Regulating the Energy Supply Chain for the new Information Economy

by | Apr 9, 2015

The expansion of the information economy is accelerating. Every two years, the digital universe will double in size, and according to EMC will reach 44 zettabytes (44 trillion gigabytes) by 2020. That’s about 5,200 gigabytes of data per person. Data processing fuelling the information economy also fuels the continued energy consumption of data centers. As the information economy expands, so will demand for energy by data centers.

Data centers already consume a high amount of electricity. US data centers were responsible for 91 billion kilowatt hours in 2013, and that number is expected to climb to 140 billion kilowatt hours by 2020, according to the Natural Resources Defence Council. That adds up to $13 billion in costs, 100 million metric tons of carbon emissions and, notably, about 2 to 3 percent of all US electricity use.

To offset these increases, the White House has challenged US data centers to improve their energy efficiency by 20 percent — more than 20 billion kilowatt hours — before 2020. Through its “Save Energy Now” initiative, the US Department of Energy is training datacenter energy practitioners (DCEPs) to help facilities realize these goals.

All businesses, including data centers, are also assessing broad, international energy agreements. At the UN Climate Summit last year, the EU set a goal to reduce emissions by 80 to 95 percent by 2050. And as part of the last year’s landmark agreement between the United States and China, the United States pledged to reduce emissions by 26 to 28 percent before 2025, while China announced it would achieve peak carbon emissions before 2030.

Although data center operators are already working hard to improve energy efficiency, it will take broad, industry-wide initiatives on both the supply and demand sides, to meet the UN Climate Summit targets and other goals that have been set across the globe. Fundamentally new approaches to the energy supply chain are required, from how energy is produced and stored to the investments required of government agencies and other institutions.

Demand-side Focus, So Far

Pledges for reduced carbon emissions and new energy efficiency challenges to date, largely project onto the demand side of the climate control problem. This is in the form of taxation schemes and regulations on energy use born by the data center operators as the consumers of energy.

Data centers, as one of the largest industrial consumers of energy worldwide, due to the continued expansion of the new information economy, are at once positioned to demonstrate leadership in sustainability efforts while also being subject to these imposed regulatory pressures to demonstrate energy efficiency improvements. While data centers must continue to consume energy to support the growing data processing demands, they also must grapple with the costs and burdens of this dynamically changing landscape of governmental regulations. This is typically accomplished with a two-pronged approach of programs to improve their use of energy and accepting the increased cost of buying green energy from the grid.

Many data center operators go to extraordinary lengths to continually ratchet down their power usage effectivenss (PUE) values. For example, the practice of seawater cooling has been implemented by one European facility, which has cut its energy bill by $1 million and lowered its PUE. Data center operators will also pay premiums on their utility services in order to compensate for their energy consumption for a proportional amount of energy generated by sustainable sources. Some data centers even derive up to 90 percent, and some even 100 percent, of their power from sustainable sources like solar, wind and hydro, using these approaches to how they procure energy from the grid.

Because energy costs are such a large part of their cost of doing business, some data center providers have been standard-bearers of energy efficiency and environmental responsibility, maintaining a sense of urgency toward carbon reduction and energy efficiency improvements long before today’s public initiatives. These energy efficiency practices and innovations pioneered by data center operators are often leveraged by other industries, such as digital media and content distribution providers who are tenants in those data centers and who want to demonstrate environmental stewardship as a part of their leadership in the new information economy.

New Energy Production and Storage

The likely economic realities of fossil fuel energy sources, including oil, natural gas and coal, have compelled researchers to predict how soon conventional power will reach obsolescence. Some have boldly predicted that we could reach a crossroad as soon as 2030.

To reach that point though, there will need to be improvements in the efficiency of solar photovoltaic cells (PVCs) and turbines. Costs of those technologies will also need to come down. Furthermore, economic and regulatory conditions will need to facilitate new capacity from sustainable sources being easily integrated and adopted.

In addition to improvements in the generation efficiency of solar and wind technology, it’s important that advances also take place for energy storage technology. There are promising developments, from pumped hydroelectric power and liquid air energy storage (LAES) to hydrogen storage and kinetic flywheels. Another is liquid-metal batteries, which operate silently and emission-free, have a long lifespan compared to conventional batteries, and discharge slowly over time. MIT researchers are working toward liquid-metal batteries that store power for less than $500 per kilowatt hour — a third of the cost of traditional batteries.

The Other Side of the Climate Change Equation

Continued pressure on the demand side of the climate change equation will have limited impact absent similar movement on the supply side.

When compared to fossil fuels, sustainable energy sources represent a very small percentage of power brought to the grid. If we truly hope that sustainable sources play a major role in total grid energy, then significant help is needed with advancement of technology as well as changes in market conditions that presently facilitate continued widespread use of fossil fuel for power generation. This level of help can come from government and institutional investments.

Realizing the technological advances required to make wind and solar a viable energy generation alternative to fossil fuels will require significant investment of capital for research and development.

Last year, global investment in clean energy topped out at $254 billion, far off the recommendation of the International Energy Agency, which has called for an additional one trillion in annual investments to stave off the worst impacts of climate change. This “Clean Trillion” initiative needs to continue through 2050 to keep global temperatures from increasing beyond the established limit of two degrees Celsius. To continue to address the supply side of the carbon emissions issue, governments and other institutions’ involvement to facilitate investment in technologies that make the energy production and storage process more efficient would be most helpful.

Bob Landstrom is the director of product management at Interxion. He holds a bachelor of science degree in electrical engineering from the University of Pittsburgh, a master of science in electrical engineering from the University of Missouri, and a master degree in IS security management from Villanova University. He has a US patent for an arithmetic data error detection and correction code, and is a frequent conference speaker in the data center industry and the author of numerous white papers and publications. Bob teaches data center and IS security topics for industry professional organizations, the US Department of Energy, and is an adjunct professor at a university in the United States.

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