Onsite Power Solutions: Empowering Our Values and Enhancing Value Creation

Developing optimized onsite power solutions is key to driving our mission forward. By prioritizing efficiency and reliability, we not only uphold our core values but also amplify the value we bring to our stakeholders.

KC Mares

Data center energy and Onsite Power Solutions Leader

February 5, 2025

Just under two years ago I was in a meeting with the CEO of a major hyperscale data center provider, and he said this to me: “power is not our business.” I was taken back, as after all, a data center sells power capacity; it is the actual unit of sales—kiloWatts per month of power capacity. Watts is in nearly every one of our useful financial and operational metrics. Power capacity and matched cooling system capacity is the driver of over 80% of the cost to build a typical data center, and power products along with those that install them are the key supply chain constraint. I understood that he meant that he just wanted to focus on building data centers and let others figure out how to supply power to them. And yet we all are too familiar with grid power availability being the key limiter to adding and scaling data center capacity, and our demand will and can never be fully supplied by the grid for reasons I’ll articulate in a future article. For a data center tenant or an end-user owner-operator, data center energy use is the first or second largest operating expense of a data center. I know this from having led the data center business for the then largest internet property—which included acquiring outsourced data centers as much building, owning and operating our own data centers around the world. I also provided this same function for what is now the largest internet property.

So I cringe when I see our industry approaching “power solutions” as a temporary and sub-optimized solution instead of being part of a core and strategic approach, which makes me recognize that we are still stuck in outdated thinking by not taking an active role in power solutions. Hope that power availability will miraculously be available or improve, and that we should not have to think about power—that’s the grid’s problem—leads to very sub-optimized, expensive and longer time to creating the product we actually sell: power. And at our current scale and timeframes for grid capacity, it is highly risky and non-strategic, and old thinking that limits our growth, value and benefits while adding costs and risks.

Let me explain why power IS our problem to solve and that the grid will not be our savior, and why it is to our benefit to create the solutions. Those leading this will gain cost, scale, and speed benefits along with more, while those that chose to think they just sell real-estate and that don’t see power as a core product and solution will loose opportunities and market dominance.

Why be part of the solution? One, we reduce our capital and operating expenses if we plan and build optimized onsite generation or colocate with generation. Not just short-term solutions, but solutions that provide enduring value for the operational life of a data center: effectively forever. These optimized solutions support the grid during peak demand periods with lower cost and lower emissions energy when desperately needed to the benefit of all rate-payers, including ourselves with financial incentives. Whether we export power to the grid, or participate in demand-response programs with acceptable clean onsite generation, will be both economic and already becoming required by some utilities to even get a grid connection, in addition to financial arbitrage options, and similar emissions-reduction arbitrage for reduced net-emissions.

When we optimize onsite generation solutions, we not only reduce our use of damaging coal generation, and support renewable generation, but we also can and should replace traditional standby diesel generators, that with an optimized onsite generation system, no longer add any uptime or value, but we also reduce net-emissions and thus capability to increase capacity while reducing smog and human-health concerning emissions. We also increase our site reliability and uptime, especially when trying to source dozens of refuel trucks during or following an electricity grid outage, and with impacted roads while competing with our fellow data centers and more importantly truly mission-essential customers: hospitals and the like. This is one of the reasons why nearly every major US military base has installed onsite energy over the years–because it is core to supporting their mission–just as it is ours with information services.

Exceptionally, a well-designed and optimized power solution reduces capital and operating costs, reduces net emissions, reduces project risks and accelerates capacity and to a greater scale, while also providing higher uptime. And when optimized and co-located with generation in a well-planned site, this also increases capacity and time to scale it as well as development of renewable generation, as well as reduced costs and time for interconnection for all parties. With transmission as the limiting factor to both new generation and demand, we solve this when we create optimized and co-located generation with our power demand. Contrary to this as we’ve seen, buying existing generation resources is fraught with challenges as this would take capacity from the grid and thus increase costs and outages to all rate-payers. As we’ve seen, and rightly so, FERC needs to enforce reliability and costs to minimize harm to all rate payers. People die with grid outages and we don’t want to be responsible for exasperating or causing grid outages—we need to be part of the solution or developing any data center will be even more challenged. And at this inflection point, we have the opportunity to be a net provider to the grid instead of just a negative impact.

While an un-optimized, temporary only solution comes at an added expense and emissions impact, a well-planned solution can and should decrease costs and emissions, and should be what we strive to achieve—not just to add raw capacity for that is a forever battle with only added impacts—but to create long-lasting solutions that solve for our many challenges of acceleration and scaling of capacity, supply chain constraints, grid integration and support, costs, emissions and more. We can certainly wait for the grid, or future technologies, but we are already creating the solutions for the next decade today that solve for many challenges and create long-lasting improvements, but only when we accept that power is our business, it is our problem, and that creating power solutions adds enduring value and reduces long-term risks and costs; then we become a part of the solution. I see this with the gigaWatts of projects I have in operation and development.

We in the data center industry are at a major inflection point and thus need to rapidly evolve how we site select, design and develop power for information services. Data centers turn electrons into valuable information services that we are use every day, and recognizing that our information factories are power centers, and that with full integration of power as the key element we can achieve greater scale at lower cost, lower impact, and with even greater benefits to society. If we leave power entirely up to others, our business growth, operations and costs are at risk.

At this major inflection point, converting power into information is transitioning into a much greater purpose of not just providing information but integration of power that has far greater value and purpose to all of society. By integrating power generation, storage and grid integration we not only further increase efficiency, yet now at far greater scale, value and benefits than if we only look within the walls of our information factories. There is so much more that can be achieved than just power capacity when we advance to an integrated power center. I know that power is absolutely fundamental to our business; it is the core of what we build and spend; power literally powers our business, and when approached wisely, power can increase and transform the ultimate value that we create.