Powering the #Data Economy

| September 23, 2019

The growth of Europe’s data centres highlights the need for energy in the Fourth Industrial Revolution

Google made headlines this weekend with its commitment of an extra €600 million in 2020 to expand its new “data centre” in Hamina, Finland. Data centres are the infrastructure which underpin cloud computing, making everyday data processing and storage available over the internet instead of on precarious local hard drives. This is Google’s second investment in its Finnish data centre, located in a former paper factory to the east of Helsinki and cooled by the sea. It brings the tech giant’s total stake in European data centre installations to €3 billion.

No doubt celebrating the move will be the European Parliament’s Committee on Industry, Research and Energy (ITRE), which is set to meet this week. Google’s investment is a clear statement of faith in Europe’s digital economy. Meeting Finnish Prime Minister Antti Rinne on Friday, Google’s CEO, Sundar Pichai, called the investment “a significant driver” of “growth and opportunity”.

With the world now living life on the cloud, data centres have fast established themselves as critical infrastructure. According to research from Cisco, global internet traffic has effectively tripled since just 2015. This traffic is showing no signs of reducing. Data flows are poised to double again within the next three years, to some 4.2 zettabytes (that is, 4.2 trillion GB) each year.

As consumers and firms, urban and national economies embrace 5G technology and embed new connections through the Internet of the Things (IoT), the need for data centres will only grow. By 2025, there will be some 5 billion mobile internet users worldwide, up from 3.6 billion last year. The GSM Association, a mobile network operators’ trade body, expects the number of IoT connections to triple to over 25 billion by 2025.

But there is no hiding from the fact that the growth of the digital economy is consuming vast amounts of energy. Already, the International Energy Agency has estimated that data centres account for about 1% of global electricity demand. In the US, each year data centres need more than 90 billion KWh of electricity. That is the equivalent of about 34 large (500 MW) coal-fired power plants. Experts from the University of Leeds have found that data centres’ power consumption effectively doubles every four years.

Considerable advances in energy efficiency are, of course, limiting the pace of power demand growth to a certain extent. The IEA expects energy efficiency to continue to improve over the coming decades. But as new data centres are brought online, demand for energy will nonetheless increase.

The only option left is to add more power to the grid. And so Google has given the ITRE another reason to celebrate this week: a package of 18 new renewable energy deals, of which half the capacity will be located in Europe. The company has boasted of its “biggest energy purchase ever”, with investments in Belgium (92 MW), Denmark (160 MW), Finland (255 MW) and Sweden (286 MW).

The Fourth Industrial Revolution is largely thought of in terms of digital technology. But the data centre surge highlights just how essential energy remains – and will remain – to its success.

It is not just the tech firms that have grasped the relationship between energy and innovation. The energy sector itself is fast acknowledging it too. The world’s premier oil & gas event, for example – the upcoming Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) – will soon welcome Google’s own former Vice President, Sebastian Thrun, to speak about the digitalisation of energy. The conference’s host, the Abu Dhabi National Oil Company (ADNOC), has already embarked on a strategy it calls “Oil & Gas 4.0”, in order to explore the nexus of power and digital in a world increasingly shaped by Big Data and the IoT. Indeed, ADNOC’s own chief executive, Dr Sultan Ahmed Al Jaber, has called for the energy sector to “rethink how it adopts and applies technology”.

The IEA has global energy demand growing by around 25% over the next two decades. Another 2.5 billion people moving to urban areas by 2050, along with two thirds of the global population entering the middle class, will create immense pressure not only for cloud networking and new data flows, but also for the power that supports these new technologies.

The ITRE will have much to discuss this week. It should keep in mind that the Fourth Industrial Revolution will rely as much on energy as on tech.

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