The European Commission estimates that between 2020 and 2030 data centres will account for 3.21% of electricity demand in the EU. This represents an 18.5% increase from 2018, where data centres accounted for 2.7% of electricity demand. One of the most energy-intensive components for data centres is cooling, which accounts for approximately 40% of the data’s centre energy consumption.
To ensure that data centres increasing energy needs don’t hinder the EU's objectives on demand reduction, Europe has adopted a set of measures to make the sector more energy efficient. From May 15, 2024 data centres in the EU which are larger than 500kW will be subject to mandatory reporting of energy use and emissions. This reporting will include among other things: installed power, data volumes, energy consumption, temperature set points, waste heat utilization, water usage, and usage of renewable energy. This data will help the European Commission issue a report in 2025 which will inform the EU’s thinking around performance standards, possibly introducing minimum requirements or specific labelling to guide end-users and stakeholders. Ahead of the introduction of these new requirements, we sat down with Andreea Constantinescu, Managing Partner at Planet First Partners, to talk about a new trend to help data centres become more energy efficient: immersion cooling.
What makes investing in the data centre economy so cool?
In a world that generates and uses increasing amounts of data, data centres are becoming both mission critical to an increasingly digitalised economy and a growing environmental concern. Globally, data centres are projected to consume up to 10% of electricity and account for 2.75% of carbon emissions by 2025, placing them above the airline industry in terms of their carbon footprint. In Ireland, they are expected to use almost 30% of the country’s electricity by 2028. With data centres growing at projected annual rates of 2-6% and energy efficiency gains plateauing since 2018, urgent solutions are needed to enhance the efficiency and sustainability of data centres.
Efficient cooling is a crucial driver of a data centre’s profitability. Can you share with us what are the most promising cooling technologies you are looking at? Can you point to any portfolio company working in the field?
The data centre industry faces three interrelated challenges: (1) manage higher server heat outputs driven by increasing chip density; (2) lower the environmental impact of data centre operations; and (3) minimise the total cost of ownership of data centre equipment. We see immersion cooling as the most compelling technology to solve these challenges. Our portfolio company Submer’s active single-phase immersion cooling technology cools data centre server units in modular tanks filled with a biodegradable electrically non-conductive liquid which absorbs the heat and dissipates it through heat exchangers for efficient reuse in commercial and industrial settings. The technology is capable of effectively cooling even the most power dense server racks and uses 50% less energy, 99% less water and 85% less real estate than traditional cooling methods. As well as being better for the planet, Submer’s cooling system also delivers significant cost savings for data centre owners and future proofs them against evolving regulation on emissions and growing processing power, and hardware density requirements.
Immersion cooling is hailed as the best solution to bring high-performance computing to a much wider range of users and applications. Why would an investor consider immersion cooling over alternatives like direct liquid cooling?
Immersion cooling and liquid cooling deliver similar cooling performance, but immersion cooling excels with superior environmental benefits and lower total cost of ownership. Enabling virtually 100% heat capture – compared to 60% achieved by direct liquid cooling – immersion cooling uses less energy. Immersion cooling also requires less materials connected to the IT hardware – the most expensive components in data centres – and benefits from less frequent renewal cycles, thus delivering a lower total cost of ownership. Finally, the closed loop architecture of immersion cooling systems greatly reduces the water consumption of data centres. In comparison, air-based cooling systems rely on evaporative cooling technologies that can consume enormous quantities of water, with larger facilities getting through the volume of an Olympic pool every 48 hours.
What is the return on investment for immersion cooling?
The return on investment depends on the specific circumstances of data centres, including the efficiency of existing cooling setups, energy and real estate prices, as well as average atmospheric temperature.
On average, data centre operators can save from day one when deploying Submer’s immersion cooling equipment in newbuild data centres by avoiding the installation of costly white room data halls with raised flooring, false ceilings, cold aisles, and other modifications. In addition, the immersion cooling requires less electrical grid overhead and physical space than alternative cooling technologies, allowing to minimise the real estate footprint of data centres.
When retrofitting existing data centres with immersion cooling equipment, the return on investment can be realised in less than one year on the back of Opex savings in energy, water, and maintenance costs. Even in highly efficient, state-of-the-art data centres, the return on investment can be realised in less than 4 years – much less than the typical 15 years lifetime of these facilities.
What are the biggest challenges facing immersion cooling adoption? What role policy can play to address these challenges?
Over the past decade, incumbent cooling technologies have been largely sufficient to meet the cooling requirements of data centres. This situation is now poised to change due to higher computing requirements, increasingly stringent regulations, and more ambitious sustainability commitments across the industry.
First, the acceleration of generative AI systems drives the need for enhanced processing capacity of large-scale cloud computing systems. The increasing chip density in these applications is set to intensify the heat output of servers, placing additional demands on cooling systems to cope with higher temperatures. Cooling systems are already among the most energy-intensive components in data centres, typically accounting for around 40% of data centres’ total energy consumption. Without higher-performing systems such as immersion cooling, generative AI is set to further increase the energy consumption of data centres.
Second, the substantial energy usage of data centres is not only a significant cost item for operators, but it can also put strains on local electricity grids. In response, regulators have started to impose minimum energy efficiency requirements and in some instances restrictions on new data centre developments. Advanced cooling systems can aid operators in reducing the energy consumption of data centres and future-proofing operations against more stringent regulations.
The final point is the imminent adoption of more comprehensive carbon emissions reporting by key players across the industry. Moving beyond emissions from directly owned or controlled assets (Scope 1 and 2), companies are increasingly monitoring and disclosing carbon emissions across their value chain, including emissions from data centre operations. This adds further pressure on data centre operators to drive down carbon emissions, highlighting the importance of high-performing cooling systems as a key energy efficiency lever.
High-power processing and data hosting capabilities are the backbone of an increasingly digitalised economy. Europe has been the leader in data privacy and digital controls globally. The implementation of the GDPR and geopolitical elements add to the importance of developing European digital infrastructure.
Europe has also taken the lead in driving the climate change agenda, with strong commitments to lower overall GHG emissions by 55% by 2030. These aspirations do not need to clash with the strategic need to accelerate the growth of the European digital infrastructure. The European Green Deal and its associated Sustainable Finance Framework have already taken steps to incentivise improvements in data centre cooling efficiency, but the status quo is clearly not ambitious enough. To future-proof its sustainable and digital economy, Europe needs to bring greater ambition into its own Code of Conduct for Energy Efficiency in DCs and in the recommended practices outlined in the CEN-CENELEC document CLC TR50600-99-1. Evaporative and adiabatic cooling systems should be implemented as the minimum efficiency standard in data centres, with liquid cooling technologies such as immersion cooling systems as the gold standard for sustainable data centre operations.
This interview is part of our ongoing series Voices of Innovation, where we convene cleantech investors to discuss challenges, opportunities and trends of the cleantech transition in Europe.