Batteries and Data Centers

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So, this is what we’re calling hyperscale. I just got done today listening to a bunch of meetings with DatacenterDynamics. This is one of the groups that I belong to. And if you really want to learn something about data centers, you can join up with DatacenterDynamics. There is also one group called and they keep track on the metrics of data center construction worldwide. They looked at the top 18 markets in North America. One year ago, third quarter of last year, there was 3.9 gigawatts of contracted power being delivered to data centers. And this was the top 18 markets: 3.9 gigawatts. Today, it’s 4.5 gigawatts. In one year, it went up 600 megawatts. By the way, from the first quarter of this year to the second quarter of this year, which was the time just before and the time just after the start of the pandemic, it went from 4.1 gigawatts to 4.4 gigawatts.

Matties: Would you call that a significant jump? Or is that moderate?

Mosman: Yes, that’s a significant jump. Now, the top data center market in growth in America right now is Northern Virginia. 70% of the world’s internet traffic goes through Northern Virginia. That’s 70% of the world’s daily traffic goes through Northern Virginia. By the way, the top five growth markets are responsible for 90% of the growth in North America. And they are Northern Virginia, 38%, Northern California, which is San Jose, Silicon Valley, at 27%. Atlanta is 12%, Phoenix, 9%. And Hillsboro (Portland) is at 5%. Hillsboro is where Hewlett-Packard and Intel started out.

Johnson: Mike, for this kind of growth, you talk about so many megawatts per quarter going out there at such a high rate. Is this just a gust? Or is this what you see as the new sustainable rate for data center buildup?

Mosman: Well, I think that it’s going to slow up a little bit when the pandemic ends. The pandemic has probably been responsible for half of that growth. There’s been a real correlation with the pandemic, 100 to 150 megawatts of growth in contracted data center wattage. (Now, this refers to the wattage that’s being drawn by data centers for critical power. That’s how we measure the industry, more or less, when you are a company operating a data center.) Now let’s say you’re a large internet company, and you’re building data centers. Right now, my company is doing an awful lot of commissioning of data centers all over the US. Typically, they will put, let’s say, about five megawatts into a data hall. And usually the building will have 10 to 20 data halls. But that’ll be in a campus that has maybe five to 10 buildings. And we’ve been commissioning them, a data hall at a time, almost continuously.

Aerial view of a typical hyperscale data center located next to a power substation.

Basically, as fast as they can get them commissioned, they’re going to fill them up with racks. And we haven’t had a problem finding UPS. As a matter of fact, UPSs and batteries have become almost a commodity. They used to be a specialized item. But all of these battery technologies are now turning into a commodity. Whenever you see that happen, the price floor falls out. There are a lot of people coming into the market to make these batteries. There used to be two or three major battery manufacturers, and you just didn’t go anyplace else. Now, there’s maybe eight or 10 regular manufacturers of these batteries. When you have that many people making the same thing, that’s what’s driven down the price of batteries. And it’s also driven up the availability.

Matties: Mike, are you seeing any interest in automotive industry data centers with the rapidly growing connection of vehicles to the internet?

Mosman: No. That’s completely off the radar. Now, Tesla may change that because Tesla is not an automotive company. Tesla is more of an internet company. They’re making cars that, if they don’t have internet connection, they practically don’t work.

Matties: The ways most cars are connected to the internet and all the connectivity for software downloads and updates back to the mothership, if you will. And it just seems, to me, that that’s going to be an emerging market in data centers.

Mosman: But that’s just cloud, isn’t it? Tesla and their types, Ford with Sync and all of that other stuff, that all just goes to a cloud. And I can tell you, probably, it might be in the cloud through AWS, Amazon Web Services. Or they might be hiring some cloud space in Chicago or Dallas or Atlanta or elsewhere.

Matties: When you look out to the future with the demand that you’re talking about and the growth in batteries being able to displace traditional diesel generators and the growing demand in e-cars and micromobility, do you see an issue with battery supply lines?

Mosman: Well, it can be, but it would be a short cycle. These things are cyclical. And when I see a jump in contracted wattage going into data centers of 300 megawatts in one quarter...let’s go back three decades… about a whole decade’s worth of growth in critical power. We’re talking about a possible shock on the supply chain.

Feinberg: So, you’re putting in these huge battery centers. Are they actually battery backup centers, power backup? Or do they provide the constant power for the use of those data centers on a moment-by-moment basis?

Mosman: There are two reasons why you’re going to do this. The first reason is going to be for grid stabilization. It might be a small community that’s worried about getting brownouts. They might be able to put in a little battery plant next to their substation that feeds their town. We’re talking about a community, maybe 5,000 to 10,000 people, and it’s probably served out of one substation that might have a 15- or 20-megawatt transformer there. It wouldn’t be too hard to bring in a couple dozen canisters of batteries. By canisters, I mean Conex containers. They plop these down, connect them all up, put them into inverters. They have step-up transformers that step them up to a transmission voltage. And then, they connect it into the substation.

Then, they have controls that watch the utility voltage, and they can set them up so that, if the power does go out, they can then switch over and draw all of the power required out of their batteries, for maybe up to two to four hours. When it gets more than that, the cost of the batteries gets quite exorbitant. Eight years ago, even five years ago, you couldn’t afford that. No small community I know of would have had the municipal budget to afford anything like that. And the utility that served you would not have seen enough revenue from the small town in order to be able to pay for something like that.

But that’s changed. Now you can. But that’s not where the market is for batteries. The market is in gigawatt-sized battery facilities that are being used to stabilize the grid because of the tremendous amount of solar power that everybody’s putting on their roof and all of the wind farms that are being built.

If you go up the gorge on the Columbia River, then you can see a great example of these windmills. Recently I was driving to Washington State University, my alma mater, to check in with the electric engineering department. I noticed all the windmills that had popped up in the wheat fields and remarked, “Holy crap, that’s changed the whole landscape here.” And it’s been a real strain on the grid to figure out how to deal with that. When you’re taking power out of the Columbia Basin, we’re dealing with 90-, 100-, 125-megawatt water turbines. It takes time for them to spool up and down with load. But when you have a large wind farm supplying 8, 10, 12% of your power and, all of a sudden, the wind changes direction or dies down, well, you’re going to see some grid stabilization problems.

Frequency is going to deviate. Voltage is going to deviate. And so, electrical companies are becoming more and more desirous of somebody who’s going to put in a large battery plant that they would be able to, A) draw power from if they suddenly need it or, B) be able to deliver power to when, all of a sudden, they have an excess of power because some other loads have dropped off. And so, they want to put in these batteries, and then run them at 50% charge so that they can either be charged up or discharged down, depending on if the utility has not enough or too much generating capacity online at the time. So, what we’re doing there is putting in a shock absorber to the electrical grid.

Now, I just funded the Mosman Distinguished Professorship Chair at Washington State University so that they can hire a professor to work for five years with the Pacific Northwest National Laboratories and WSU to do research into grid stabilization. This was one of the things that they’re really going to be interested in; how utilities can work with these huge battery plants, where they are going to be, and who’s going to buy them.


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