Renewable Energy in Data Centers: Drivers, Challenges, and Solutions
The rapid growth of data centers, driven by advancements in AI and electrification, is leading to an overwhelming demand for electricity. The U.S. Department of Energy sees the rising demand as a catalyst for expanding renewable energy production, though the road is long ahead.
Cloudwatt’s Normandy data center in Val-de-Reuil. Image courtesy of WikiMedia Commons.
In the next decade, electricity demand is expected to rise by 15-20%, according to estimates by the Department of Defense; and by 2027, data center energy usage will surpass 500 terawatt hours (TWh). Currently, there is not enough energy infrastructure in the U.S. to support this growth. In fact, the grid is already straining under the load in places like Virginia and Texas.
At this point, updating and expanding the grid is the only option. But doing so sustainably will be key to preserve the U.S.’s position as a leader in technology. However, there are several challenges:
Infrastructure Integration: Integrating renewables into existing power grids requires significant time (up to 10 years) and investment, which can be complex, especially in areas with high data center density. McKinsey & Company projects that over $500 billion will need to be invested in bolstering the infrastructure of future data centers to meet escalating demands. This figure does not include the costs of IT within data centers or upstream transmission and distribution infrastructure, which are pivotal to the success of our transition into the next digital age.
Intermittency of Renewable Sources: Data centers require high levels of redundancy to maintain five nines of reliability — or 99.999 uptime. This cannot be guaranteed through the intermitted nature of solar and wind energy solutions alone.
Energy Storage: To balance supply, robust battery systems are needed, but large-scale storage is still costly and not fully optimized.
Space and Location Constraints: Renewable power generation requires space, which may be limited near data centers. Some suggest building data centers next to existing resources, but lawmakers, such as Thomas Gleeson, chairman of the Public Utility Commission of Texas, are pushing back. In an article in Bloomberg, he argues that allowing construction near these sites threatens resource adequacy on the grid.
Given these complications, solutions for future data centers will require a highly integrated, multi-pronged approach. And other states will be looking to leaders in data center expansion, such as Virgina, Texas, and California, for innovative solutions.
According to a study by KnownHost, Virginia, Texas, and California are among the states most impacted by data center development and emissions. Virginia alone is responsible for more than one-seventh of total data center emissions in the U.S., producing 199.1 tons of CO2-eq per MWh across more than 450 data centers. Texas and California also lead the pack, emitting 117.04 tons and 116.7 tons of CO2-eq, respectively.
But these states also signify incredible growth and change, with many developers citing Texas for its expansive opportunities in wind and solar. In fact, Texas’ natural gas-fired generation is expected to decrease by 5% in 2025 due largely to a transition to solar and a push from state officials for data centers to build their own generation sites.
Though essential to widespread transition to cleaner power, generation projects are still years out from completion. So, developers are leveraging policy incentives to drive innovation and meet growing energy demands sustainably. Renewable Energy Certificates (RECs) allow data centers to claim green credentials by offsetting nonrenewable electricity through investments in renewable energy production elsewhere.
Altogether, these practices are leading to a growth in distributed energy resources, with a push toward local load balancing in many regions. Coordinating these efforts across centers, cities, and the country requires advanced and vendor agnostic technological solutions that can leverage the AI and data the new systems aim to power and preserve.
As the energy demands of data centers continue to surge, the path forward is undeniably complex. Ensuring that these facilities operate sustainably will require significant investment, innovation, and integration. While renewable energy sources offer a promising solution, challenges still loom large. The future of sustainable data centers hinges on collaboration, technological advancements, and decisive action to integrate cleaner energy solutions.
Partnering with Keyfive:
Keyfive can play a pivotal role in integrating renewable power sources into data center deployments by leveraging its digital twin technology to create dynamic virtual models for real-time monitoring and energy management. Through advanced AI and machine learning, Keyfive's solutions enable data centers to optimize energy consumption, seamlessly balance loads between renewable and traditional power sources, and automate decision-making processes. Additionally, Keyfive’s vendor-agnostic platform can integrate diverse renewable energy systems, such as solar and wind, ensuring smooth operations while maintaining reliability and sustainability across data center infrastructures.