Every email sent, photo or video captured, crypto token traded and online article published adds to the growing mass of digital data worldwide.
Last year alone, nearly 100tn gigabytes of data were created and consumed, according to market researcher International Data Group, equivalent to 4.5tn times the entire text contents of Wikipedia. And the figure will nearly double again by 2025.
Powering this growth are the energy-intensive data centres around the world that process, host and store digital information but which are fast becoming insufficient in capacity.
Developers are scrambling to expand existing centres or to build new ones in order to meet demand. An ever-growing number of people and devices are connecting online; streaming services such as Netflix and Spotify have millions of concurrent users; and the advent of cryptocurrencies and their processing-heavy mining methods have all added to the strain. Bitcoin mining and trading consumed almost triple the electricity of the entire island of Ireland last year, the Cambridge Centre for Alternative Finance estimates.
Our reliance on data centres for the functioning of modern life will only become more entrenched. In the years to come, “two of the bigger drivers would be AI and the internet of things”, says Petroc Taylor, a research analyst for Statista covering data centres and telecoms. “These AI algorithms need massive amounts of training data, as they become more complex, they [will] need more data filtered in.”
Large language models such as GPT-4, which powers ChatGPT, require vast amounts of computing power to create and improve. While OpenAI, the company behind ChatGPT, doesn’t publish exact figures, its older model, GPT-3, is estimated to have cost between $3.2mn and $4.6mn in processing power to train. For the training of GPT-4, that cost had jumped to over $100mn, according to an estimate by Sam Altman, OpenAI’s CEO.
Solving the looming data centre crunch isn’t as simple as just building new operations, or expanding existing ones. Developers must overcome hurdles including local planning restrictions, the need for increased electricity generation and upgrades to national transmission systems.
In the regions that host clusters of data centres, these constraints are limiting the development of new centres, potentially forcing developers to look elsewhere.
The amount of electricity that data centres guzzle has also raised questions about their sustainability — and the impact they have on countries’ net zero targets.
“It’s certainly physically possible to accommodate this demand growth and to decarbonise and have enough generation,” says Mark Turner, a partner at energy consultancy Baringa. “But balancing all of those things does become particularly difficult.”
Anatomy of a data centre
A personal computer contains a hard drive for storing data, a processor capable of modifying that data, networking hardware to connect to the internet and a battery or a power supply to provide the energy for it all. As the electricity passes through your laptop’s hardware, it produces heat which is cooled by a fan.
Data centres take these core concepts of a standard computer and scale them to an enormous level. Instead of one hard drive on your computer for storing photos and home videos, a data centre will contain multiple thousands of hard drives and powerful processors inside “servers” which store, process and host vast quantities of data, for example the entire video catalogue of YouTube.
Vast arrays of servers are stored in rows of energy-intensive “racks” that produce incredible amounts of heat. This heat requires specialised cooling systems to regulate. A data centre needs to be kept between 18 to 27 degrees Celsius in order to stop the hardware deteriorating.
Data centres have various different ownership structures. Organisations can build and operate their own data centres for their own specific needs, and this can be preferable for security-sensitive government or military operations. On the other end of the scale, server space can be rented for short durations from companies that own and operate data centres known as “cloud providers”, such as a Amazon Web Services or Google Cloud. Regardless of how they operate, all data centres require a large supply of reliable electricity to power their hardware and cooling systems.
While data centre energy efficiency has improved substantially in the past decade, the ever-growing demand for data has driven increases in overall power usage.
The energy efficiency of a data centre is measured on a scale of power usage effectiveness (PUE), which equals the total power entering a data centre divided by the total energy used to run the equipment within it. So perfect efficiency would receive a PUE score of 1.
Until 2018, data centres were making large gains in energy efficiency, due to consolidation and improvements in cooling systems. However, these efficiency gains have plateaued.
When fibre routes converge
Due to factors such as geography, climate and access to a skilled workforce, data centres tend to be geographically clustered; big hubs include Dublin, Amsterdam, Zurich and Virginia.
Structure Research, a consultancy with a focus on internet infrastructure, estimates data centres consumed electricity equal to about 1 per cent of the world’s total energy demand last year. However, due to the clustering the electricity demand isn’t equally distributed around the world.
The most active hubs have “links to the fibre backbones that are going across different continents”, says Turner, who has also researched the specifics of the Irish data centre market. “That’s where places like Amsterdam and Dublin really win out, because they have a lot of fibre routes converging in one place.”
There are 82 data centres operating in the Republic of Ireland, for example, with most in the greater Dublin area. Another 40 have planning approval and 12 are under construction, according to Bit Power, an Irish market research firm.
These centres consumed 19 per cent of Ireland’s total energy use in 2022. This share is set to increase to 28 per cent by 2031, according to Eirgrid, the Irish transmission system operator. Due to concerns about the capacity of its grid, Eirgrid has stopped issuing new grid connections to data centres in the Dublin area until 2028.
“There’s definitely a desire to reinforce the network around Dublin,” Turner says. “It’s very difficult to do that though . . . particularly to get the right planning permission and generally it’s very difficult to get planning for new wires particularly in built up areas.”
The power supply and transmission issues are not unique to Ireland. The US state of Virginia boasts one of the largest data centre clusters in the US — 27 per cent of all US data centre capacity, according to Structure Research. Its 300 centres consume 20 per cent of all electricity demand in the state.
Technology companies concerned about how this level of demand affects the environment are planning for and investing in more sustainable cloud services. Sundar Pichai, CEO of Google, announced in 2020 a “commitment to operate on 24/7 carbon-free energy in all our data centres and campuses worldwide” by 2030.
The company plans to purchase round-the-clock clean energy in the markets it operates, and is also investing in renewables. Other data centre operators have made similar pledges to decarbonise their grids.
Data centres are emerging as important wholesale power market players, capable of influencing the direction of power generation investment.
In April, Google made a direct purchasing power agreement to buy 150 megawatts of wind energy from Ørsted, a Danish energy company operating wind farms in the US.
Such power agreements made by data centre operators can help secure the financing for construction by guaranteeing a fixed income stream to clean energy providers for a number of years. An energy insider tells the Financial Times that “purchasing power agreements are one of the key factors that decides whether or not a wind farm gets built”.
This, says Turner, suggests that new hubs could play a part in meeting future demand, along with the expansion of existing centres.
“The most obvious, all-round good locations probably have been the ones that have already been developed,” he says. “In the scorecard of factors around where you locate your data centre, the availability of sufficient headroom and capacity on the grid, and availability of low-carbon power, ideally at a low price — [the latter] is becoming more critical. This may lead operators to look elsewhere.”