I remember economic lessons when I look at the concept of using Hydrogen powered Data Centres in near future. The concept of law of scarcity and its implications. When you have resource whose availability is limited, you need to put that resource to right set of use so that you can achieve benefit. When organizations advocate using hydrogen powered datacenters we need to step back and look at that solutions from a different perspective. Now more and more organizations, countries are embarking on the journey of planning to use hydrogen powered data centers. One of the reasons for choosing such alternative source of energy is to reduce the green house gas emission. Did you ever try to look this scenario from the scope of economics of scarcity? Giving up one use to choose another alternative.  When you have multiple sources of producing electricity if you look at the outcome of the process as sole “Electricity”, you will lose its significance. Even the cost of Ton of CO2 is around $50. Even the reference documents on Carbon Pricing by OECD publishers show a varied carbon tax for the countries. For majority of cases it comes as a scope 2, which covers the indirect emission sources, which often ignored. Yet the source of electricity is 2nd major contributor of Carbon emissions. The assessment should focus on the pathways which lead to the production of electricity.

woman holding laptop beside glass wall
Photo by Christina Morillo on Pexels.com

When you look at the generation and distribution of electricity, it broadly involves some basic steps like sourcing the energy, generating the power, transportation of electricity via networks, supply management and consumption. For its operation we require system operation team, marketing team and a method of monitoring the metering. Whatever may be the source of electricity, the basic steps of generating and distribution remains the same. For some sources of power generation, the raw material which is used to drive differs which results in varying amounts of carbon emissions and different levels of cost.

Now coming to the topic of organizations using the hydrogen powered sources for running the data centres the proposal might seem overly exciting given that it has opportunity to reduce the carbon emissions, running a local source of power generation and reduced reliance on national grid etc. It does have some inherent challenges which are specific to any hydrogen powered electricity generation and distribution – the cost, risk, and continued availability or predictability of source. There are already varied studies carried out which put the cost of power generation using hydrogen powered source to cost around 50$/KWh to as high as 200$/ KWh depending on the type of the hydrogen source.

The infrastructure for generation of electricity using hydrogen and inherent risk in running the same in local environment puts the operations in risk as well. It needs to be generated and distributed sufficiently long distances to reduce the chances of any catastrophe. It might result in transportation losses which are inherent in any electricity. The cost of building a hydrogen powered infrastructure is also high. Besides the predictability of the source.

When you compare these uncertainties with other sources of electricity sources you tend to understand is investing hydrogen powered electricity for running data centres is a right choice. The intention of using green fuel for powering too high consuming scenarios seems very lucrative but the given the challenges inherent with the technology the easy availability of alternative source of electricity from the grid will not encourage organizations to continually rely on hydrogen powered centres.

Coming to the topics of operational cost of data centers nearly 50% of the cost of operations of data centers alone falls under the cost for energy consumption. Annual requirement spans across many TWh across the companies. Switching to alternative power supply will result in lot of energy savings in terms of emissions. However, given the current scenario of economics of hydrogen powered generation, the scale of such intense electricity generation is limited and might discourage organizations in continuing to use hydrogen powered electricity. Even the negative pressure requirements of the vent stacks etc and other changes to infrastructure needed are to be worked on. Not to miss on the topics of Fuel cells and Storage medium. I still remember my research days when we tried to generate Hydrogen using Fuel Cell Technology like Nafion and Carbon Nanotubes like Fullerenes to store hydrogen. It is still some more time before organizations can start hugely investing in the change. Organizations can plan for part of their operations to be run using hydrogen powered scenarios. Again the back up and how to switch to main grids needed to be worked on.

Now coming to the topic of tackling the issue of climate change and reducing the carbon footprint there are other ways of going neutral to achieve similar level of reductions which are anticipated by running using the hydrogen powered data centers. Now the organizations need to analyze such alternative sources of achieving the reductions by investing in scenario where large scale emissions are resulting either naturally or due to manmade activities like misuse of technologies, farming practices etc. There are also major works being carried out on alternative energy sources for electricity for example.

Before I conclude, I would like to leave with certain references on the topics of economics of electricity generation, distribution and hydrogen powered electricity for much deeper perspective.

  1. Jesus Montoya Sánchez de Pablo, María Miravalles López, Antoine Bret – How Green are Electric or Hydrogen-Powered Cars; Assessing GHG Emissions of Traffic in Spain-Springer
  2. Chris Harris – Electricity Markets_ Pricing, Structures and Economics-Wiley (2006)
  3. Darryl R. Biggar, Mohammad Reza Hesamzadeh – The Economics of Electricity Markets-Wiley (2014)
  4. E;ectricity_ Markets, Competition and Rules-Cambridge University Press (2019)
  5. Catalão, João P. S – Smart and sustainable power systems _ operations, planning, and economics of insular electricity grids-CRC Press (2015)



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