Open Access Renewables Can Cut Data Centers’ Power Costs by 15-40%: Interview

ST Telemedia currently sources 36% of its power needs from renewables


Integrating renewable energy into the power mix is a no-brainer for data centers as it allows global companies to meet sustainability targets and offers 30-35% cost arbitrage over power procured from distribution companies, Akhil Agarwal, Senior Director, Power Management, ST Telemedia Global Data Centres told Mercom in an exclusive interview on the sidelines of the Mercom India Renewables Summit 2023.

Here are the excerpts from the interview.

Data centers are rapidly transitioning to clean energy across the globe; what has been the progress in India?

Data centers are power guzzlers. So integrating renewables served a dual purpose. One, they have to meet their sustainability targets, and the second is meeting the sustainability targets of data centers set up for the server load requirements by the tech giants like Google, Amazon, and others.

We have to meet the targets of our customers and our own goals. Additionally, cost saving is also part of the agenda.

What is the decision-making process for sourcing renewable energy for a data center? Does the mandate come from companies using them?

In some cases, it is a part of the contract, while it’s part of our clients’ wishlist in other cases.

In some cases, we make the requirement a standard part of the contract because if we aggressively offer them renewable energy, they will meet their sustainable targets, resulting in repeat orders for us.

What is the cost-benefit of switching to renewables for data centers?

In states like Maharashtra and Tamil Nadu, renewable energy presents almost 30-35% arbitrage compared to power sourced from distribution companies (DISCOMs). This can translate into a 15-40% savings.

How do you deal with intermittency issues regarding renewable sources?

At data centers, we have round-the-clock power consumption, so we don’t face such challenges.

For example, when we started procuring renewable energy, it was based on a single source -solar or wind.

We didn’t face intermittency challenges because we used to procure power with banking provisions in any state.

And in the case of the interstate transmission system (ISTS)-based power procurement, we can replace almost 75-80% of our power consumption due to the oversizing by developers when setting up the project.

There are three modes of open access: the captive, group captive, and third party. Which one do you prefer?

We always go either captive or opt for a third party; we never go for group captive because of the few earlier issues still in the courts and challenges from DISCOMs.

What’s the basis for choosing one open access mode over the other?

We prefer captive, but when we enter any renewable energy contract, the developer of an intrastate project can take 9-12 months to start supplying power after signing the power purchase agreement.

Similarly, grid connectivity can take at least 18 months for ISTS-based solar hybrid power projects.

Even after signing PPAs, we can’t source renewable power from these projects for up to 18 months. During this period, we procure energy under the third-party mode.

What portion of your consumption has been replaced by renewables?

We are sourcing nearly 36% of our power requirements from renewables and aim to increase it to 50% by 2026.

Our facility load is 400 MW across 21 operational data centers in 10 Indian states. We are adding 1-2 data centers every year.

(Note: Sections of the interview have been paraphrased for better reading. Check out the video for a full chat)