What’s the issue?
An increasing number of data centers are being constructed across the country. These data centers have varying power requirements, with the largest facilities requiring well over 100 MW in a single location.
Why does it matter?
Data centers provide a critical service to almost every industry and downtime can have significant consequences.
What’s our view?
The electric power demand and extensive reliability requirements for data centers has emerged as a significant opportunity for natural gas.
An increasing number of data centers are being constructed across the country. These facilities have varying power requirements; the largest require well over 100 megawatts (MW) in a single location. Data centers provide a critical service to almost every industry and downtime can have significant consequences.
The electric power demand and extensive reliability requirements for data centers has emerged as a significant opportunity for natural gas.
What Is a Data Center?
At a high level, data centers are the physical facilities that house computer systems and associated components for various organizations across all industries. These systems are used to store, process, and distribute large amounts of data. They provide the foundation for essential services including healthcare, airline services, and online banking. Many data centers are considered “mission-critical” and outages can have serious, far-reaching consequences.
Extensive Electricity Demand
The International Energy Agency estimates that data centers account for 1-3% of the overall electricity consumption across the globe. It is projected that these facilities will account for more than 4% by 2030 and the demand will only continue to grow. Close to 40% of the world’s data centers are located in the United States. The Berkeley Lab estimates that data centers consumed about 73 billion kilowatthours of electricity in 2020.
As seen in the chart above, if the nation’s data centers were treated as their own state, the group would be in fourth place based on residential electric consumption in 2020. The rapidly increasing number and size of these facilities will likely cause the data center to move up the list into first place in the near future.
Reliability Requirements
The reliability requirements for new and existing data centers can seem extreme. Most of these facilities operate under service level agreements that are meant to guarantee no more than an established threshold of service interruptions in a given calendar year. There are different service levels measured by their “uptime,” which is simply the time that the data center is able to provide continuous, uninterrupted service. The lowest have an uptime of 99.671%, guaranteeing no more than 29 hours of potential downtime in a year’s time. The highest, and most expensive, levels achieve 99.9995% uptime, which translates to no more than 26.3 minutes of disruption in a given year. The newest data centers are being built to have an uptime somewhere in the middle of these two, typically targeting an uptime of at least 99.99%. This translates to a maximum potential service disruption of nine hours within a year.
Most large data centers (typically anything over 10 MW) are powered through a utility’s transmission systems. It isn’t uncommon for new facilities to be required to construct and maintain a substation to provide power specifically for the facility. Data centers cannot risk power outages, so many employ redundant reliability. Redundant reliability is simply an equally reliable power source that is able to back up the main power source. In many cases, the alternate power is also supplied by the utility and provided through the same substation as the primary power source.
Some newer data centers have begun to take their power supply into their own hands and are constructing power generation facilities on site. Because they require significant amounts of electricity 24 hours a day, 7 days a week, they cannot rely on intermittent, renewable sources of power. A lot of these facilities are relying on natural gas to guarantee their electricity supply and are looking to bring it directly to their physical locations.
Identifying Opportunities
We are able to leverage our data scraping capabilities in conjunction with geospatial analysis to map the location of existing and potential data centers across the country and overlay pipeline footprints to identify commercial opportunities for our midstream customers.
In the map above, we have identified 100 potential data centers that are within 10 miles of this pipeline. In addition to the physical location of these facilities, we also acquire data related to their operators and developers.