Grid constraints risk delaying data centre growth: report

January 15, 2025 07:09 AM

AI-generated image of sustainability and green power in data centres

Regional grid constraints are creating bottlenecks for new data centre projects, but a new report from Schneider Electric suggests alternative energy solutions and stronger collaboration with utility firms could pave the way forward.

Published during the World Economic Forum in Davos, Switzerland, the report warns that surging energy demands — set to exceed 1,000 TWh by 2026, equivalent to Japan's total electricity consumption, are hampering some regional grids.

Schneider Electric’s report suggests that power sustainability and upstream power infrastructure need to be addressed to support the influx of data centres.

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“Sustainability and economic growth can go hand-in-hand,” says Olivier Blum, CEO of Schneider Electric. “By forging strategic partnerships, companies can leverage innovation and technology at hand to increase their performance while delivering meaningful impacts and a better future for all.”

Despite a “perfect storm” of factors exhausting grid capacity in some regions, Schneider Electric’s report suggests it is possible to scale infrastructure to support emerging workloads like AI while also ensuring smart and sustainable management.

The report emphasised the importance of rethinking site selection strategies, encouraging operators to prioritise locations with sufficient power availability and renewable energy potential.

Schneider Electric recommends that data centre developers work closely with utility companies early in the planning process to streamline permitting and align on infrastructure requirements.

“Planning together allows utilities to better prepare for the significant power demands of new data centres to maintain grid stability and minimise the use of more carbon-intensive ‘peaker’ plants,” the report reads

The report also highlighted several alternative energy solutions, such as using microgrids as backup solutions or using hydrotreated vegetable oil (HVO) to power on-site generators.

Schneider Electric also suggest data centre operators should consider on-site alternative prime power sources, such as battery energy storage systems (BESS), fuel cells, and small modular reactors (SMRs) in place of traditional diesel generators.