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What is True Additionality in the Data Center Industry?

June 3, 2024

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Reaching carbon neutrality by 2050 is one of the world’s most urgent issues. This call to action hasn’t been lost on the data center sector, which recognizes its role as a huge energy consumer (about 2% of the world’s energy usage).

As such, hyperscalers — the world’s largest tech companies such as Google, Microsoft, and Amazon — have taken numerous steps to decrease energy usage and carbon emissions. They have, in fact, been leading the industry’s efforts toward a greener future, announcing plans to operate all of their data centers using carbon-free energy in the not-too-distant future.

Most industry observers acknowledge that getting there won’t be easy, particularly due to surging energy capacity demands (think cloud computing, artificial intelligence, and other emerging technologies). To save face in a situation that can quickly feel overwhelming or even impossible (or, some would argue, to strategically buy time while they invest in research and development around actual carbon reduction), some companies are relying on carbon credits (sometimes called carbon offsets). According to Morgan Stanley, the carbon offset market is expected to skyrocket from $2 billion in 2020 to $250 billion by 2050.  

Still others are engaging in greenwashing through misleading marketing campaigns, bait-and-switch-style sustainability initiatives and downright cheating emissions tests. At the same time, energy procurement is usually an afterthought in data center development across the industry. With all of that combined, it’s tough to come by data center energy transparency, let alone “true additionality” — which refers to going beyond carbon offsetting and even net-zero emissions, but actually adding clean energy capacity onto electric grids.

CleanArc’s True Additionality Brings New Components to Renewable Energy Equation 

CleanArc was launched in January 2023 to offer a different approach to the hyperscale data center industry: turnkey data center development that combines robust green energy structuring, scalable locations, and fast construction timetables to meet the business, growth and sustainability needs of hyperscalers.

The robust energy structuring refers to something the CleanArc team calls “true additionality” in the data center industry, an advanced renewable energy energy structure to provide customers with hourly, load-following carbon-free energy.

The “hourly” aspect of CleanArc’s approach is key since this is an area where hyperscalers still struggle. While hyperscalers buy loads of renewable energy from various sources to match their energy consumption, they end up addressing their annual electricity consumption, but not their hourly consumption. Because of the renewable energy sources’ unpredictable energy fluctuations (e.g., the sun doesn’t always shine for solar panels, and the wind doesn’t always blow for wind turbines), cloud giants must still rely on fossil fuels to fill in the gaps. 

The other critical aspect of Clean Arc’s true additionality solution is using clean energy sources in the same region as its hyperscale data centers. This allows for a direct offset of the energy required by the new data centers, rather than further weighing down the grid. To accomplish this, CleanArc is working with developers to add more wind, solar and other types of clean energy sources back into the grid. 

In that vein, the company launched an RFP last summer seeking proposals from renewable energy developers to support CleanArc’s hyperscale data center campuses under development. The company received a robust response of 3 GW worth of proposals from more than 40 companies. Selected projects, located in the same region as CleanArc’s hyperscale projects, will be invited to negotiate energy purchase agreements with CleanArc’s data center customers. 

This goes back directly to the goals of CleanArc’s true additionality — to deliver more green electrons and displace more fossil sources in the area where the energy is being consumed. 

Hyperscalers, meanwhile, have expressed concern on both fronts. Most recently, they’ve announced even more ambitious carbon neutrality goals, shifting from just offsetting their annual consumption to mitigating the carbon footprint in all of their data centers on an hourly basis. In addition, they’ve indicated interest in offsetting carbon emissions in the regions they are located, rather than only achieving general offsets to the overall energy grid.  

This is the same approach incorporated into CleanArc’s solution. It’s a ‘win-win’ for all involved –  helping hyperscalers seeking to meet aggressive sustainability goals, while also benefiting the planet through reduced carbon emissions.

 

 

CleanArc is an innovative provider of first-of-its-kind, sustainability-focused data center development and operation solutions. With decades of experience in both the data center and energy sectors, CleanArc has assembled the critical components for hyperscalers seeking to expand quickly, sustainably, and cost-efficiently.

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