In recent years, businesses around the world have had to meet increasing demands for digital services. The COVID-19 pandemic and the subsequent trend towards remote work have only accelerated this trend. Organizations and individuals alike indirectly depend on an expanding number of large data centers to facilitate these services.
Data centers’ energy usage only accounts for about 1% of all worldwide electricity consumption. However, data centers are some of the most energy-intensive buildings, and our society’s heavy reliance on these structures contributes to greenhouse gas emissions. Compared to a standard commercial office building, data centers consume anywhere from 10 to 50 times the amount of energy per floor space. Furthermore, because the largest data centers are run by influential technology companies, this industry has an important role to play in the fight against climate change.
Over the past few years, prominent leaders in this sector have made public commitments to shifting to renewable energy to support their operations. Many data centers have already made progress in this area, and top data centers are gradually transitioning away from dependence on fossil fuels. In fact, the top three data centers all anticipate running entirely on renewable energy between 2025 and 2030, excluding embodied emissions released by their processors and infrastructure.
Business leaders that are aiming to reduce their companies’ Scope 3 emissions may be interested in working with a data center that prioritizes sustainability. Let’s examine the prevalence of renewable energy usage amongst the leading data centers and assess which data center operators have already transitioned entirely to renewables.
Where Do The Major Data Centers Stand On Renewable Energy?
Google Cloud, Microsoft Azure, and Amazon Web Services (AWS) run the largest data centers in the world, providing data storage and cloud services for millions of clients across the globe. All three organizations are aiming to operate their data centers with 100% renewable energy between 2025 and 2030. Furthermore, they all provide greenhouse gas emissions calculators to assess workload emissions, allowing clients to generate estimates for their own emissions reports. Here is where the top three data centers stand in terms of reliance on renewable energy.
From 2019 to 2020, Google increased their data centers’ reliance on 24/7 carbon-free energy (CFE) from 61% to 67%. In 2020, Google also announced that they planned to operate all of their data centers, cloud regions, and campuses around the world with CFE by 2030, and by 2021, five Google data centers were already operating near or above 90% CFE.
Major data centers generally leverage carbon offsets to make progress towards these goals, and they still require fossil fuels from local electricity grids in order to provide cloud services. However, Google’s commitment to reaching 24/7 CFE operations marks a welcome deviation from this approach.
As of 2017, Google had already begun matching 100% of their annual electricity consumption with renewable energy, but reaching their new CFE target will entail direct reliance on renewable energy - in order to fulfill this goal, they will need to utilize CFE purchased from regional grids to power their operations at every hour of the day. When considering locations for new data centers, Google will need to evaluate the power grid’s energy sources or work to hasten the regional grid’s shift towards renewables.
Power usage effectiveness (PUE) is a crucial metric for evaluating data center sustainability. This figure represents the ratio of energy used by the computer data center divided by the total energy used by the computing equipment. A PUE of 1 indicates that the entirety of a data center’s energy consumption is utilized for operating computing equipment, while a PUE of 2 means that an equal unit of energy must be used to cool down this equipment and distribute power to the machines.
While the average large data center’s PUE stands at approximately 1.57, Google reached an average PUE of 1.1 by 2021. The company has achieved this in part by investing in hardware materials that emit less heat to reduce cooling requirements and using artificial intelligence to determine the most efficient run times for heat pumps.
Google is also taking steps to improve their reporting efforts regarding renewable energy usage. Recently, they announced that they will be piloting Time-Based Energy Attribute Certificates (T-EACs) to assess and validate how, where, and when electricity is produced.
Microsoft is working towards operating their data centers on 100% renewable energy by 2025. Furthermore, they are planning for their data centers to be carbon-negative by 2030, meaning that they will match all of their electricity consumption with zero-carbon energy purchases. They are upholding transparency throughout this transitional process by releasing life-cycle assessments and publishing region-specific reports on data center emissions across 28 regions.
To accomplish this goal, Microsoft is cementing Power Purchase Agreements (PPAs) for renewable energy. With a PPA in place, a company commits to purchasing renewable energy from projects that are set to launch in the future for a set period at a specific price. This secure source of income provides much-needed funding for clean energy projects and brings more renewable energy sources on line in the long run. Under Microsoft’s sustainability commitment, they will need to set up additional PPAs to contract green energy for all of the carbon-emitting electricity used by their data centers, buildings, and campuses.
Microsoft’s newest data centers have achieved an average PUE of 1.12. They have gradually improved their energy efficiency by employing liquid immersion cooling and grid-interactive UPS batteries, as well as utilizing clean fuels for power back-up. These back-up batteries store energy to keep the data centers running on days when production from wind or solar sources is fluctuating.
By 2050, Microsoft hopes to achieve a more ambitious objective of removing all of their carbon emissions from the environment since their founding in 1975. The company has set additional sustainability goals for their data centers. For example, Microsoft aims to run water-positive, zero-waste data centers by 2030 and eventually achieve net-zero deforestation from new construction.
Amazon Web Services (AWS)
Amazon Web Services is also aiming to operate their data centers with 100% renewable energy by 2025, while setting a target for net-zero status by 2040. Originally, AWS had established a target for running on 100% renewables by 2030, but they have made dramatic progress towards this original goal and now expect to reach this target by 2025. Currently, AWS relies on 85% renewable energy across its business.
In 2020, the company announced a significant investment in 26 new solar and wind power projects to support their cloud infrastructure, and as of 2021, Amazon has invested in 274 renewable projects around the world. Amazon stands as the largest buyer of renewable energy in history.
AWS is now 3.6 times more energy efficient than the median enterprise data center in the U.S. and 5 times more energy efficient than the average European data center. They have employed power-efficient general purpose processors and improved the longevity and airflow of cooling mediums in their data centers, which has lowered the energy usage of their cooling equipment by 20% and doubled the equipment’s service life.
Due to their recent improvements in boosting energy efficiency and investing in renewables, AWS states that working with their data centers can reduce businesses’ workload carbon footprints by approximately 80% compared to other enterprise data centers. Once AWS has achieved their renewable energy goals, this figure could reach 96%.
It should be noted that AWS does not include Scope 3 emissions in their data center infrastructure emissions data. While Google and Microsoft Azure provide full life-cycle assessments for their data centers’ environmental impacts, AWS fall shorts in this regard. Therefore, without Scope 3 emissions data, their reporting may not be as comprehensive as figures from other major data centers.
Sustainability Targets for Other Data Centers
In addition to Google, Microsoft, and AWS, other large data centers are making strides towards running on 100% renewables. For example, Oracle Cloud’s data centers in Europe currently run on 100% renewables, and the company is working towards running all of its data centers with renewables by 2025.
Furthermore, Alibaba Cloud is aiming for Scope 3 carbon neutrality by 2030, while Tencent Cloud has committed to reaching 100% renewable energy in the same time frame. OVHcloud is transitioning to a 100% low carbon model, including nuclear and hydro energy. IBM Cloud (Kyndryl) is on track to achieve 75% renewable energy by 2025 and 90% renewable energy by 2030. However, some data centers, such as Linode, have not set clear renewable energy targets.
Which Data Centers Have Shifted to 100% Renewable Energy?
Today, it is still rare for companies to run all of their data centers on 100% renewable energy, but some smaller organizations are leading the way. For example, Switch is a groundbreaking technology company that has operated all four of its data centers on renewable energy since 2016. It maintains a very low PUE amongst the data center industry at an average of 1.18. Switch stands out as the only company out of 180 corporate issuers that has been awarded an E-1 rating from S&P Global’s ESG Credit Indicator Report Card.
At the moment, companies like Switch that are operating a small number of data centers may have an easier time switching to renewables. Businesses that are interested in working with data centers that already run on 100% renewable may need to seek options outside of the largest corporations in this space.
The Future of Sustainability for Data Centers
As Environmental, Social, and Governance factors become more important considerations for investors, sustainability and reliance on renewable energy could represent a competitive advantage for data centers in the future. In fact, the green data center market is expected to grow by 14% annually through 2032.
Furthermore, new financial incentives could encourage more data centers to transition to renewable energy on a faster timeline. The federal government offers tax credits intended to help businesses adopt renewables without a financial burden, and the costs associated with renewable energy are gradually falling. For example, in 2020, concentrating solar power costs decreased by 16%, with onshore wind costs fell by 13% and offshore wind costs fell by 9%.
As renewable technology becomes cheaper and more reliable, data centers will be able to make significant progress towards their sustainability targets while supporting customer demands. These developments could encourage data centers to shift away from leaning on carbon offsets to achieve sustainability goals and run directly on renewables instead. Government regulations could also hasten the transition to renewable energy.
Additionally, data centers must be prepared to improve their reporting methods in the coming years. As investors place a higher priority on sustainability, data centers should be ready to accurately and reliably report Scope 1, 2, and 3 emissions for a transparent picture of their progress. In the coming years, technology in this area will undoubtedly continue improving, and ideally, running on wind, solar, or other renewable sources will become the norm for data centers.
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