The surge in gas-powered data centers: Unearthing the underlying factors
In the rapidly evolving world of data centers, natural gas is increasingly being considered as a power source. This shift is driven by several factors, including its ease of transport and lower emissions compared to other fossil fuels.
However, experts caution that the current focus on natural gas is not a sustainable long-term solution for powering data centers. Natural gas may not be subject to the same level of regulatory scrutiny as other power sources, but its scalability limitations make it unsuitable for hyperscalers, who would find it impractical to have a gas generator per rack.
Remote regions with poor grid access but pipeline availability are benefiting from using gas to bootstrap datacenter operations. These areas often have stranded natural gas resources, such as flared gas from oil fields, making gas a viable temporary solution. In disaster-prone areas, gas offers a more stable fuel source than diesel, which can be hard to deliver post-disaster.
Operators are adopting on-site generation to bypass long connection queues and speed up project timelines. Some are opting for 'behind the meter' primary generation, which allows them to generate their own power and sell excess back to the grid. In some cases, mobile natural gas generators may be allowed on site for a certain period of time, even in parking lots or next to buildings.
Companies like Microsoft, Google, and Amazon have ordered natural gas generators in recent years to power their data centers. xAI, for instance, uses natural gas generators at its Colossus data center in Memphis, USA, and recently purchased a former natural gas power plant for Colossus 2. However, critics claim that xAI doubled the number of turbines in use at Colossus without the required permits.
Facilities equipped with carbon capture and sequestration technology can potentially meet ESG goals, but this adds significant cost and complexity. Once the push for AI slows down and new energy infrastructure is built, the demand for natural gas could wind down.
As the industry grapples with the high energy consumption of generative AI, exceeding the capacity of regional grids, data center operators are facing a challenge. They are already planning for flexibility by shifting loads, curtailing activities during peak demand, and investing in cleaner alternatives.
Choosing natural gas risks locking the industry into a slower decarbonization path and may be seen as a form of greenwashing by critics. As the industry continues to evolve, the focus will likely shift towards renewable energy sources and cleaner technologies to meet the growing power needs of data centers in a sustainable and environmentally friendly manner.
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