Renewable energy and onsite power generation has taken significant strides in use and availability but there are still challenges in connections, expectations and experience. Although performance of the systems has increased while cost has gone down, tax credits and incentives are still needed to ensure that the return on investment is still attractive. Spatial requirements and fluctuation in performance are also limiters that need to be defined when planning to implement. As the cost of the technology and installations has decreased so too have the incentives, but they are not dropping at the same rate which creates a greater opportunity to add renewables.
Many in the industry are not aware of the available incentives, which can range from the popular solar and wind to geothermal and other alternate systems. The savvy customers can employ energy industry experts to recoup 40-50% of the initial installation costs within the first five years of operation due to federal and state tax credits as well as utility incentives. The cost is still the bottom line, as customers rarely choose renewables unless they offer the same price or lower.
Getting those incentives aren’t always the easiest to capture, as larger entities have figured out how to maximize them and gobbled up most of the opportunities. However, there are still opportunities to be made even if they aren’t advertised, such as creating more based on those already deployed or introducing new ones that other regions or entities may have implemented successfully.
Every state also has a different program too and finding sources with local knowledge could save time and energy – such as knowing whether permits or re-bundling is required. The cost is typically dependent on the area which is different nearly everywhere: energy productivity based on the system; cost of the system components, installation, and maintenance; incentives and other credits; and regulations.
Cost modeling is typical to understand which contracts may work best for the customer, as most projects last over 15 years. The performance contracts can be arranged for any number of years, but often settle in around five years, which works for both parties. The engineers review the company’s assets, from HVAC operations to lighting and more, to seek ways to improve their efficiency. A strategy is formed then followed to integrate reforms, including renewable energy. The projects that come from this phase can be far reaching to include several things a data center might have around it, from local gas, wastewater treatment, wind, heat reuse, alternative cooling sources, to photovoltaics and more.
For data centers, energy efficiency measures can already be implemented in many ways without the need for an energy performance contract. For example, lighting controls and efficiencies are a quick win that operations teams can implement without major changes to the IT equipment spaces. Though renewable energy is typically not on the radar for a data center.
The expense and complication of installation to use directly with a data center have many looking at other ways to use renewables, but to finance and use indirectly through a power purchase agreement. This allows data center customers to pay for what is generated and not the whole system or its maintenance. This also allows all sizes of companies to afford renewable energy as part of their energy strategy.
Data centers consume a lot of power, which is more attractive to investors that want to go beyond small installations with low power requirements. Unlike a factory data center loads are typically steady from hour to hour and day to day, which a solar photovoltaic can aim to assist if there are time-of-day or peak demand charges. As most dedicated data centers are more remote and also have a large flat roof, the spatial prerequisite for a solar PV installation seems solved; however, the size of the installation is often dwarfed by actual data center use, with the need being 100x higher than even peak production. While certainly an option, a solar PV installation is much better suited to support the office and non-critical power needs. Combining a major solar installation also adds to the complexity of the electrical system, which often leads to operational risks for the overall data center power chain.
Posted in: Costs, Energy, Power
Filed under: cost modeling, energy performance contract, epc, geothermal, Incentives, photovoltaic, PV, renewable, solar, tax credits, wind