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Data Centre Energy Storage: Challenges and Opportunities

Mon 26 Jul 2021

Data centre owners and operators are increasingly focused on sustainable power sources, like wind, solar, and hydro technologies, which contribute to progress toward environmental objectives.

Google has committed to a goal of reaching 24/7 carbon-neutrality by 2030; Amazon Web Services (AWS) is looking to reach 80% renewable energy in data centres by 2024 and 100% by 2030, and Microsoft wants to reach 70% renewables by 2023.

Read more: Sustainability Front and Centre at Data Centre World Virtual 2021

While powering the data centre with renewable energy is a common goal in the industry, there are some challenges to overcome before it can be achieved. Even though data centres share a commitment to using renewable power, they must balance green goals with the need to provide customers with uninterrupted services. Natural power sources fluctuate, sparking a necessity for reliable, affordable energy storage systems.

The data centre industry has yet to agree on a standard form of energy storage for renewables. However, as we get closer to the dates when objectives must be reached and data centres take increased action to reach environmental goals, a great opportunity is arising in the area of data centre energy storage.

Challenges to Energy Storage


In order to truly balance environmental goals with service reliability, energy storage technology must reach the required standards of performance. Data centre owners and operators must be certain that energy storage systems will work: holding power in reserve until it is needed, and releasing it as expected. Modelling and simulation can help to demonstrate performance, but the surest path to industry acceptance is real-world adoption by industry leaders.


According to the U.S. Department of Energy, energy storage technology accounts for 30-40% of the total cost of an energy system. Some energy storage technologies have performed to the required standard, but have proven too expensive for widespread adoption. A large part of creating an industry standard for renewable energy storage in data centres will be finding a solution that is cost-effective – for adoption, implementation, and operation.


While regulations have largely been focused on encouraging companies to focus on green initiatives, an uncertain regulatory environment has actually restricted advancement in energy storage in a significant way. An uncertain regulatory environment has created a perception of risk around large-scale investment in energy storage, which has impeded technological advancement and adoption.


Creating a viable system of data centre energy storage requires cross-industry cooperation – between data centre owners and operators, utility businesses and agencies, public safety services, regulators, and insurers.

At the recent Energy Storage Summit 2021, Chloe Lianos, head of energy storage innovation at the UK’s Department for BEIS, stated, “There’s going to be a jigsaw of a lot of different technologies coming together.” She added that it will be difficult to predict the mix that will eventually become the standard because of existing uncertainties.


Market Size

The global market for data centre energy storage is expected to grow at a CAGR of 6.3% from 2020-2027; reaching 1.8 billion USD. The growth in the market will be driven by increased attention to environmental initiatives, the adoption of data-intensive technologies such as AI and IoT, and the increase of data centre facilities located in markets with less reliable power grids.

Types of Renewable Energy Storage

Hydrogen Fuel Cells

The efficacy of using hydrogen fuel cells to provide backup power in the data centre is being explored in the R&D departments of a number of industry leaders. Hydrogen fuel cells are used to store fuel generated from the separation of hydrogen and oxygen, rather than from alternate energy sources. This makes them more limited in use than other types of energy storage, which can be used to keep excess power from other renewable sources in reserve.

Lithium-Ion Batteries

Until quite recently, lithium-ion batteries were considered largely inappropriate for data centre usage. The quality and standards for lithium-ion batteries varied greatly between manufacturers they were unstable, unreliable, unsafe. However, as their use increased in consumer electronics, electric vehicles, and smartphones, advancements were made to improve the reliability and stability of lithium-ion batteries.

As a result, analysts from Bloomberg have predicted that lithium-ion batteries will account for 35% of data centre UPS energy storage by 2025 – up from just 1% in 2016.

A Google data centre in St. Ghislain, Belgium, demonstrated the potential of lithium-ion batteries for use as backup energy storage, replacing diesel generators. Using only lithium-ion batteries as backup, Google hoped to demonstrate to other companies that batteries have advanced enough to be a viable replacement for energy storage and that this type of energy storage can help balance the local electric grid. Additionally, by integrating lithium-ion batteries into the Google global portfolio, Google hopes to signal key stakeholders, including investors, that batteries are a mature, scalable, investment-ready product.

Energy consumption has been a primary concern of data centres – and the local power grids that they draw from – for a time. In fact, recently the Irish government stepped in to reprioritize the data centres connecting to the national grid to help balance supply and demand.

The ability to store excess power, and make it available for backup or during supply fluctuations, is critical for the future of data centres. Energy storage systems can help to improve the reliability of services, balancing demands on the local power grid and improving the overall utility of renewable energy sources. As data centres begin to penetrate rural areas and countries with less reliable infrastructure, sustainable energy storage will become more important than ever. On the cusp of a breakthrough, many opportunities exist for data centres to reach environmental goals and for investors to support this change.


environmental goals supply and demand sustainable energy
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