Large US tech giants are building data centres in Denmark to power their operations with high levels of renewable energy, which is available on tap from the country’s grid. The investments represent a massive boost to the Danish economy, but meeting the new energy demand will push up electricity consumption, risks diluting the renewables content of the country’s energy mix, and taxpayers may find themselves footing the bill for the capital costs. The potential to funnel waste heat from the centres into local district heating networks is seen as small compensation

When the Danish Energy Agency in April 2018 presented its scenario forecasts for 2030, eyebrows were raised. In its frozen policy scenario, which describes expected developments assuming no new policies, the share of renewables in Denmark’s energy mix declines to 39.8% by 2030, well below the government’s goal of at least 50%. The agency shows the share of renewable energy increasing from now until 2021, when it peaks at 43.6% before declining. Renewables growth, according to this particular scenario, would fail to keep pace with a huge increase in electricity consumption, primarily driven by hyper scale data centres — big buildings housing thousands of power-hungry servers to provide cloud computing services and store vast amounts of information from every corner of the world. Data centres may account for 20% of Denmark’s electricity consumption by 2030. The country’s Energy Act, agreed on June 29, 2018 following multi-party negotiations and after the agency’s scenarios were published, improves the picture a little. It includes construction of three new offshore wind farms with a total capacity of 2.4 gigawatts, meaning the energy required by the first three date centres “are covered,” says Mikkel Sørensen from the Danish Energy Agency. More than three centres, however, are almost certain to appear. In principle, data centres can be placed anywhere, but some parameters weigh more than others. “There is no doubt Denmark is an attractive country to place a data centre,” says John Nordbo, climate advisor at CARE Denmark, an NGO. “It has a well-functioning grid, a high level of energy security and low prices.” It also has the right ambient weather conditions to keep servers in their comfort zone. Facebook, which is building a data centre in Odense, Denmark’s third largest city, agrees. “Our location in Odense offers excellent access to fibre [optic cables] and a robust electric grid with an abundance of renewable resources,” says the company. “A strong pool of talent for construction and operations staff, and a great set of community partners who have helped us move forward quickly with our project,” were also assets, it adds.

High consumption

The Danish Energy Agency tasked COWI, a consulting group, to analyse the effects of the large data centres being built, or expected to be built, in Denmark in the coming years. COWI forecasts the construction of six data centres in the country by 2030, rising to nine in 2040, with a total electricity consumption of seven terawatt hours (TWh) by 2030 and 11.4 TWh in 2040, the equivalent of 33% of Denmark’s total electricity consumption that year. “The scenario includes a rather significant level of uncertainty because it is new consumption, but it is a good bet,” says Sørensen. Martin Lidegaard, member of parliament for the Danish Social-Liberal Party and former energy and climate minister, believes big data centres have potential branding value for Denmark and create new jobs, not least in the building phase. He would, however, like to see the IT giants contribute more economically. “The use of digital media will go on rising and so will the related energy consumption,” says Lidegaard. “As a rule it is better if this is covered by renewable energy for the sake of the climate. In this sense, the data centres are not a problem. But for the nation of Denmark, there seems to be little gain and that bothers me.” The question of who should pay for connecting the planned offshore wind farms with the mainland was a key question during negotiations between political parties over the new energy law, says Lidegaard. “We would have preferred to see the costs paid for via electricity bills, the way we’ve always done. That way two-thirds would have been paid by businesses, including the new data centres, but the government insisted the costs were to be absorbed by the national budget.” In other words, the taxpayer will be left to foot the bill. “It is costly to build offshore wind farms,” says Nordbo. “Perhaps some sort of upfront payment could be a solution.” Lidegaard says he has urged the government to find out if the IT giants are interested in a direct financial involvement in the coming offshore wind development. “It is good branding for them and it is a pretty good investment, too. Of course, they would have to pay for the cables to shore but that’s the least they can do.” Denmark’s Transmission System Operator, Energinet.dk, says the data centres will pay the same price for their electricity as any other large company being connected directly to the grid, including meeting any extraordinary costs Energinet.dk may incur on their behalf, such as added transformer station capacity, cables to connect the data centres to the grid, and any specific research work.

The use of digital media will go on rising and so will the related energy consumption. As a rule it is better if this is covered by renewable energy for the sake of the climate.

Waste heat

One way Denmark could benefit from the data centres is by recovering waste heat from them, which can be recycled and used by the community. “This is something we must explore,” says Lidegaard. Whether creating a closed loop heating system would be profitable requires more detailed analysis, COWI says in its report. Facebook has agreed a partnership with the municipality-owned district heating company in Odense to use waste heat from its data centre once it is online in 2020. “This innovative project will reduce the amount of heat produced from the combustion of coal and fossil fuels and we believe it will help the green transition in Odense and beyond,” says Facebook. The company also recently signed a long-term power purchase agreement (PPA) to receive 100% of the energy from three new wind projects in Norway. “The projects add 294 megawatts (MW) of new wind capacity to the grid and market that supplies our Odense and Luleaa (Sweden) data centres,” states Facebook. “The 15-year PPA term provides the long-term financial certainty necessary for the projects to be financed, constructed and operated.” Apple is building two data centres in Denmark, its first on European soil. One is located in Foulum outside the city of Viborg in the centre of the Jutland peninsula, which makes up the windy west of the country. The centre was announced in 2015 and the construction of the first of potentially six vast buildings to house thousands of servers is now underway and should be complete in the first half of 2019. The second centre will be located in Kassø near Aabenraa in southern Jutland. It was announced in the summer of 2017 and construction is expected to begin in the second half of 2018. Further giant data repositories and additional data warehouse capacity may be added later as the need arises. To begin with the data centres will require access to 30 MW of power generating capacity, Apple says. To provide the extra capacity, the company will support the building of two new wind farms in Denmark by committing to buy the output through a PPA. It says it is committed to sourcing 100% renewable electricity. Apple is aware of the potential for its centres to recover waste heat, but says the process is complex and reliant on whether local utilities can make a commercial case for it. Google has also acquired two sites in Denmark, but has not decided yet whether to build data centres on them.

Writer: Karin Jensen