centers
Data centers around the world are facing a winter of unprecedented energy instability and a series of challenges that could test their ability to avoid widespread failures if the grid goes down.
In the coming months, data center providers may have to disconnect from the power grid and rely more than ever on self-generated energy. But with dwindling diesel reserves and other logistical hurdles, that may prove to be a difficult task.
While data centers use massive amounts of electricity, the industry has a strong track record of staying operational when the power grid goes down. During events like the catastrophic Texas grid failures of early 2021 or the blackouts in California due to wildfires soon after, data centers largely stayed up and running, using diesel generators and other on-site power production to keep their servers turned on.
But the coming months could see a global power reliability crisis unlike any in recent memory.
In the UK and Europe, reduced access to Russian oil and gas due to the Russia-Ukraine has spiked energy prices. In some markets, government officials have raised the possibility of rolling blackouts, while others have raised the possibility of forcing large electricity users like data centers off the grid during periods of peak demand.
In the U.S., where demand for power in the most important data center markets has exceeded the ability of aging transmission infrastructure to deliver it, experts say grid failures like those in Texas will become more common.
Many data center operators are taking steps to prepare for this looming energy uncertainty: coordinating with utilities and governments, buying more sophisticated generators and stockpiling fuel. But a winter in which more data centers are relying on their own generators more often and for longer periods than ever before would be a significant test for the industry, particularly as dwindling diesel reserves exacerbate an already-daunting host of logistical challenges.
Despite past success, experts say preparing for this reality is front of mind for a rapidly growing sector that is using an ever-larger share of global energy production.
“It’s a real concern,” said Element Critical Chief Operating Officer Shane Menking, speaking at Bisnow’s DICE South event last month. “These issues persist across the grid, and frankly you have to make sure you have the right answers.”
Across global markets, data center providers are preparing for a near-term future in which access to grid power is increasingly uncertain.
In the UK, where the national utility has raised the possibility of rolling blackouts, data center operators are engaged in active discussions with government officials to avoid unexpected power cuts and ensure supplies of diesel fuel for generators in the event of fuel rationing. And while officials say blackouts will only occur in a worst-case scenario, major data center providers like Equinix are stockpiling diesel and increasing the capacity of diesel tanks at their facilities.
In Ireland, where data centers use a massive 14% of the electricity in the nation’s power grid, Amazon Web Services and Microsoft recently purchased a combined 127 new generators capable of producing a total of 836 megawatts in anticipation of more regularly self-powering their massive facilities near Dublin. Severe power constraints in Ireland have led the national utility to encourage major power users like data centers to generate their own power, offering a lower rate to operators willing to pull themselves off the grid for 500 hours each year.
While the energy crisis may be most acute in Europe, data center operators in the U.S. are also bracing for decreased grid reliability.
The most impactful grid failures the industry has encountered have been in the U.S., where aging power transmission infrastructure is becoming increasingly unreliable. And while most data centers emerged unscathed from events like the Texas blackouts of 2021, experts say the failures and close calls are a preview of the risks that lie ahead.
“I was talking to a provider today in Texas that went down when their generators failed and they couldn't get fuel, so this is the real deal,” Menking said. “It’s not only in Texas. In Virginia they just said they’re out of power and California started shutting it off. It's the reality of it.”
For data center providers, preparing for this growing grid insecurity in the U.S. means buying up more sophisticated generators and shoring up diesel supply lines. Some operators are signing on to programs offered by utilities like Texas grid operator ERCOT that offer increased transparency into the state of the grid and potential outages in exchange for an agreement to switch to self-generated power to balance the grid when needed.
“It's about the dialogue that you get with the utility, when things start to go crazy at the utility level, you're going to be notified first if you're in one of these programs,” said Jim McDonald, director of environmental impact at generator emissions specialist Miratech. “There's a whole new level of awareness about what the utility is going through.”
Industry insiders who spoke with Bisnow expressed confidence in the sector’s ability to withstand any imminent power shortages, but there is also widespread agreement that the coming months could present a significant test of resiliency.
One of the largest concerns: a dwindling supply of diesel fuel in the U.S. and UK just as demand from data centers could increase dramatically. The UK’s diesel stock was down 30% this summer compared to 2019, while the U.S. had just a 25-day supply, the result of shortages of the natural gas needed in the refining process.
Data center giants Equinix and Digital Realty announced plans to stockpile diesel over the summer, but such measures are more complicated than they sound and aren’t an option for most data center providers, said Bob McFarlane, a principal at Shen Milsom & Wilke and an expert on data center power systems.
Diesel has a relatively short shelf life. It can only sit in holding tanks for so long before it takes on moisture and other contaminants, according to McFarlane.
While giants like Equinix, AWS or Microsoft use sophisticated generators that may be able to handle degraded fuel, many smaller operators don’t have that option.
“These big organizations may be running such good fuel filters that they can afford to not worry about fuel contamination,” McFarlane said. “But most organizations I see, they have to be very concerned about fuel storage duration.”
Even if the global supply of diesel stabilizes, the potential increase in usage of diesel generators by data centers presents a host of additional logistical challenges. Chief among them: ensuring that diesel can be reliably resupplied when needed, something that experts say is typically needed every 48 hours if a generator is on constant operation. Not wanting to leave the fate of their facilities in the hands of a single supplier, data center providers now routinely contract with multiple providers across different geographic regions.
These logistical challenges are further complicated by the fact that data centers are typically clustered together. If all the data centers in hubs like Loudoun County, Virginia or Slough in the UK had to run off their generators for an extended period of time, there are serious questions as to whether the diesel storage and delivery infrastructure would have the capacity to deliver the massive volume of fuel needed.
These supply pinch points have been among the most urgent subjects in discussions between industry groups and government officials in certain markets.
“Issues with storage and delivery of fuel, and those are conversations we’re having with the government,” said Luisa C. Cardani, head of data centers at London-based trade group TechUK. “In Slough, what would happen if all the generators were turned on at the same time?”
Widespread use of diesel generators in dense data center hubs could also lead to air quality concerns, experts say, creating potential legal liability to operators as well as possible operational problems if highly polluted air is used to cool servers.
Reliability is also a concern when it comes to the generators themselves. While the giants of the industry use generators designed to be a primary power source, smaller operators are using generators that are meant to be backups and could encounter issues if they are relied on for extended periods of time.
“The majority of diesel engine generators are standby rated, not full-time operationally rated,” McFarlane said.
Despite these challenges, insiders who spoke with Bisnow expressed confidence that the industry will emerge from this winter having mostly avoided catastrophic downtime. Still, they say they are preparing for a future where grid reliability gets worse before it gets better, pivoting toward increased reliance on self-generated power through natural gas microgrids, battery storage, alternative fuels and other emerging technologies.
“Those solutions start to come to bear because of the realities of the power grid and the power cost,” Element Critical’s Menking said. “Those solutions will get creative, because we have no other choice.”