How data centers can green the grid and lead the green transition by example

Rasmus Lildholt Kjær, CEO at Better Energy, shares his views on hyperscale data centers’ contribution to the green energy mix in Denmark

Originally released: Danish Data Center Market Outlook 2020

The world is in the midst of a climate crisis and change is therefore a necessity. We must significantly reduce our CO2 emissions by 2030 to avoid a climate disaster. CO2 emissions come primarily from fossil fuels and the transition to renewable energy is crucial.

The transition to renewable energy can only be achieved by adding new renewable energy to the energy system. Only by adding new renewable energy can fossil fuels be phased out. Until now, the supply of renewable energy has been driven by government support. The granting of this support has had the effect of ‘additionality’, the fact that new renewable energy plants have been built and new renewable energy has been added to the energy supply. Government support has had the effect of adding new renewable energy.

At the same time, the renewable energy supplied through government support has received certificates of origin which have been used by energy suppliers to document the sale of renewable energy to their consumers. However, this sale of renewable energy and certificates of origin has had no effect of ‘additionality’. Two parties are simply trading in pre-existing renewable energy. It has had no effect of increasing the supply of new renewable energy.

When consumers buy existing renewable energy for their electricity supply, they just take it away from other consumers, and the net result is the same. New renewable energy is not added, and CO2 emissions are not reduced. They just use the renewable energy that taxpayers have already paid to add through government support.

An interesting and innovative aspect of the power purchase agreement (PPA) between Better Energy and Google for the 50 MW Næstved solar plant is that it is the first Danish PPA to have a 100% ‘additionality’ effect. The solar plant does not receive government support, and it is the PPA alone that has had the effect of ‘additionality’. It is therefore the PPA that has had the effect of increasing the supply of new renewable energy. In addition, it was also was critical to the Google PPA that the new solar power plant was located in Denmark so that the positive additionality effect goes into the same country.

The Google PPA is a game changer in the renewable energy transition. Consumers of energy can now drive the transition to renewable energy. Going forward, data centers and other major energy consumers can make a world of difference by choosing to be supplied with new renewable energy that does not receive government support.

Hyperscalers can now demonstrate real climate action by sourcing new subsidy-free green power that helps, not hinders, progress towards national climate goals. Going green today is no longer an obstacle, but an opportunity – a rare chance to radically change the way society is powered.