By the end of the decade, power consumption from U.S. data centers is expected to reach 35 GW, nearly double 2022 consumption. This rapid growth is because more data is being produced than ever before—and more organizations are moving to storing that data in the cloud. The rise of AI is also responsible for this rapid growth—and the current and projected surge in electricity demand.
The challenge is substantial: how can data centers meet their customers’ demand—and how can utilities meet data centers’ demand—without compromising sustainability, cost-effectiveness, or efficiency?
In this blog, we will explore the impact of data center growth on the electric grid and how battery storage (with or without solar PV) can help data centers access cleaner, less expensive, and more reliable energy.
What is Causing the Surge in Data Demand?
With billions of smartphones, laptops, and IoT (internet of things) devices generating and consuming data, the need for data storage and processing power has soared. Currently, data centers consume approximately 1-2% of the total global electricity supply, and this figure is expected to rise significantly.
In the U.S. alone, data center power demand is expected to increase dramatically—potentially tripling current capacity by the end of the decade. Currently responsible for 3-4% of total U.S. electricity consumption, data centers could account for as much as 11-12% by 2030.
Several key factors are driving surge in demand for data, including the rapid adoption of digital technologies, cloud computing, and the proliferation of internet-connected devices.
Artificial intelligence (AI) and machine learning are also playing a pivotal role. These technologies require massive computational power to process and analyze the vast amounts of data they generate, adding further strain to data center infrastructure.
Additionally, the widespread adoption of cloud services, remote work, and e-commerce, alongside innovations like smart cities, are further contributing to the surge. As digitalization continues to evolve, data centers will need to expand both in scale and energy capacity, making the need for sustainable, energy-efficient solutions more urgent than ever.
How Battery Storage and Solar PV Can Lower Data Centers’ Energy Costs?
As energy demand from data centers surges, energy storage and/or solar PV can play a critical role in reducing electricity costs.
Energy storage systems allow electricity to be stored—and then discharged—at the most strategic times. Today, Lithium-ion batteries, the same batteries that are used in cell phones and electric vehicles, are the most commonly used type of energy storage. Like the batteries in your cell phone, utility-scale battery energy storage systems can be charged with electricity from the grid, stored, and discharged when there is a deficit in supply or when energy is most expensive.
Solar PV systems can lower overall supply costs by generating clean energy onsite, while energy storage optimizes bill costs by storing electricity and discharging it when rates are high.
When battery storage is paired with solar photovoltaics (PV), known as solar-plus-storage, solar PV lowers emissions by reducing grid consumption, while battery storage extends the value of solar energy by managing energy costs—charging during times of low electricity rates and discharging when rates are high.
Additionally, an on-site battery storage and/or solar PV system can not only reduce data centers’ energy costs—they can insulate them against supply constraints, decrease carbon footprints, and generate revenue through incentive or market-based programs.
Key Benefits of Adding On-Site Renewable Energy to Your Data Center
Adding battery storage and/or solar PV systems to your data center(s) can address has numerous benefits:
💰 Cost Savings: Energy storage and/or solar PV can significantly lower electricity costs by reducing demand charges, optimizing time-of-use (TOU) rates, and decreasing overall reliance on grid power.
✂️ Peak Shaving: Peak shaving is an essential benefit of energy storage that lowers electricity costs in certain regions and reduces the data centers’ impact on grid peaks—a critical issue as new data center capacity comes online. By storing excess energy during off-peak periods and discharging it during peak demand, solar-plus-storage minimizes strain on the grid and helps avoid demand charges.
🌳 Enhanced Sustainability and Environmental Impact: Solar-plus-storage supports sustainability goals by reducing carbon footprints and generating renewable energy credits (RECs). This is crucial for data centers, which are often perceived as having a negative environmental impact due to high energy consumption.
🔋 Capacity and Load Management: Solar-plus-storage systems can provide additional capacity during times by using solar energy or discharging the battery when data centers are struggling to secure enough capacity from the grid.
📈 Hedge Against Energy Price Volatility: A power purchase agreement (PPA) with solar-plus-storage locks in a fixed cost of energy for up to 20 years. As energy demand rises, the PPA helps data centers avoid price increases.
These strategies offer a powerful solution to the challenges data centers face, but they also come with certain obstacles that need to be addressed. While energy storage and solar PV provide significant cost savings and sustainability benefits, factors such as interconnection costs, space constraints, and tenant buy-in can impact implementation. These issues can significantly slow down projects and reduce the financial savings, which is why very few data centers are taking this on alone.
Partnering with Convergent Energy and Power
It is important to have an experienced partner to add an energy storage and/or solar PV system to your plant (spoiler alert: that partner should be Convergent!).
Convergent is a leading provider of energy storage solutions in North America. Convergent has over a decade of experience financing and managing all aspects of the energy storage development cycle to help customers reduce electricity costs and increase reliability. The company’s commercial, industrial, and utility-scale assets can yield seven-figure savings while advancing the clean energy transition.
Ready to Evaluate Energy Storage and/or Solar PV? Contact Us Today.
Finding more cost-effective and sustainable energy is essential for data centers and their growth. Battery storage and/or solar PV can help your data center reduce your energy costs and carbon footprint at the same time.
To sum it up, the future of energy depends on our ability to store it. We need energy storage to accelerate the clean energy transition, reduce costs, and increase reliability for businesses and communities.
To learn more about how an energy storage system or solar-plus-storage (paired solar PV and battery storage) can benefit your business, schedule a free, no-obligation introductory call with our team today.
