No return to normal for data centres in 2022

17 Dec 2021

Image: © Production Perig/

Eaton’s Ciarán Forde discusses his predictions around what the future holds for the data centre and energy industry in 2022.

For data and the data centre industry, the pandemic disruption was a major catalyst for accelerated digitalisation. Thankfully most of the technology needed during the crisis was already in existence, supported by data centre and telecoms infrastructure.

The crisis drove the rapid adoption of these technologies and sped developments which were already underway. But what is most significant is that this change is likely to be irreversible. When you remove a catalyst, the reactions it caused do not reverse themselves. The increased reliance on data centres – and by extension the telecoms infrastructure which connects us to them – is here to stay.

However, there are serious issues associated with this. A decades-long efficiency drive, which held data centres to steady demand levels while processing much more, has run out of headroom.

Our economy and society have gone full throttle on data, exactly at the time when we need to put the brakes on energy consumption if we’re to combat the climate crisis. There are no megabits without megawatts and as we demand and produce more and more data, energy consumption levels will rise.

How, then, can the industry achieve seemingly contrasting objectives and ramp up while ramping down?

Squaring this circle will be the dominant feature of the energy and data centre industry for the next five years. As if this conundrum was not enough, throw in the fact that electrification is sweeping other industrial sectors, transport, domestic and commercial heating and cooling. As the demand for electrical energy is set to soar, data centre operators will face tough challenges in accessing scarce new energy production.

The solution is to ramp up renewable energy production, not only to meet new demand but to also displace current fossil-based production. So, it is not just the data centre industry facing challenges. Energy network operators themselves will be stretched as they are asked to perform the magic trick of increasing supply while simultaneously decommissioning fossil fuel plants.

This may apply further pressure on commercial end users. And governments setting the rules and direction for energy markets will be asked to make complex and highly consequential decisions about how energy is produced, managed and who is prioritised for power consumption.

Dublin, for example, has risen to become a major data hub for Europe. Data centres currently take up around 11pc of Ireland’s grid capacity, with warnings that this will rise significantly higher. There were even political calls for a moratorium on new data centres.

Between all the stakeholders, the energy and data centre landscape is now quite complex, requiring new policy and strategies. It would be naive to assume that Ireland’s case is unique, it is perhaps just to first to experience the confluences of trends.

Limited capacity means acute oversight

Players in the data centre sector – from Big Tech to service providers and real estate owners – have grown used to getting power whenever they need it. But as the plates spin across many sources of demand, data’s role will be scrutinised in detail. The sector can make the case that its activities offset existing demand elsewhere but cannot excuse itself from the consequences of creating greater demand in the main.

As such the challenge for data centres will no longer be one of efficiency, but one of sustainability. New metrics, new approaches to data centre design and operations will fall under greater scrutiny, as will the energy consumed by the overall telecom infrastructure, which has an energy requirement many times that of the data centre industry.

We rely on data, data relies on power and a significant gap between our wants and needs will soon emerge. On one side this appears as a crisis. However, on the other side, this will be the kind of gap that will attract serious investment and innovation. For the grid, this gap will enable new and existing private ventures to build out the renewable power we desperately need.

Market opportunity

A seller’s market for power supply opens the door to new approaches and new models. For data centres, it will solidify the economic case for a new relationship with power, not just as consumers but as sites which support the grid with energy services, storage and even power generation.

Data and power will realign and soon in some cases that alignment will become a physical proximity, too. With economics and policy beginning to align in this manner, there is a case for data centres to offer not just frequency response, but also move into direct flexible supply to the grid. Sector coupling could become one of 2022’s major headlines for the data centre sector.

Here in late 2021, we’re seeing the first glimmers of what this might look like. By the end of 2022 and beyond, the dots between data and power will truly have been redrawn and hopefully look joined up. And we will continue to see the growth of ventures structured to make data centres part of the solution to the renewable transition.

By Ciarán Forde

Ciarán Forde is the the segment leader for data centre and IT operations in EMEA for Eaton, a global power management company headquartered in Ireland.

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