Data centers and other types of critical infrastructure have traditionally been relatively passive consumers of energy rather than active participants in the grid.
True, most large facilities have energy generation of some kind but these are used to maintain availability during a grid outage rather than as a primary energy source.
There are indications however that this relationship is beginning to shift. There have been previous efforts to encourage more critical facilities to use batteries or generators to take part in so-called demand/response with the grid – reducing grid energy use or feeding energy in – but uptake has been relatively modest to date.
But the emergence of new technologies to support so-called Critical Energy (CE) services, and a continually shifting energy landscape, could see more participation in these kinds of schemes in the future. This could lead to the emergence of more so-called ‘energy prosumers’ that actively manage an interactive and transactive relationship with the energy grid.
Critical Energy Landscape
Critical energy services can be broadly broken into two key areas:
- Front of the meter (FTM): For example, deploying centralised battery energy storage at utility scale to help manage the impact of intermittent renewables.
- Behind the meter (BTM): Using diesel generators, UPS batteries or other local generation technology to provide critical infrastructure operators with autonomy from the grid or to feed energy into the grid.
As these areas are quite different markets with different stakeholders, let’s focus on the BTM scenario.
According to an online poll conducted in our recent webcast on the topic, approximately 68 percent of respondents thought the major growth in energy storage system applications in 2019 would happen in BTM services.
Some of the main activities in BTM services include:
- Demand/response services
- Energy cost optimisation
- Microgrid integration
There are specific organisations that could benefit from involvement in BTM CE services including data centers and other operators of large critical infrastructure that are able to participate in the energy market.
According to research from energy research consultants Navigant Research, the US, Germany, Japan, Australia and South Korea will be the leading markets for adoption of BTM services. However, the UK is also emerging as strong near-term market for distributed energy storage.
However, it’s important to point out that access to energy markets is often not straightforward and usually requires navigating complex regulations as well complex contract negotiations. Regulation and adoption also differs between regions.
BTM: Aggregators vs Self-Operated
Looking more deeply into BTM services, there are two main entry points for organisations:
- Aggregators. These are effectively companies that allow the participation of small energy storage units into the electricity market. The electricity market is not that readily accessible especially for smaller companies. Aggregators bring together multiple smaller sources of energy storage so they can provide support at the scale required by utilities. The aggregator can control the state of battery-enabled equipment such as uninterruptible power supplies.
- Self-operated. In this scenario the customer deals directly with a national grid operator. Technically it is more challenging but the customer retains all the associated revenues. However, outside help is still probably required from consultancies and system designers etc. The other complication is that the customer must manage contracts and tenders directly some of which need to be renegotiated every six months or even more frequently – perhaps even daily.
Critical Infrastructure Solutions for ‘Prosumers’: Next generation UPS
So, what are the actual technologies that will enable operators to participate in Critical Energy Services? A good example is the so-called next generation UPS. The primary mission of any uninterruptible power supply is to protect the load and provide optimal power quality. But given the challenges and opportunities around next generation energy grids, we think there is an opportunity to develop next-generation UPS services. These systems will still provide back-up and power quality but are also capable of:
- Demand management
- Energy arbitrage
- Grid services
When an organisation like Vertiv goes out to our customers to suggest adopting a grid support enabled UPS, we obviously must focus on the capacity of the battery bank in terms of kWh. Our customers have been asking us to reduce the kWhs stored in the battery with some requiring as little as five minutes or less of battery storage time. But to take advantage of these new critical energy services customers will often have to make a more strategic and long-term investment in batteries. The advantage however is that it is an incremental investment. We can talk to our customers about developing a business case with incremental costs versus incremental revenues.
A grid-support enabled uninterruptible power supply is capable of some neat tricks. For example, peak shaving or time-shifting of energy. The batteries are charged during the early hours when demand is low, but during peak demand the batteries can be discharged to reduce the overall load on the grid.
There are advantages for this approach for the customer and the grid operator. Providing that the customer is paying more for energy during the day – especially during the peak – there should be a reduction in the overall bill. The advantage for the grid is to smooth out the load profile during the day.
Next Generation Uninterruptible Power Supplies - Risks vs Rewards
It’s also critical to point out that all this activity does not impact, or threaten in any way, the primary mission of the uninterruptible power supply, which is to protect the load. The capacity used for grid services is in addition to the core energy redundancy required to protect the load. We should make sure that we always have sufficient kWhs of UPS battery capacity to back-up the load in case of any interruption to the grid supply. This can be hardwired within the UPS control or through the external site controller.
So, if the risks to the load can be mitigated, what are the actual rewards from investing in grid support services? The table below gives the details of a real-life example from a facility in Ireland.
Reference data centre - Ireland
UPS only (Euros 000s)
UPS + Diesel generators
20 MW with 5 min autonomy (N=2)
Addressable load 9.6MW
UPS energy 320 kWh
Total site revenues p.a. Euros
This is a market in evolution so revenues are likely to change over time. But even for a large facility these are numbers that start to be interesting.
For example, for colocation data center operators that have a business model where competitiveness in terms of price per square meter is key then this type of additional revenues could be quite attractive. This is provided of course that the primary mission of protecting the load is met. To ensure that this is the case, Vertiv looks to back-up the service-level agreements (SLAs) that commercial data center operators have with their customers if they choose to engage in these kinds of grid-energy services.
Lithium Ion batteries
Lithium Ion batteries are becoming very interesting for applications such as distributed energy storage or even utility scale storage. There are number of reasons for this:
- Long levels of cycles
- High efficiency
- High energy density
- Ability to discharge without affecting battery life
- Quick charge and discharge
- Lower pricing compared to the past.
For peak shaving or time shifting, the ability to discharge and charge over a fixed period is critical. The price per kWh has dropped over recent years and prices are expected to continue to come down.
New ways to monetise existing assets - such as UPS and generators - are emerging that also promise to maintain the primary mission of resiliency equipment to protect the load. These kinds of services are becoming key as more intermittent renewables continue to challenge conventional energy generation. Evening out this renewable supply will require new energy storage services both in front of the meter and behind. Operators of data centers and other types of critical infrastructure will have a key role to play in this shifting energy landscape which will present new ways to generate revenue and lower costs.
Watch the webcast “How to Earn Revenue from Stored Power in UPS Systems and Generators for Grid Services?” – June 2018: https://www.vertivco.com/en-emea/about/news-and-insights/events/webcast-how-to-earn-revenue-from-stored-power-in--ups-systems-and-generators-for-grid-services/