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Microgrids for Data Centers: Enhancing Uptime While Reducing CostsMicrogrids for Data Centers: Enhancing Uptime While Reducing Costs
Data center microgrids offer resilience, cost savings, and sustainability – key advantages as AI-driven power demands strain the electric grid.
3 Min Read
Data center microgrids enhance resilience, cut costs, and support sustainability as AI-driven power demands push the electric grid to its limits.Image: Alamy
In the race for AI dominance, tech giants are spending hundreds of billions on new data centers. But their plans create a pre-eminent challenge for the industry: How can they meet the insatiable demand for around-the-clock computing power while maintaining a continuous, reliable, and sustainable energy system?
Data center operators have long relied on diesel-powered backup generators, a tried-and-true solution that has kept servers running during power outages. But diesel generators are a 20th-century solution for a 21st-century problem.
As data centers consume more power and electric grids face increasing strain, data center operators are looking for alternatives that do more than provide emergency power. Microgrids offer a potential solution.
Microgrids offer on-site generation that integrates renewable energy sources and lowers a facility’s carbon footprint. They can also optimize energy use while enhancing power stability, reducing reliance on the grid during peak demand when costs are highest.
Power-Hungry Data Centers
The massive investment in new data centers is significantly impacting the energy sector, especially in the U.S. Large AI-driven hyperscale data centers require 100 MW or more of power, with an annual consumption roughly equivalent to the demand for 350,000 to 400,000 electric cars.
In the U.S., data center energy use tripled over the past decade, accounting for 4.4% of total electricity consumption in 2023. Forecasts for future power demand vary widely. For example, the Department of Energy projects that data centers could consume anywhere from 6.7% to 12% of U.S. electricity by 2028.
Such rapid growth poses a major challenge for the U.S. electric grid, which saw nearly flat demand for the first two decades of this century. The nation’s aging electric infrastructure, largely built in the 1960s and 1970s, is struggling to keep pace with modern energy demands and a warming climate.
As extreme weather events become more frequent, businesses and communities face increasing vulnerability to power outages. Between 2000 and 2023, weather caused 80% of major outages in the U.S.
Upgrading the grid for resilience and reliability will be costly and complex. That means data center developers must actively collaborate with utilities, power producers, and grid planners to build energy security and achieve their sustainability goals.
While backup power systems – typically comprising diesel generators and an uninterruptible power supply – are essential to ensure continuity of service, they are not designed to run continuously. This underscores the value of microgrids, localized energy systems capable of operating independently or in conjunction with the broader electric grid.
For data centers, controlling their energy supply is not just about cost but a strategic necessity. Microgrids, especially ones that include storage, can help data centers meet their commercial and climate objectives in three ways:
Enhanced resilience: Microgrids allow data centers to operate independently of the main grid during outages or disruptions. They can coordinate a variety of on-site, distributed energy resources and battery storage. By regulating voltage and frequency, microgrids also increase overall grid stability and reduce the risk of blackouts.
Cost-effective energy management: Energy costs are a significant operational expense for data centers. Storing energy during off-peak hours and using it during peak demand periods can save money and improve efficiency. Advanced distribution management systems optimize energy use during peak demand.
Sustainability and decarbonization: Many data center operators have committed to ambitious climate goals, including achieving carbon neutrality or running entirely on renewable energy. Microgrids can replace traditional diesel backup systems with cleaner sources such as natural gas. They also enable data centers to integrate renewable sources, such as solar or wind power, to offset their carbon footprint.
AI and cloud computing’s power needs are growing so fast that single data center campuses could soon use more electricity than some cities. This means there is a greater need to optimize energy use, mitigate on-site and grid-level strain, integrate renewables, and avoid downtime. There is a clear path forward.
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