Analysis Cloud computing is one of the few areas of the tech industry to show continual growth, even during the pandemic and the subsequent inflation-driven curb on spending. Yet one thing that might hinder cloud's inexorable expansion is finding the power for the infrastructure it depends on.

The global spend on infrastructure services by organizations is now nearing $80 billion per quarter, as The Register reported recently, up 22 percent year-on-year. This growth is partly due to increased demand for AI services, which have seen a surge since generative AI came to prominence last year.

However, cloud services need tech pipes and plumbing to operate: datacenters full of equipment, plus the networking, cooling, and power distribution facilities that keep it all up and running. All of this can add up to hundreds of megawatts of power at some facilities.

This power draw is an issue amid ballooning demand for capacity. While customers might be able to provision a new virtual machine instance with a few clicks of the mouse, it takes much longer to build a new data facility, especially if available land is scarce, and in many places the required power infrastructure may not be there with utility companies often struggling to keep pace.

A recent study forecast that US power consumption from all the new bit barns coming online will more than double by 2030, with adoption of AI services blamed.

In fact, the CEO of global datacenter operator DigitalBridge warned earlier this year that power has become the constraining factor for continued growth.

"We started talking about this over two years ago at the Berlin Infrastructure Conference when I told the investor world we're running out of power in five years," Marc Ganzi told analysts during DigitalBridge's Q1 2024 earnings conference in May. "Well, I was wrong about that. We're kind of running out of power in the next 18 to 24 months."

Solving the challenge at an atomic level

Operators are trying to deal with this situation in different ways, ranging from initiatives to bring more renewable energy online to striking deals with nuclear power plants.

Amazon Web Services (AWS) is one cloud company that went for the nuclear option, revealing in March that it had taken possession of a datacenter campus owned by Talen Energy built next to its Susquehanna nuclear power plant in northeast Pennsylvania. AWS confirmed intent to add more than a dozen bit barns to the site over the next decade.

Talen said this month that it has now received the outstanding $300 million due from AWS, following the completion of the necessary milestones that will allow for the campus to be upgraded to 960 MW of power.

AWS isn't having everything its own way, however, as utility firms have filed an official objection over concerns the power plant may deliver less energy to the grid because of the megacorp's arrangements.

There is also a wave of interest from energy companies in developing and using small modular reactors (SMRs), potentially compact enough to be sited at a datacenter in order to generate its own power.

Last year, Green Energy Partners revealed plans to build a bit barn campus in Surry County, Virginia, some of which it expects to be powered by SMRs in the future. In January, Microsoft caused a stir by hiring a director of nuclear technologies to oversee a program to develop small-scale atomic reactors to power its facilities.

However, one analyst told us that deployment of an SMR in the United States is unlikely before 2030, and possibly up to 15 years away for a datacenter campus. In addition, the Institute for Energy Economics and Financial Analysis (IEEFA) published a report in June indicating that the few SMR projects that had so far been built had proven to be costly and unreliable.

Alternatives? Renewables

Another way to provide grid-independent power might be via solid oxide fuel cells, which produce electricity directly by oxidizing fuels including hydrogen, biomethane, or natural gas.

Datacenters have already started using these as a replacement for backup diesel generators, and are also mooted as a primary power source.

Last year, Amazon planned to power its Oregon bit barns with natural gas. SK Group was also planning a datacenter in Ireland powered by fuel cells, which would be supplied initially by gas but move to hydrogen in future.

The drawbacks to these arrangements are that natural gas or biomethane still generate some carbon dioxide; hydrogen is difficult to store and transport and can only be considered "green" if it has been produced using renewable energy.

Less exotic moves include companies signing deals to bring extra capacity to the grid, so there will be more energy available - many of these efforts focus on renewables.

Meta recently disclosed an agreement with Sage Geosystems for geothermal energy in the US, which, while being pitched as helping the internet giant reduce its carbon dioxide footprint, will actually see the power added directly to the grid.

Google signed a similar contract with NV Energy earlier this year to help power its Nevada datacenters, adding 115 MW of energy generated by geothermal means to the local grid in the state.

Last year, global bit barn biz Digital Realty was working to match energy demand with wind-powered renewable sources in Australia, and installing solar panels at facilities in Singapore. This would not meet the entire energy demands of the sites, but would reduce the amount of grid power consumed from non-renewable sources, it said.

One consortium of companies setting up where it can take advantage of plenty of renewable energy is IceCloud Integrated Services. It aims to sell a customizable private cloud service for compute-intensive enterprise workloads delivered from a datacenter located in Iceland, powered entirely from geothermal and hydropower sources.

While this might be a niche offering, it makes sense, according to Omdia Chief Analyst Roy Illsley.

"There is a real shortage of available power that datacenters need now, and in the future, and this has been exacerbated by the rise in AI and GPUs. So on one level the ability to offer renewable energy, and probably enough of it to power demand is a positive," he told The Register.

The size of the power draw and infrastructure issues

Access to available energy can also become a real issue in some locations. Google was this month denied permission to build an extra facility at its site in Dublin, Ireland, due to insufficient power capacity on the national grid, and a lack of significant renewable energy.

In fact, datacenters have become something of a hot potato in Ireland because of power consumption. They accounted for more than a fifth of Ireland's electricity supply during 2023, and could be using as much as a third by 2026 if demand continues to rise unchecked.

Even if datacenter operators can access plenty of power, they need to get it where it is needed. Last year, commercial real estate empire CBRE highlighted that moves to transition US data dormitories to renewable energy were being hampered by the transmission infrastructure.

It claimed America suffers from outdated power lines, exacerbated by delays in planning and permission for new distribution projects, such that upgrading existing power lines can take as long as three years.

This isn't just an issue in the US. A more recent CBRE report found that power shortages are the top concern for bit barn operators across all regions of the world, and in Europe this is leading to growth in second-tier markets outside the usual data dormitory hotspots, such as in Oslo in Norway.

In Britain, the CEO of the National Grid called for an upgrade to the infrastructure earlier this year, saying that construction of an ultra-high voltage onshore transmission network of up to 800,000 volts would enable bulk power transfers around the country that could meet the requirements of new datacenters as well as general consumption.

For the long term, it is hoped that renewables will be able to deliver all of the world's energy needs, not just those of cloud facilities. This, however, will require more investment - some of which the cloud and bit barn operators are providing - and upgrades to power distribution networks.

Until then, the operators need to consider a range of choices, including on-site generation such as the private gas-driven power plant Microsoft sited at its facilities in Dublin last year, which is designed to kick in if the electricity grid is constrained. Gas companies in the US also revealed this month that they had been approached by operators to supply them with large quantities of gas for power generation purposes.

As Uptime Institute analyst Jay Dietrich told The Register in May, the industry's power problem will "have to work itself out," and that may mean abandoning lofty goals of cloud datacenters powered entirely by green energy for now. ®

https://www.theregister.com//2024/09/03/cloud_growth_energy_challenges/