Industry trends clearly outline that data centers have a bright future in power plant production, which we have already reported on in a previous blog post. By generating a stable base load, data centers have an enormous potential, providing power plants not only with an additional source of revenue, but also with an additional flexibility in production through the consumption of servers that they are free to set according to their needs. A considerable consumer that is available at any time to generate revenue immediately out of unused capacity, improving both the return on assets and their profitability. In short, data centers offer competitive conditions on the market in exchange for the electricity used.
Innovations usually take a while in the energy sector. Moreover, it is even rarer for an innovation to generate extra revenue. This is why the spread of data centers has strongly determined the direction in which innovations go in recent years, slowly but surely changing the best practices of power plant production. Setting up an own data center proves to be an attractive investment for all industry players as it provides a flexible consumer at a cost of 1000 EUR/KW. Both the installation and operation consist of very complex processes that require specific know-how that can be challenging for power plants to acquire. Enerhash Group aims at equipping power plants with the necessary know-how that enables them to enjoy the benefits of data centers. Let us give you an insight into the framework for collaboration that we have developed.
Maximizing the value of energy production without investing: How is that possible?
Enerhash creates a bridge between power generators and Blockchain server owners. Operation of servers and maintenance of IT infrastructure is fully managed by our group. Server owners we partner with use the server capacity provided by us to execute high-performance computing operations on a Blockchain network. Simply put, we provide server space for server owners, while for power plants, our data centers function as a flexible consumer generating stable and predictable revenue after the electricity used and site rental. Our model simplifies the process significantly for both sides since Enerhash acts as a representative of all server owners.
Both costs of operation of data centers and costs of installation are financed by Enerhash. Installation at the power plant site can take place within 30 calendar days after agreement which includes terms and conditions of site lease and price of electricity purchased.
We bring the consumer to the power plant – What does that look like in practice?
Enerhash Group has developed a mobile product that is easy to move. We can install the DATABOX on the site of any plant that has 25 m2 of free and secure space.
The server park is built on the structure of a standard 20-foot shipping container, accommodating 156 servers. As the container occupies 6096 mm x 2438 mm x 2590 mm space on site, 25 m2 are more than enough to assure safe operation around. Should free space on site be limited, we can stack DATABOXes on top of each other completely safely. We recommend placing the container as close to a power generation unit and transformer as possible since the installation costs of power cables can make up large sums even for short distances.
There are no other prerequisites for the installation. At remote locations, we equip the container with 4G antennas that receive signal from two different service providers. However, should an internet cable be at disposal, that provides an even more stable connection. The IT system built into the DATABOX allows us to monitor and control operations remotely, meaning that frequent site visits by Enerhash are not necessary. Nonetheless, we need access to the site to perform regular maintenance, cleaning and upgrade of servers.
Our server park does not require special cooling. Design of the DATABOX allows heat to escape freely through the ventilation grille on the container sides which create an airflow corresponding to outdoor conditions. We install a firewall inside to create a physical barrier between hot and cold air.
The DATABOX is equipped with an easy-to-use power cord that requires a standard 400V 3-phase power supply.
How does a data center optimize power plant production?
Under increasingly fierce competition and highly-regulated market conditions, power plants are left with little flexibility in production. Market mechanisms reward players who optimize to the extreme. In addition to being a stable revenue source and consumer of spare capacity, data centers provide the flexibility needed to be competitive on the market. By having a consumer that is constantly available, participation on regulator tenders becomes easier and more lucrative. Let’s look at the example of natural gas plants whose profitability, the clean spark spread depends on the market price of electricity and costs of production. Should the market price of electricity fall below their break-even point, they cannot generate electricity out of natural gas at a profit. However, electricity sold to data centers is fully independent of market fluctuations. Hence, they offer a reasonable hedging option for power plants.
With the cancellation of the black start fee, several smaller power plants may lose their primary income source. Server parks could provide a viable alternative for such smaller plants and even serve as their main source of income. Nevertheless, data centers have numerous benefits to all power plants, not only to those that are affected by the cancellation of the black start fee. They offer a solution for a new regulation that forces market players to take responsibility for the imbalances caused in the system by them.
Consumption of the server park with a maximum capacity of 500 KW per unit can flexibly be adjusted in the +10% / -100% range. Operation of the data center can be fully subordinated to power plant production, given that it can be switched off immediately or switched on within 4-5 minutes. Consumption of servers can be customized on an hourly basis. To provide a seamless user experience for remote controlling, we have been developing a software called the Enerhash User Interface that simplifies scheduling processes between the power plant and Enerhash. Power plans can enter their planned production data on a weekly, daily or hourly basis, which tells us how to program our consumption to maximize the value of excess capacity. Our software provides flexibility on both sides, allowing the performance both scheduled and unscheduled maintenance.
If we compare data centers to other energy storing alternatives, data centers hold some notable advantages. Investment cost of a Li-Ion energy storage per sé is 4 000 -5 000 USD/KW that the power plant must cover along with the associated risks. Installation and licensing are both significantly more costly and take a longer time, not to mention that not all power systems are suitable for installing energy storage units. In contrast, Enerhash DATABOX is available without a permit within 40 days and requires no investment from the power plant. Furthermore, since the data center functions as a direct consumer, there’s no reduction in efficiency from discharges. It can be used constantly at 99% efficiency without having to store electricity first, in order to gain it back later. Electricity will be used immediately and paid to the power plant in EUR according to the contract.
What does the legal framework for cooperation look like?
Since the data center remains an asset of the Enerhash Group and its operations are also handled by the group, the power plant doesn’t need to participate in any of the digital processes and operations. Under a simple purchase agreement, we buy electricity at a fixed or flexible indexed price.
The legal framework includes long-term consumption guidelines which can be flexibly adjusted according to the needs of the power plant. For instance, during maintenance or if there’s a more favorable sales opportunity, consumption of the data center can simply be turned off.
We ensure the legal framework for the container placement on site with an area lease agreement. The handover point and place of electricity purchase is at the connection point set up at the producer’s site designed and constructed by Enerhash. It takes about 3-4 weeks to establish connection which must be preceded by an agreement regarding the connection.
All in all, the above-mentioned three agreements fully ensure the necessary legal conditions for a cooperation to take place.
What does the cost accounting process look like?
The annual guideline for consumption specified in the legal framework is paid for monthly in HUF/KWh or EUR/KWh based on the electricity actually consumed and contracted quantities.