A new report from the Cool-Data project sheds light on the possibilities for utilizing the flexibility and excess heat from data centers in Denmark. DTU's researchers answer five questions about how the energy can be used in the district heating network.
In the Cool-Data project, a team of researchers from DTU (DTU Compute, DTU Construct, and DTU Management) work with four companies and a utility company to make the cooling processes as climate-friendly as possible small and medium-sized data centers (up to 500 servers). It is done through, among other things, AI-based control, where the excess heat must be sent to the district heating network or used internally.
In a new report, Cool-Data reviews the rules and incentives influencing Danish data centers' interest in utilizing flexibility and waste heat.
The EU desires to connect data centers to the surrounding district heating networks to use the excess heat.
The researchers Juan Jesús Jerez Monsalves, Claire Bergaentzlé, Martijn Backer, and Dominik Franjo Dominkovic from DTU have answered five questions about how the experiences can contribute to the EU's desire.
Small and medium-sized data centers have significant advantages in providing surplus heat for district heating. The main advantage is their location: they are usually close to existing networks, significantly reducing potential investments in network expansions and transmission losses. It can therefore be good business for them to pass on the excess heat.
In addition, surplus heat from small data centers can be used in district heating networks that only cover a small area without the district heating company running the risk of basing a significant part of its supply on a single plant. Finally, data centers with a heating output of less than 250 kW are exempt from price regulation, which gives greater flexibility when negotiating with the district heating company.
The importance of integrating smaller data centers into the energy system is also reflected in a revision of the EU's Energy Efficiency Directive, which is part of the Fit-for-55 package. The audit initially required new data centers larger than 1 MW to carry out a cost-benefit analysis for the utilization of excess heat, including its use in district heating systems. However, an amendment has recently been approved to include data centers larger than 100 kW, highlighting the potential contribution of even smaller data centers to European energy security.
Another even more significant advantage of small and medium-sized data centers is that they can often use their waste heat directly in the business building(s) where it is located. This is even more efficient than using the surplus heat in a district heating network. In contrast to large data centers, they are often found in the commercial buildings where the company is located.
Until 2021, the scheme regulating the sale of excess heat inhibited the desire of small suppliers to participate because they were subject to the same accounting rules and price control requirements as district heating companies. The requirements made it so administratively burdensome and expensive that small suppliers chose not to participate. In addition, the previous tax on the utilization of excess heat meant that there were only a few cases where it could pay off financially.
The new regulation, which came into force in January 2022, has transferred the administrative burden to the district heating companies, who have the tools and expertise to handle it. At the same time, the tax on waste heat produced from electricity has been removed, effectively removing the data centers' most important barriers to providing heat.
Since the legislative changes are relatively new, it will take time before the data centers get up and running. Furthermore, practices need to be established for who has to handle the surplus heat, especially if it is necessary to raise the temperature of the surplus heat using heat pumps. It is still being determined whether the operator must be the data center owner or the district heating company and who must invest in heat pumps.
Technically, air-cooled data centers - the most common type of data center cooling systems - require heat pumps to raise the temperature of the surplus heat to the district heating network. The lower the temperature difference, the less power the heat pumps use.
Therefore, the economics of this type of project is determined by three main factors: electricity prices, heat pump costs, and connection to the district heating network (and its expansion).
Since the current regulation sets a price ceiling on surplus heat, data centers cannot sell heat to district heating companies whose production costs exceed the ceiling.
The current rules require greater certainty in the calculation method that determines the price ceiling. The Danish Energy Agency set the 2022 ceiling at DKK 77/Gigajoule, considering the heat production costs from biomass boilers and heat pumps. Potential changes to this method and the high electricity prices seen this year bring considerable uncertainty about the level of the price cap in the coming years, increasing the risks for waste heat recovery projects.
Building new data centers will benefit from early cooperation between engineers and developers, district heating companies, and authorities so that doubts can be clarified before proceeding and seeking permission to integrate the data center into the surrounding supply network. This will make it possible to factor in potential income from the sale of surplus heat and adapt the cooling system's structure to the task right from the start because once the data center is built, it will usually be too expensive to retrofit equipment.
The mandatory cost-benefit analysis, currently being discussed in the European Parliament, will make project developers aware of the potential benefits of selling excess heat. However, the local conditions will ultimately affect the possibilities and, thus, the interest in such a solution.
The industry is greatly interested, especially since the EU is preparing a regulation on the sale of excess heat. Industry partners have shown much interest in participating in various tests and cases.
On the other hand, the data center industry is conservative, where security and reliability have always been a top priority.
Because of the latter, data centers are usually keen to use only those technologies and systems that have passed many tests in the real world. This is the main reason the roll-out of solutions integrating excess heat into the district heating network is slow, even if the technical options have been developed and are ready for use.
Data centers use electricity to operate their IT equipment and cool their servers, while the cooling produces a lot of heat. Cool-Data works to make the cooling processes as climate-friendly as possible through, among other things, AI-based control, where the excess heat must be sent to the district heating network or used internally.
Cool-Data is supported by the Innovationsfonden from 1.9.2020-31/08/2023.
The goal is to create growth and export opportunities by developing a smart cooling solution that can be used immediately.
Partners: DTU Compute, DTU Byg, DTU Management, EnergyCool, GEV, PURIX, Naviair, Center Denmark.