As the world goes digital, datacenters that make the cloud work look to renewable energy sources

Two seismic shifts in society are happening at the same time: The digitization of nearly everything, in what some call the fourth industrial revolution, and a move toward renewable energy driven by the climate crisis and other world events. 

At the confluence of these movements are thousands of datacenters operating around the clock to support a wide spectrum of critical services.  

When people refer to the cloud, they are really talking about the data in datacenters. These are real, on-the-ground places: buildings that house banks of computer processing units, humming with our work, our research, our play, the stories of our lives and the road maps to our futures. 

While the energy datacenters use accounts for about 1% of all electricity consumed globally, the influence they’ve had on the shift to renewable, sustainable sources of energy is disproportionately large. Some of the impact has been direct and tangible, and some is indirect and harder to gauge. 

“Energy use by leading tech firms is relatively minor compared with their economic, financial and even social footprint,” write George Kamiya and Laszlo Varro in an International Energy Agency analysis. “Yet, it is precisely because of that massive financial footprint, combined with their enormous cultural and scientific influence, that these companies have such a potentially huge role to play in tackling the climate challenge.” 

One of the most visible ways that these companies have made an impact in the renewable energy markets is through power purchase agreements, or PPAs. With a PPA, a company agrees to buy renewable energy from a project that is not online yet for a set period at a set price, usually between a decade and 20 years.  

This guarantee of steady income for a new project has been a force in expanding the market for renewable energy, says Kyle Harrison, head of sustainability research at BloombergNEF. 

“Corporate demand specifically has been a massive catalyst for clean energy builds around the world,” he says. “When you think about tech, even though Microsoft and some of these other companies are using renewable energy, they’re going to need to sign more deals to keep up their goals” because demand is growing so fast. 

Microsoft, for example, was the second largest corporate buyer of renewable energy through PPAs in 2021. Buying through PPAs that make a long-term commitment helps to raise the financing that is needed to bring new electricity generation online. Many of those deals are in Europe, including Ireland, Denmark, Sweden and Spain. In total, Microsoft has signed PPAs that will contribute to bringing more than 10 gigawatts of new renewable energy capacity online.   

On Nov. 23, the company announced PPAs in Ireland for more than 900 megawatts of new renewable electricity capacity. There are 1,000 megawatts in one gigawatt. Microsoft forecasts that by 2025, its datacenters in Ireland will be supported 100% by renewable energy from new projects supported by PPAs. 

As Microsoft has expanded its datacenters to meet customer demand, it has also doubled down on its commitments to reducing carbon consumption and helping solve the larger issue of climate change, says Brian Janous, general manager of energy at Microsoft.  Those commitments are demonstrated through everything from large purchases of renewable energy to innovation and collaboration, as well as advocating policies that support a sustainable path forward. 

“It’s important that we lean in with our voice to help influence how policies evolve that support rapid decarbonization,” he says.

Harrison of BloombergNEF also said that it’s important that companies like Microsoft are active in seeking policies that favor clean energy. 

“Lobbying with utilities and working with regulators to open up more access for clean energy buying is a massive role that Microsoft and other companies are currently playing,” he says. 

Microsoft’s advocacy for clean energy starts in-house. By 2025, Microsoft will shift to 100% supply of renewable energy, meaning that the company will have PPAs for green energy contracted for 100% of carbon-emitting electricity consumed by all its datacenters, buildings and campuses.  

By 2030 Microsoft will have 100% of its electricity consumption, 100% of the time, matched by zero-carbon energy purchases. By 2050, Microsoft has committed to removing from the environment all the carbon the company has emitted, either directly or by electrical consumption since it was founded in 1975. Datacenters can play a role in helping reach these goals.

Moreover, the ability to ensure the cloud meets Europe’s needs and serves Europe’s values is a core part of a new set of European Cloud Principles  Microsoft Vice Chair and President Brad Smith announced in May of this year, after discussions with a number of European partners. 

Supporting the market for renewables 

Using innovative approaches, Microsoft has been demonstrating how datacenters can conserve power, reduce emissions and even contribute energy back to the grid. 

In Finland, waste heat from two new datacenters will contribute to the district heating system that provides warmth to more than 250,000 people in winter. The Microsoft datacenter region in Sweden uses rainwater and outside air to cool servers, while using the heat they produce to keep work areas warm for employees. Also in Sweden, Microsoft is piloting batteries to displace diesel generators as backup systems.  

Microsoft’s datacenters in Ireland use batteries to maintain an uninterruptible power supply. In a collaboration between Microsoft and Enel X, those batteries can provide grid services through an instantaneous interaction with the power grid. On days when wind and/or solar power production is fluctuating, Microsoft’s backup batteries can be used to help maintain a steady flow of energy to power customers. 

That means fossil-fuel burning power plants will be needed less often to maintain steady power, cutting emissions and fuel costs.

“The great thing about the project in Ireland was that those batteries were already there,” says Janous of Microsoft. “What it required was providing that digital layer of intelligence to determine what does the grid need to help balance the frequency on the system? 

“Those assets, which are ubiquitous in datacenters, are all over the world. And it creates a huge opportunity to be able to see the datacenter as something more than a consumer of energy, but also a producer and a partner to grid operators to improve reliability and ultimately the energy transition that we’ve been talking about.” 

Looking ahead 

It is the technology companies’ “work in digitalization, artificial intelligence and information systems that could be potential game-changers in creating the smarter, more flexible energy systems needed to get to net-zero emissions,” write Kamiya and Varro in the IEA analysis.   

Harrison of BloombergNEF also cited the potential for the development of digital tools to help grid operators shift loads during periods of high demand. He says the internet of things (IoT) and artificial intelligence (AI) could help create energy efficiency in a variety of ways.  

AI can be used for everything from smoothing out supply-chain issues to creating more accurate local weather forecasting to helping providers find ways to capture more energy.    

While AI and machine learning will add to demand for cloud computing, Janous notes that those advanced tools are also likely to be essential in solving some of the biggest problems we’re facing. 

“Energy transitions are historically very slow because they involve massive amounts of infrastructure,” he says. “We need close partnerships with grid operators and energy companies in Europe to help them figure out what are the most efficient and fastest ways to accelerate this transition” to renewable energy sources. 

“We need the digital tools that datacenters provide to accelerate that transition.”