Pros and cons of on-site power generation for data centers

Benefits to on-site energy production

Customers expect data centers to remain active and functioning properly at all times, which means you must guarantee 24/7 uptime. Traditionally, on-site power generation serves as an emergency backup that you only rely on during outages or natural disasters; if the grid goes down, your data center can simply switch over to the backup power generator without disruptions or downtime.

However, you can use on-site power generation to fully support data centers and replace the somewhat unpredictable power grid altogether. This approach leads to increased reliability and stability, higher-quality power, enhanced energy efficiency and greater environmental sustainability.

Energy grids are prone to frequency variations. When you work with sensitive equipment that requires balanced and stable environmental conditions, you must avoid such variations where possible. With on-site power generation, you have more control over your energy supply, ensuring more consistency and uptime. Other demands on the energy grid are also less likely to affect your data center.

On-site power generation gives you improved energy density and reduced transmission line losses, as well as reduced conversion losses. AC power often gets converted to DC power and vice versa multiple times as it travels from the grid to your IT equipment, which can lead to a loss in power. As a result, you end up paying for energy you don't actually use. With on-site power generation, you can generate AC or DC power on site to directly feed your equivalent equipment. This increases your power quality and energy efficiency, which in turn lowers your operating costs.

Environmental stability depends on the type of power generation you use, but moving your power generation on site puts less demand on the local power grid, which helps move the global power supply to more renewable and sustainable options. Utilities, third-party energy providers and other organizations can feel the pressure to follow suit and reduce their own carbon footprints.

Downsides of on-site power generation

Data centers must overcome several obstacles in the transition to an on-site power supply. The upfront investment involved in on-site energy often presents the biggest barrier to organizations. Moving power on site takes significant money and resources in the short term, but the advantages of on-site power generation pay off quickly, especially if you utilize renewable energy. The price of fuel fluctuates year to year and can make long-term planning difficult, but with a renewable source, you know exactly how much energy costs and can extrapolate costs with growth over time.

As data centers grow, energy infrastructure must expand accordingly. For those relying on existing grid infrastructure, this becomes a problem, because demand can eventually outpace grid capacity and cause instability. On-site power generation shifts this issue away from the grid and to the data center, which introduces a separate set of challenges. Some data centers adopt modular power systems that enable easy expansion and addition to their own microgrids, but you might struggle to find such systems due to their limited availability. Plan to put significant time and effort into planning and scaling energy capacity.

Additionally, in many cases, local market supply and monopolies can limit access to renewable energy sources for data centers. You might struggle to transition to a singular renewable resource for all power generation. Consider implementing a combination of sources, such as hydropower and solar energy, and newer technologies with a smaller environmental impact, such as fuel cells and lithium-ion batteries, to begin your transition to renewable on-site energy.