Bright green vs murky: Is your UK data centre renewable power procurement keeping its promises?

Data centre projects in the UK face tremendous pressure from stakeholders to ensure their considerable power consumption is sourced whenever possible from renewable or clean sources.

But are today’s power procurement practices as green as they seem?

For some of the biggest projects, the answer may be yes – via a corporate PPA. But for small to mid-sized projects, that option is usually out of reach, leaving them to source clean energy from the wholesale market instead.

That leads to several headaches for UK data centres looking for genuine and affordable renewable energy – threatening to land them with murky green supply at best.

Renewable energy for UK data centres: Traceability versus certificates

First, the data centre operators have to ask themselves: just how green is the power they procure anyway? And can they prove it?

‘Green’ tariffs from traditional business energy suppliers deliver power - any power - from the grid, and match each MWh with a certificate to say that, somewhere, the equivalent amount of clean energy was generated. In theory, this gives renewable generators an additional revenue stream (sale of certificates) on top of power sales, therefore supporting the sector.

In practice however, certificate prices have plummeted, meaning suppliers can hoover them up cheaply while buying power wholesale and claiming green supply without actually giving much tangible support to renewable projects.

As a result, many have labelled the use of certificates as ‘greenwashing’, with corporate interest waning and some suppliers opting out entirely on principle.

In other words, relying on the wholesale market plus certificates is what we might call ‘murky green.‘

Victims of volatility

Then we have the issue of the cost. Data centres are thirsty power consumers, and fluctuations in power prices can make the difference between profitability and the red zone.

As we’ve seen, the ‘green’ component of the supply often costs only a few pounds per MWh. The lion’s share of the price is tied to the wholesale power markets. The problem here, is that marginal pricing means that the whole-market price is very often set by the gas generators and their generation costs – meaning domestic renewable energy is sold at a price largely set by international gas prices.

Maybe that’s palatable if gas markets are cheap and stable, but recent history shows us how exposed they can be to geopolitical strife – from Russia’s invasion of Ukraine to the US-Iran conflict closing the Strait of Hormuz.

This creates the bizarre scenario where a data centre can be buying 100% ‘green’ power yet be tightly tied to gas prices – opening up exposure to potentially vast price risk, thwarting attempts at forecasting, and putting project economics at risk.

The brighter alternative

Both headaches can be treated with the same pill: a different way to procure energy that guarantees green credibility and traceability without certificates, and simultaneously allows data centre projects to escape the wholesale market’s stormy weather.

UrbanChain’s platform matches users like data centres directly with renewable generators. Rather than ‘power from anywhere plus a certificate’, data centres directly purchase from named renewable generators, with 100% traceability enabled by the UrbanChain operating system.

What’s more, the price is agreed in advance, offering both buyer and seller price certainty that allows for accurate forecasting, no exposure to wild wholesale swings, and often at a better rate than available in the wholesale market.

Where possible, UrbanChain’s platform encourages local matching between generators and users. This can both cut costs and help data centres demonstrate a positive impact on local communities.

Stakeholders - whether customers, investors or policymakers – can be assured that green credentials are genuine, while the CFO can breathe easier about the impact of energy costs on the bottom line.

That’s a brighter green future for UK data centres – one built on easily reportable, reassuringly stable, lower cost renewable energy.