Data centres are evolving beyond their traditional role as passive energy consumers and instead becoming embedded in the broader energy ecosystem. As concerns mount over grid instability and the decentralisation of energy, the data centre industry is having to come up with new ways to be ‘good energy citizens’ and define a future that is more sustainable by design.
Europe’s energy system is currently undergoing significant changes. With the grid struggling with rising demand and AI consuming vast amounts of power, the onus is on data centres to act.
“Grids that traditionally were made up of fewer, larger generators now have millions of assets contributing to them,” said Katie Davies, head of energy and infrastructure policy at techUK, at Datacloud Energy Europe last week.
“Alongside decarbonisation, that brings system challenges around the intermittency of renewables and grid congestion.”
Confronting grid flexibility challenges
Grid congestion is a significant problem across Europe, as buildouts have not kept pace with demand and the rapid expansion of AI infrastructure. This is placing overwhelming pressures on ageing infrastructure and, with data centre electricity demand expected to double, operators and policymakers know they need to work together to keep everything running smoothly.
“In the last couple of years, I’ve seen a shift of focus. Now, when we talk about flexibility and demand response, there is a lot of focus on industrials,” shared Gilda Amorosi, senior programme manager at Microsoft. “However, as a sector, we are at a crossroads.”
She added: “[We need] an inclusive definition of flexibility that creates a menu from which operators can choose, not a mandated approach.”
The concept of on-demand flexibility is not new, but data centres haven’t traditionally been involved in it. At Datacloud Energy Europe, conversations very much turned to how the industry should be more active in supporting the grid.
“What we see with hyperscalers is that grid operators are asking them to disconnect from the grid on the day-ahead market with around two hours’ notice,” said Francesco Ciccola, regional sales director for Europe at Mitsubishi Power Aero LLC. “When that disconnection occurs, they still need power inside the data centre.”
The answer, he argued, lies in a combination of technologies – gas turbines capable of coming online in under ten minutes, battery storage for frequency response and AI-enabled system management – rather than any single “silver bullet”. However, he described himself as ‘clear-eyed’ about the limits of what can realistically be expected moving forward.
“It’s extremely ambitious to expect that, in the short term, we can have a backup or storage solution on site that can cover the full capacity and power needs of the data centre,” he added, given that backup diesel generators are not a sustainable solution and long-duration battery storage involves high cost.
For Neal Kalita, senior director of global power and energy at NTT Global Data Centres, flexibility comes with honesty. His company has participated in grid flexibility programmes in the US, but he said the experience wasn’t the most positive.
“We supported the grid during storm events and one of the things we noticed was that our scope one emissions went through the roof because of the diesel generation involved,” he explained. “Unfortunately, there was no mechanism to account for that or provide a penalty offset.”
Build the energy ecosystem of the future
Looking ahead, some data centre operators are pursuing an ambitious vision: becoming genuine nodes in a local energy ecosystem, generating, storing and redistributing energy in ways that benefit the communities around them.
Kalita described an initiative underway at NTT’s largest site in Germany that illustrates what this can look like in practice. He said: “We’re embracing an offshore wind farm being developed to the east of our site, connecting it up with a gas connection that we already have, fuel cells, and then combining all of that with our data centre load.”
He explained the plan involves an on-site electrolyser powered by behind-the-meter wind energy, producing green hydrogen to feed back through fuel cells. It then distributes the resulting heat to the local municipal network.
“They can take it not just one or two kilometres, but potentially 50 kilometres, because the quality and volume of the heat is significant,” he said. “That is the kind of integrated energy ecosystem we can actually create.”
However, it remains an ambitious model and Kalita acknowledged that green hydrogen at scale remains some way off.
“There isn’t a commercially available electrolyser on the market that can produce hydrogen at a truly industrial scale, and that is extraordinary,” he said. “No planet, no data centre, no digital. Simple as that.”
Across Europe, locations like the Nordics are able to provide a natural ground for this type of integrated approach. Ciccola advocated for the positive potential of Northern Europe, given its vast land, favourable weather, cold temperatures and renewable energy potential.
“That is potentially the perfect place to have a greater concentration of sustainable data centres,” he added.
As Europe seeks to be more competitive in the digital infrastructure space, ensuring grid security and stability is a vital mission. The defining question is whether regulators, policymakers, data centre developers and grid operators can align to turn ambition into infrastructure.
“We will never be able to compete with the Americans or Chinese on scale alone, but what we do have is an integrated grid,” Kalita argued.
“A continent that develops digital infrastructure without destroying the planet will not just have a competitive edge – it will have a moral one.”
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