Generative AI ‘arms race’ under way driving demand for high density data centres, but unlikely grids will be able to cope with their proliferation – consequently, growth of data centres will be inextricably linked with that of energy storage
One of the by-products of the explosion in the use of generative AI – that is, AI that creates new content such as text, images, audio and video – will be a dramatic increase in the deployment of energy storage around the world. Goldman Sachs has talked about how the explosion of interest in generative AI has resulted in an “arms race” to develop the technology, and consequently demand for high density data centres – as well as the electricity to power them – will rocket.
According to data from the International Energy Agency, data centres’ global energy consumption will more than double over the six-year period from 2024 to 2030 – in 2024, data centres accounted for 415 terawatt hours (TWh) of electricity consumption (or 1.5 per cent of the world’s total), but this is expected to soar to 945 TWh by the end of the decade.
Massive strain on grids
However, rapidly increasing data centre demand will put tremendous strain on electricity grids, and there are doubts about whether grids will be actually able to cope. Goldman Sachs has reported that meeting the forecast energy demand of data centres in 2030 will require $720 million of spending on the grid between now and then. The prospect of that level of backing being realised appears slim, it can take years before major transmission projects get permits and, then, once they do, it takes years to actually build them. Consequently, relying on grid capacity is unrealistic and that approach will strangle data centre growth.
It’s for this reason that the rise of data centres will become inextricably linked with that of energy storage. Meta, the technology company that has a division devoted to AI development, is one of the forward-thinking companies that is future-proofing its data centre build-out by ensuring such assets are powered by battery storage. Back in December 2023, Meta announced that its Mesa data centre in Arizona would be supported by solar energy and battery storage from Salt River Project (SRP) through a contract with clean energy provider Ørsted. SRP is a community-based, not-for-profit public power utility and the largest provider of electricity in the greater Phoenix metropolitan area in Arizona, serving more than 1 million customers. Under the contract, Mesa data centre will receive the majority of the solar energy generated by Ørsted’s Eleven Mile Solar Center, a 300 MW solar farm and 300 MW, four-hour battery energy storage system in Pinal County, Arizona. The solar and stored energy not needed by the Meta data centre will be available to SRP’s customer base.
Power outages can cost data centre operators up to £1 million
Energy storage represents a sound investment for data centre operators. Ensuring a reliable supply of energy for a data centre – rather than being at the mercy of the grid, which may be susceptible to blackouts – is a crucial way of managing costs. Studies have shown that power outages can be extremely costly for data centres – one survey found that nearly half (47 per cent) of data centres that experienced outages reported costs ranging from $100,000 to $1 million. Last year, Arizona – the location for Meta’s data centre – was plagued by a number of power outages, emphasising the appeal of battery storage for data centre operators given the frequently high costs involved.
Ensuring that plans for data centres incorporate energy storage systems will also make them more appealing to communities and therefore increase the likelihood of such schemes being approved by local authority planning committees. A recent survey found that 70 per cent of Americans are comfortable with a data centre being built within a few miles of where they live if it is “done sustainably”. The survey of 600 Americans, commissioned by thermal management company Modine, concluded that support for data centres hinged on “responsible development” with “increased energy demand” a major concern. It serves as a clear indication that incorporating energy storage into plans for data centres will – in addition to mitigating the risk of costly power outages – also be instrumental in satisfying the sustainability and energy-related concerns of local communities and thereby make it more likely such projects will successfully navigate the permitting process.
Public acceptance of energy storage projects in their community is at a similarly high level. A recent survey of nearly 4,000 US citizens – commissioned by Firetrace International – showed that 71 per cent of Americans support battery energy storage system (BESS) sites in their local community. With similar levels of public support for data centres and energy storage projects, it’s clear that building such assets in tandem represents the perfect match.
Strategic communications, insight and events for the global energy transition.