Viewpoint | Creating Resilience

The Digital Revolution’s Hidden Challenge: Power-Hungry Data Centers

Innovative energy solutions are needed to meet the growing demand for data centers.

30 Nov 2021 6 Minute Read


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Data centers are at the heart of the fourth industrial revolution, also known as the digital economy. And just as the pioneers of the first three industrial revolutions, they have a huge and growing need for cheap, reliable energy. The difference today is that they also are searching for more sustainable and environmentally friendly sources, such as wind and solar.

The data center industry currently uses approximately 90 billion kilowatt hours of electricity annually or 3% of all the electricity used worldwide—more than all of the electricity used in the entire United Kingdom.1 Some data center users are finding innovative, cost-saving ways to reduce their power requirements, such as servers placed in waterproof containers and located undersea to eliminate cooling requirements. As more than half of the world’s population lives less than 120 miles from coastlines, the use of undersea or submerged containers to keep data servers cool may be a more viable solution than other alternatives like air conditioning.

Several of the largest providers and users of data centers have committed to carbon neutrality within the next few decades. To accomplish this, providers are utilizing solar panels, wind turbines and other “carbon-clean” energy sources where land is available or are signing power purchase agreements where land constraints may present a challenge to on-site generation. In other instances, they are utilizing renewable energy credits (RECs).

Innovation also includes more efficient data center technology. Containerized solutions—modular systems that offer scalable data center capacity with multiple power and cooling options—have increased power density per square foot, while cooling by submerging servers in water rather than using air conditioning has contributed to increased data center efficiency.

Figure 1: Data center energy use change since 2010

Image of data table

Source: Masanet, E., Shehabi, A., Lei, N., Smith, S., and J.G. Koomey (2020).
"Recalibrating global data center energy use estimates." Science, Vol 367, Iss 6481.

According to Energy Innovation Policy & Technology, while the use of data centers has increased more than sixfold globally from 2010 to 2018, the amount of energy used over that period grew by less than 10%, largely due to gains in hardware and operational efficiencies. As the demand for data center services has increased over the past two years, their energy use likely has outpaced their efficiency gains.

New geographies

A major portion of data centers' energy usage is for cooling, which varies greatly based on geographic region. As such, many have suggested that building data centers in more northerly locations will help mitigate cooling requirements.2 Some data centers that are highly latency dependent (where speed is the critical factor) are not viable for cooler climates as they need to be near the end user. Less latency-dependent data centers are options for cooler-climate locations, while those in warmer climates will have to explore creative ways to boost efficiencies. But governments will probably want to keep such strategic infrastructure within national boundaries.

Figure 2: Global data center energy use, 2018

Source: Masanet, E., Shehabi, A., Lei, N., Smith, S., and J.G. Koomey (2020). "Recalibrating global data center energy use estimates.“ Science, Vol 367, Iss 6481.

Clustering exacerbates the problem

The clustering of data centers in certain locations optimizes the speed of data transfer (prioritizing low latency is a must for time-sensitive industries like finance and health care). The challenge of clustering is the inefficiency of energy transmission, where even the most modern power lines lose between 2% and 5% of their energy during transmission. This can increase up to a 15% loss as the power sources are farther away.3 The maximum efficient distance today for high-speed power distribution is about 300 miles, or, about the distance from Boston to Philadelphia.4 While that distance seems manageable, energy loss in high-density areas like the Northeast Corridor is far greater than in low-density areas, largely due to the ability to have more high-voltage lines. This means that “farther away” is currently not a workable solution when delivering power to where it is needed most.5

Figure 3: Energy Losses by State, 2019

Source: U.S. Energy Information Association, CBRE Research, Oct 2021.

Though a quantum leap in transmission or superconductivity technology would make energy transfer more efficient and permit energy sources to be located farther away from users where available land is more abundant, it still would not solve the speed of information sharing or latency issues that are the primary drivers of clustering. Varying national privacy laws require the usage of data centers that are located within the borders of nearly every country. This prevents the ability to build data centers that serve multiple countries in more efficient locations, such as in cooler climates to reduce energy costs. And as emerging market economies advance, we likely will see much more construction of data centers internationally.

The nuclear option

Perhaps no single energy source generates more controversy within climate-conscious circles than nuclear power. Disasters are extremely rare, but highly publicized mishaps in Fukushima, Chernobyl and Three Mile Island fuel an anti-nuclear narrative. Nevertheless, nuclear power is a carbon-free, inexpensive and abundant energy source. Indeed, some data center operators are actively considering this option, while other high users of energy like cryptocurrency miners are already using nuclear power.6

A number of companies such as X-energy, TerraPower and NuScale Power are all working to develop smaller and less expensive nuclear reactors that will increase its viability in many areas.7 Size is relative, though. Small nuclear power facilities still require considerable acreage for deployment, just much smaller and more inexpensively than traditional nuclear power.8

Societal change needed

Governments across the world are beginning to grasp the challenge of balancing carbon-reduction goals with social and economic transformations that are rapidly creating a need for more energy. While we are seeing remarkable innovation, there needs to be a broad societal consensus on the rapid development of low-carbon energy production.

1Data Center Power Design and Features,” Digital Realty.
2Telehouse Green: Making the Move to Cooler Climates,” Telehouse, April 28, 2017.
3How big are power line losses?”, Schneider Electric, March 25, 2013.
4How Power Grids Work,” Clark Science Center at Smith College.
5Lost in Transmission: How Much Electricity Disappears Between a Power Plant and Your Plug?”, Inside Energy, Nov. 6, 2015.
6Bitcoin Miners Eye Nuclear Power as Environmental Criticism Mounts,” Wall Street Journal, Sep 26, 2021.
7This next-generation nuclear power plant is pitched for Washington state. Can it 'change the world’?” Seattle Times, Nov 8, 2021.
8This Tiny Nuclear Reactor Will Change Energy—and Now It’s Officially Safe,” Popular Mechanics, Sep 2, 2020.