Ambitious ESG targets for digital infrastructure are achievable with the right tools: data centres

Digital infrastructure’s greatest contribution to the transition to a sustainable global economy lies in its critical role as the conduit for other sectors’ sustainability improvements. But it also needs to look at its own direct impacts, risks and opportunities, especially as regulatory requirements and social pressures assert themselves. The most important ESG risks and challenges include: energy intensity and carbon footprint, data privacy and security, impact on local communities, labour practices, as well as governance and reporting.

Sustainability initiatives can serve as a powerful driver of innovation, business transformation and growth. They have the potential to shape evolving markets, driving positive change across the sector.

This article is the third in our series of five, and focuses specifically on data centres. It presents a selection of the sustainability initiatives that can help investors in, and operators of, data centres outperform their peers. All of these articles are based on research from Analysys Mason’s dedicated sustainability research team, and draws on our recent client project work.

The growing array of data centres that underpin the digital economy are collectively responsible for 1–1.5% of global energy consumption. The International Energy Agency estimates that data-centre energy usage is rising fast, from 460TWh in 2022 to over 1000TWh in 2026, and that level of growth is widely expected to continue to 2030 and beyond. The processing of data in a typical facility generates an enormous amount of heat, which needs to be removed for the data centre to maintain safe and efficient operations. The cooling process is notoriously energy intensive, and can consume significant volumes of fresh water. In addition, data centres can take up valuable land that cannot then be used for other purposes, such as food production. The following initiatives are among the most effective for operators seeking to make their digital infrastructure fit for the future:

Improve cooling efficiency: Immersion cooling allows thermal regulation by submerging all IT components into a non-conductive liquid coolant (often oil-based), exploiting the more favourable thermal properties of liquid over gas. A less disruptive technology, direct-to-chip cooling, also offers much improved cooling efficiency relative to standard air conditioning, by improving the heat exchange between chips and the cooling fluid. In terms of how and where to vent the waste heat, natural cooling sources (such as streams fed by meltwater in northern latitudes, or cold sea water elsewhere) can easily absorb substantial amounts of heat. Several projects for larger-scale roll-out of submarine data centres are ongoing.

Harness waste energy: The waste heat produced by the data centre can be viewed as a useful energy resource, and harnessed (for example) for local district heating systems. This is obviously dependent upon the local infrastructure context and collaboration opportunities. Northern European countries are innovators in this area, as the Skygard initiative in Norway shows. Co-locating data centres with vertical or indoor farms could create symbiotic relationships. Indoor farms share similar requirements with data centres: they need a reliable energy source, back-up power, temperature control, fresh water sources and security.

Explore sustainable power sources: Using the cleanest possible energy sources to power a data centre is important, but the detail depends on circumstances. Initial location choices are often driven by market demand or network strategy, but have a strong bearing on the sustainability and resilience of the available grid power. Various options exist for locally generated and stored power, whether as the primary energy source or back-up. Solar and wind power are cost efficient, but intermittent, and so are only a partial solution. Larger facilities may look to geothermal and hydroelectric schemes. Using hydrogen fuel cells for primary power provision decreases reliance on the grid and reduces energy price volatility, but is challenging without direct connection to a hydrogen pipeline. When used as secondary (back-up) energy provision, hydrogen fuel cells typically replace diesel generators, which are expensive and polluting. However, hydrogen power is only as sustainable as the energy used to create dihydrogen gas, which is typically produced through electrolysis, potentially using carbon-intensive power. More sustainable alternatives are emerging, as typified by NorthC’s installation of a carbon-neutral hydrogen-based emergency power supply at its Groningen data centre in the Netherlands – the first of its kind in Europe. We are closely monitoring this innovation to assess the commercial viability of this and similar strategies.

More details on these and other ESG initiatives for data centres – with a focus on the different stakeholders – can be found in this article.

The telecoms industry has always thrived on innovation, and finding creative solutions to technical questions. The increasing pressure to find sustainable paths for growth offers new opportunities for that innovation and creativity.

Analysys Mason is the leader in telecoms-related ESG analysis and consulting. We operate at the nexus of digital infrastructure and sustainability. To speak to one of our experts, get in touch.