A new study by WePower, the blockchain-enabled renewable-energy marketplace for commercial and industrial energy users, finds that the Australian data-centre sector accounts for more than 4% of national energy consumption — it’s usage is second only to the resources sector — and that contracting for renewable energy can reduce data centre energy bills by between 30% and 40% while meeting requirements for reliable 24/7 power supply.
Some 50,000 data centres are registered in Australia, and energy is their single largest operational cost, according to the report Data Centres: A guide to sustainable energy procurement.
Report author, Harley Tempest, Head of Sales at WePower, tells pv magazine that his data-centre clients use anywhere from 4 to 160 gigawatt hours of electricity per annum, and that consistency of supply is vital to meeting their clients’ data-storage and processing needs.
An added complication is that data centres typically bill end customers for a share of energy use, reconciling these accounts on a monthly basis. Seasonal variability of renewable energy prices can result in “increased complexity for billing systems, pressure from investors and billing confusion translating to a poor customer experience,” writes Tempest.
At the same time, he says, “There’s a huge push from the market for data centres to go green.”
WePower’s Data Centres guide was envisaged to identify the particular challenges facing the sector when procuring renewable energy, to inform executives of the risks and requirements, and to propose solutions that enable their businesses to have “a very impressive positive impact to the environment”, says Tempest.
Augmenting solar for smooth 24/7 energy supply
“One of the misconceptions,” he says, is that solar can’t meet the 24/7 demands of data centres, and to a degree that’s true,” but by making diversified energy purchases across renewable technologies, data centres can acquire energy portfolios that reflect their usage.
If the idea of signing just one direct PPA with a single renewable generator is hard enough for any but the largest companies to integrate with their company procurement and accounting requirements, contracting with multiple suppliers in order to mitigate risk and meet their energy profile has proved beyond the resources of most data centres.
WePower’s platform and processes have been developed to simplify and provide transparency in all aspects of contracting renewable energy: for example, it has formulated a digitised, standard form of agreement (SFOA) in consultation with the legal profession, which underlies all transactions on the platform, reducing costs and complexities for the consumer. It means, writes Tempest in the report, that “The learning incurred on the initial transaction is effectively amortised over all subsequent transactions.”
On WePower, energy purchasers directly directly connect with generators, some of which are already generating into the National Electricity Market (NEM); other generators use PPAs to secure finance from purchasers to develop their solar or wind farms, and the PPA is activated when the generator is built, connected to the grid and begins supplying energy; and some provide renewable energy through traditional electricity retailers.
Self serve, but with guidance
The WePower platform is designed to be a self-serve marketplace, where energy buyers bid for energy contracts, build a portfolio of energy supply and then, because every unit of energy on the platform is tokenised using blockchain technology, are also able to trade their commercial energy agreements, in part or in full.
In theory, Tempest says, a client can be set up to purchase and trade energy on WePower within 24 hours — “the learning curve is absolutely minimal”.
In practice, the typical journey from considering renewable PPAs to bidding for energy contracts — a process that has otherwise been known to take two-and-a-half to three years — is around three months as clients prefer to start using the WePower platform with guidance from the WePower team.
WePower’s consultants first gain an understanding of the data centre’s drivers — reduction in energy costs and/or traceable green energy procurement; and then load the client’s energy-use data into the WePower system. The resulting energy profile is simply mapped and can be compared with the output of renewable-energy projects and suppliers, enabling choices to be made.
A list of projects from across the NEM
WePower currently has some 20 renewable energy projects trading contracts on its platform; Tempest estimates 95% are solar projects because they are the fastest to develop and start generating; and the remainder are wind and hydro projects.
All available projects can be viewed and compared on a single pane on the platform, allowing procurement teams to register interest and easily manage supply loads.
“The beautiful thing we can do with progressive purchasing,” says Tempest, “is we can contract around 60% of a data centre’s needs with large scale solar farms, then wind or hydro can take them up to about 80%, and from there we’ll look at energy certificates, which we can also trace back to specific projects,” thereby confirming 100% bona fide renewable energy procurement.
Not every data centre has an RE100 commitment. “We encourage people to first look at 10% or 20% of their load, whatever they’re comfortable with, to test out the marketplace,” says Tempest.
After several years of development, WePower is still in its first year of trading, with interest growing from all quarters; Tempest says the resources industry is particularly receptive and he is currently engaged with three coal-mining companies interested in contracting for renewable energy to cover their electricity use — “300 GWh a year is not an uncommon energy use” in mining, he says, and every company has a sustainability goal. Never mind the irony!
Local governments and councils are also attracted, not only by the platform’s low energy and zero transaction costs, but by the fact that WePower’s blockchain technology can trace metered energy use across multiple sites, and reconcile them all with jointly held renewable energy contracts.
“The fact that we do all the heavy lifting solves a lot of people’s problems,” says Tempest.
WePower is supporting the release of its report with a live webinar: How Data Centres in Australia Cut Costs with Green Energy, on Tuesday 2 June, at 11am AEST.