We live in an increasingly digital society, and it’s easy to think that digitalisation lives in data centres. People in the cold Northern climate live in homes and work in offices that need to be heated for most of the year. Back in the olden days, heat was generated by burning logs and twigs in baking ovens and masonry heaters. That was eventually replaced with gas and coal, which have a higher energy content than wood and are combusted in big power plants. The heat that is generated is transmitted to homes through energy-efficient district heating networks.
Climate change mitigation is forcing us to rethink this process – and that’s a good thing. We must abolish coal – and eventually all combustion. The carbon-free electrical energy produced in the Nordic countries, heat pumps and district heating networks will play a big role in these efforts.
Collaboration between data centres and district heating networks is a win-win
What is the link between digitalisation and district heating, and why are energy companies so interested in data centres? The simple answer to this is clearly techno-economic: by combining these two things we can reduce the operating expenses of data centre players through the sale of waste heat and offer energy companies a competitive alternative for the replacement of fossil-based heat production. Recycling the electrical energy used by data centres by using it in district heating significantly improves the ecological aspect of both operations, and that makes for a particularly interesting equation in the fight against climate change.
Two important perspectives for the data centre discussion
All major investments spark a debate, with people passionately for or against an issue. Having a discussion is good and necessary; without a discussion, it’s impossible to implement big projects in a democratic society. It is an indisputable fact that data centres are electricity-intensive. However, it makes sense to look at the issue from two other perspectives.
1. Centralisation improves efficiency
With data centres, as with most other industrial sectors, economies of scale are applicable: efficiency can be improved by centralising operations into bigger entities. Economies of scale also work in energy. When companies and other players move their small servers to big, centralised data centres, energy efficiency fundamentally improves. In big data centres, also the small energy savings with individual servers or components become significant when there are a lot of components. Similarly, achieving better data security is fundamentally easier in big data centres. Data security is not directly related to energy, but it is definitely a significant factor behind the growth of the industry and cloud services.
2. Data centres in the Nordic countries use clean electricity
The eco-friendliness of energy procurement and use has become the most important aspect in the decision-making criteria, alongside costs, in data centre investments. When a data centre player makes an investment decision on a new data centre, a long-term power purchase agreement with a requirement for carbon emission-free production is made in most cases in the same conjunction. Often the requirement is also that the electricity is produced in a new electricity production plant specifically made for the project; in the case of the Nordic countries today, this typically means wind power. Thus, ideally, one data centre investment simultaneously creates two investments that have national economic significance.
Finland, too, needs data centre investments
Like I noted in my February 2019 blog, the data centre sector is one of the fastest growing sectors in the Nordic countries. Now, in September 2019, this remains true, and data centre players continue to have a strong interest in the placement of new data centres in the Nordic countries. Over the course of the year we have been pleased to read news about new data centre projects in Sweden and Norway. But Finland has been missing from these news stories. The single biggest reason for this is Finland’s significantly higher electricity tax compared to our Nordic neighbours.
Antti Rinne’s Government Programme (Inclusive and competent Finland – a socially, economically and ecologically sustainable society) contains several positive entries related to energy taxation. The programme rightly identifies, e.g., emissions-free electricity, and the central role of power and heat sector integration in the pursuit for a carbon-neutral society. Next it is important to ensure that the identified needs for change are implemented.
Finland can’t afford to lose all the data centre investments to neighbouring countries. Coal combustion will end in Finland by May 2029 at the latest. On the other hand, the lead time from planning to implementation of replacement investments, like a new bioenergy plant, takes several years with license applications. Utilising a data centre’s waste heat with heat pumps and carbon dioxide-free electricity is one of the most effective ways to replace fossil heat production, cleanly and combustion-free.
Data heat for tomorrow’s homes and offices
As ‘energy architects’, we at Fortum are working hard with our partners to improve opportunities to bring new data centres to Finland and the Helsinki metropolitan area. An important task in this work is finding and developing plots to accommodate the needs of data centres. If we succeed in creating favourable operating conditions – and then in successfully marketing them to relevant players – our homes and offices in the future will be increasingly heated with cost-effective and clean data heat.