Creating Resilience
Adequate Power Availability Remains Top Priority for Data Center Developers
September 9, 2024 3 Minute Read
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The cost, source and available supply of electricity have become data center developers’ prime considerations for site selection. Finding markets that adequately meet all three of these requirements is becoming increasingly difficult.
Sun Belt markets like Dallas-Ft. Worth, Atlanta, Charlotte and Northern Virginia benefit from low-cost natural gas generation of electricity, while Central Washington leverages renewable hydropower. Many other markets still rely on coal-fired generation plants.
Historically, top markets for under-construction activity—Atlanta, Northern Virginia, Dallas, Phoenix and Chicago—are among the least expensive for power costs. Among the most expensive are Silicon Valley, Southern California, New York Tristate, Hillsboro, OR and Minneapolis.
Although increasingly difficult, securing power within existing electric grids is the most preferable scenario for developers since construction timelines can be half of those for developments that require new transmission build-outs and/or interconnections. Securing enough electricity to power data centers was not always the top priority when selecting new development sites. But with the recent major increase in demand from data centers and manufacturing facilities, site selection now largely depends on whether adequate power is available or can quickly be delivered to a new data center.
Figure 1: Electricity Costs by Primary Market ($/kWh)
Electricity prices in the top data center markets have risen significantly since 2021, increasing data center operating costs. This has elevated the importance of energy efficiency and sustainability solutions.
Brownfield sites are now being considered for their potential to expedite power availability by converting legacy coal plants into data centers, using their existing infrastructure to deliver power from adjacent renewable energy generation plants.
Ways in which data center operators are reducing their energy consumption include:
- Use of energy-saving software technologies.
- Design features that maximize energy efficiency.
- Eliminating unnecessary equipment in server rooms.
- Replacing old equipment and cooling systems with more energy- and temperature-efficient technology.
Data center developers and utility companies must collaborate to increase power availability. This will help to reduce grid congestion, improve reliability and decrease total costs. Innovative solutions such as grid-enhancing technologies and microgrids are being considered to meet these needs.
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