According to IEA estimates: The amount of electricity consumed by data centers worldwide reaches about 240-340 billion kWh (larger than the electricity consumed by the entire country of Vietnam). Most centers claim to use 100% electricity from renewable energy through direct power purchase contracts. How do they do it? Summary, analysis and recommendations of experts from Vietnam Energy Magazine.
The figure of 240-340 billion kWh of electricity consumption in 2022 of data centers calculated by the International Energy Agency (IEA) does not include cryptocurrency "mining" centers and electricity consumption for transmission lines. data. Super companies such as Amazon, Google, Apple... that own large data centers always want to use 100% renewable energy to create their "green" brand, because the brand value accounts for a very large proportion. in corporate assets, is vital in attracting public support.
Direct electricity purchase agreement:
To do so, they need direct power purchase agreements (we call them DPPA). But in the US, it is simply PPA (power purchase agreement), or Corporate PPA (corporate power purchase agreement).
In addition to being "green" for buyers, direct power purchase contracts also reduce long-term electricity prices for the buyer and create a solid source of investment for the seller - that is, creating net economic benefits. drug.
A direct power purchase contract is a contract in which the buyer commits to purchasing part or all of the electricity from a power plant (usually a wind power plant, solar power plant, or other forms of renewable energy, even nuclear power).
Maybe it's direct, physically connected, like an internal power plant. For example, Amazon Web Service (AWS)'s Culumus data center in Pennsylvania is planning to sign a 10-year direct purchase contract, with incremental capacity up to 960 MW from the 2,494 MW Susquehanna nuclear power plant. MW is in the same state. Or the power supply company Digital Power Optimization (DPO) buys electricity from wind power plants in Texas to supply directly to a 100 MW data center in Texas in the form of a behind-the-meter connection (center). remains connected to the Texas grid).
It is possible that PPA is a form of virtual purchase and sale, with no direct connection between the power plant and the data center, but all electricity is transmitted through the state's centralized power grid, or the power district (some states in the US connect connected to a common power grid, some other states have independent power grids). In a virtual purchase contract, there will be binding commitments between the amount of electricity the plant in the contract produces and the amount of grid electricity that will be sold to the buyer.
The "green" nature of electricity will be guaranteed thanks to "green" certificates, or carbon credits, which the seller is obliged to return in full to the buyer. Thus, the company that owns the data center can invest in one or more wind or solar power plants to own a certificate for its data center.
Simulation of virtual PPA electricity trading. Source: Orsted
The power source for data centers must be extremely stable, so when they have a direct connection contract, they will not simply connect to a wind or solar power plant with battery storage under the contract. which they will connect to at least two sources (renewable energy electricity and grid electricity).
In addition, the third source is a backup generation system when there is a power outage, very expensive, located inside the data center fence, and is responsible for generating backup power during short-term power outages.
PPAs typically have a term of 10-15 years, ensuring the seller can find a source of credit for investment in renewable energy. With that term, the seller has enough explanation about the payback period and profit, so it is easy to find a bank to grant credit. With a long term, the electricity purchase price will be discounted to a low level for the buyer when the electricity demand in the market is expected to increase suddenly due to the demand for electric vehicles, leading to an increase in electricity prices. Furthermore, wind power in some states is being subsidized by the government, so it can be lower than the price of coal or gas power.
But it is also an obstacle for small companies (buyers), because they must have bank guarantees for that long-term purchasing contract. For example, a company that wants to sign a 15-year long-term contract to purchase electricity with a capacity of 20 MW, even at a cheap price of 60 USD/MWh, must find a source of credit guarantee of about 158 million USD for the PPA contract. Therefore, up to now, the majority of "green" centers still belong to super large companies.
Is it really green and sustainable?
Although PPA contracts have great marketing value for electricity buyers and are a sustainable source of finance for electricity selling companies, technically, someone still has to ensure the power supply to the center. Data in particular and electricity users in general are always stable, not variable like wind and solar sources, which are called Variable Renewable Energy.
Each renewable energy electricity producer produces two products: Electricity and a certificate of origin (also known as green certificate or carbon credit). In the case of a PPA, a business, after purchasing a green certificate, can separate it from the wind power plant that is producing electricity and use the certificate to "green" the coal power, or wind power, that they are purchasing. provided to data centers elsewhere. Physically, the power system has not improved at all but has to cope with an increasingly large proportion of variable renewable energy electricity due to the provision of credits.
For example, the entire wind power system in Germany has an installed capacity of 61.37 GW of onshore wind and 8.46 GW of offshore wind, but on March 20, 2024, when there was no wind, it could only generate 0.46 GW of pulling capacity. from 6:30 a.m. to 6:30 p.m., when demand is high. With actual generation capacity reaching only 0.6% of installed capacity, lasting 12 hours, there is no storage system that can make up for that shortfall other than traditional power plants (brown coal, coal). rock and gas) are readily available.
Wind power generation capacity in Germany is subject to calm conditions on March 20, 2024. Source: Frauhofer.
Or like the total solar eclipse in Texas, USA on April 8, 2024, almost all solar power capacity was lost for about 6 minutes and partially lost for 60 minutes, causing a shortage of 8.9 GW of capacity. Right at the time when solar power should be at its peak. At that time, gas power plants were forced to increase their capacity by 6.9 GW to compensate.
The challenges of connecting data centers directly to truly renewable power remain, as it is an intermittent, weather-dependent power source, while data centers need very stable power. 24/7, more precisely 24/365. Therefore data centers are still mainly physically connected to the grid.
At that time, in order to avoid damage by always ensuring a stable power supply for the data center while the supply is unstable renewable energy, the power company operates the power system, in addition to the costs. transmission, capacity charges and support service charges apply. Those fees will help power companies have money to pay for unexpected power generation costs that skyrocket in the market like the two cases mentioned above in Germany and the US, or to pay for electricity storage centers that are also very expensive. .
In China and Thailand, power companies must pay on-duty fees to gas power plants according to kW/month, whether they generate electricity or not. Thanks to that, power companies can ensure a stable power supply.
Experience for Vietnam:
First: Companies that need direct power purchase agreement (in Vietnam called DPPA) in the form of direct connection will tend to buy large hydroelectric power sources in Vietnam, because they are cheap and have stable power sources. fixed all year round. Small and medium-sized hydropower sources can also be considered, because the source is cheap and stable for a certain period of time, and the rest they buy from the grid, or virtual DPPA. Therefore, the Government needs to keep these sources for the general power system, not for direct purchase and sale.
Second: Vietnam's current transmission costs are too low compared to countries with equivalent systems, and may not reflect the true costs if fully and independently accounted for by distance and location. Transmission. Therefore, the DPPA contract may be taken advantage of to enjoy low transmission costs.
Third: Whether direct or virtual, DPPA contracts also create great pressure on the power grid to balance with the increasing amount of renewable energy electricity. Therefore, it is necessary to have dispatch policies appropriate to the load capacity of the power grid.
Fourth: Current gas and storage electricity prices are one and a half times higher than EVN's retail electricity prices, discouraging non-EVN businesses from investing in those two areas even though Power Plan VIII has great ambitions. If EVN invests on its own, it will cause losses. Without electrification and storage, it is impossible to further increase renewable energy as required by businesses that want DPPA.
Fifth: Currently, Vietnam has not applied two-component electricity prices, so preparing and maintaining ready capacity to supply data centers with DPPA with some renewable energy plants becomes extremely expensive. poor (if electricity is only sold according to the amount of electricity actually supplied on demand, which is always unexpected within the limited market price frame). Not having a capacity fee will create an unfair business, because EVN does not have money to maintain available power generation capacity./.
Source: DAO NHAT DINH - EXPERT VIETNAM ENERGY MAGAZINE
