Pioneers in Europe: first to optimize power production with a data center at a natural gas power plant
Enerhash has arrived at a major milestone this year: we were the first to optimize production of a power plant by connecting a data center directly to its grid. In this article, we report on key takeaways and results of this flagship project.
Enerhash data center powered by a natural gas plant: the project broadly
Our power plant optimization model was first implemented in practice in cooperation with a small natural gas power plant. The Enerhash data center was installed during the first quarter of 2021 on the power plant’s site, where electricity is supplied directly by the power plant. The plant in question is an active participant in the system-level services market through a regulatory center, generating electricity and heat at the same time. Within the framework of our contract, the power plant operator maintains the opportunity to turn off the electricity supply to the data center – a flexible load – if its economic interests so require. The data center stops working almost immediately, the power it consumes can then be fed into the public power grid, so it can be utilized in regulatory tenders.
Brief recollection of previous results on the global market
During the last couple of years, data centers on power plant sites have not been a rare phenomenon any more. As part of a 2020 project, a server park with several MW consumption no longer only received electricity from a power plant as a passive base load, but also actively participated in the operation of the grid network. This project created such a big stir that it made the news on the front page of Bloomberg Green.
What did Layer1 accomplish in Texas?
In Texas, wind energy has an incredibly high penetration in the power grid system. Consequently, the high ratio of non-dispatchable energy sources leads to a lot of imbalances in the system. Especially during hot and windless periods, there is a massive shortage of generation capacity, driving electricity prices sky-high. During these periods, the Layer1 data center may choose to sell their contracted capacity to the public network at a higher price and operate the data center when the price of electricity is low due to windy weather.
An article published by Bloomberg reports that a 30-minute pause in data center operations can result in a return of up to 700%. By shutting down the data center for half an hour on the warmer and windier days of the year, they can save up to $ 6.7 million a year. This is a tangible example of the results that can be expected from optimization with a data center as well as the benefit of the solution in terms of production balancing for a network with high penetration of renewables.
Enerhash was the next to take steps towards network balancing
The inventiveness of our first optimization project lies in the fact that we have integrated the data center into the daily operation of the power plant as a flexible load. The consumption of our data center is regulated on a daily basis by the control center responsible for plant management. This way, the power plant is capable of and free to participate in the system-level services market with its full capacity, while also supplying electricity to the data center.
Therefore, our model based on the presence of the data center is advantageous for
- the system operator (MAVIR),
- power plant operators,
- and data center operators, as well
Excellent results after only 6 months at the natural gas power plant
Since the beginning of the year, we have been continuously monitoring synergies between the power plant and the data center. Experience shows that gas engines produced fewer faults during continuous operation, and the reduction of on-off cycles had a positive effect from a technical point of view. Moreover, the collaboration also increases flexibility of the control center, improving the gradient of the portfolio with the possibility of extremely fast intervention. By switching off the consumption of the data center, the capacity of the power plant to be fed into the public network increases (almost) instantaneously (given the presence of a flexible load of -0.4 MW, which in practice means a reaction time of about 1 second).
Improving the gradient at the portfolio level is becoming increasingly important for systemic market players. Currently, power plants have 15 minutes to activate the capacity needed. However, this time frame is about to be reduced to 5 minutes gradually in the coming years. Essentially, the slope of the current porfolio’s load curve would have to be tripled if they were to compete on the market with the same capacity. In addition, the dead time required to switch the power plant on and off – often as long as several minutes – can also hinder competitiveness. Serious improvements or partial renewal of the portfolio need to be carried out in the medium term.
A flexibly available load can help with just that. Supplying the data center with power provides continuous base load consumption for a power plant, allowing the power plant to operate steadily. There is no need to switch it on and off, but at the same time, if required, its entire capacity can be fed into the public network by switching off the data center.
The power plant, therefore:
- protects equipment by reducing start-up numbers, thereby reducing maintenance costs,
- is able to participate in the systemic regulatory market with a greater gradient,
- can operate at a level higher than the minimum, where both heat and electricity efficiency are higher.
Extra flexibility and economic benefit for the power plant: How do data centers provide a hedging option independent from the stock market?
The data center receives electricity from the power plant completely independently of stock exchange prices, but at a competitive price. Its consumption is always at disposal at a given price with the option to regulate it flexibly, in case the capacity can be sold on the stock exchange at a more favorable price. This flexibility provides the power plant with a hedging option – completely independent of the power exchange – and works very much like a power storage.
Flexibility is becoming more and more valuable on the electricity market
As the penetration of renewable energy in the energy mix increases, so does the volatility of production, thus the share of renewables may soon reach a limit – a limit that can still be balanced. For example, the penetration of solar power plants has been growing aggressively in recent years, and their production can only be forecasted ( and not scheduled) given current and future weather conditions, making it challenging to regulate and balance. Such systemic volatilities require conscious planning and scheduling by both MAVIR and power plants.
An illustrative example of this was March 4, 2021, when forecasts reported sunny weather based on which power plants compiled their schedules. MAVIR planned to contract power plants on the basis of the submitted schedules, i.e. a significant part of the energy supply should have come from the production of solar power plants during the sunny hours that day. The night before, however, it had become unexpectedly clouded. Due to the cloudy weather, production of solar power plants barely reached a fraction of the planned value, thus a deficit of -870 MW was created in the network, which had to be regulated quickly with fast-response power plants.
As volatility also increases with the integration of each renewable power plant to the electricity grid, there is a need for flexible and extremely responsive instruments that balance the production of renewables. Examples of such tools are flexible loads and energy storage solutions. Only by increasing the number of instruments providing a high degree of flexibility is it possible to increase the penetration of renewable energy sources in the national energy mix.
It is clear that tools enabling rapid response and flexible production are the ones that represent real innovation in the energy sector, which has already been recognized by global market players such as the International Renewable Energy Agency (IRENA) and Energy Live News. Our solution contributes to making the power plant’s production more flexible as the data center’s load can be regulated in real time from the plant’s control center. We place a tool at the disposal of the power plant operator which can operate combined heat and power generation at the highest efficiency with.
Regulation with a data center for sustainability, not against it
Data centers have received a lot of attention from the press globally regarding sustainability. However, conclusions are drawn unilaterally. As for our first project implemented, we optimized the operation of a natural gas power plant, which, in addition to electricity generation, also generates heat to meet heat demand of the population. Thus, energy used to operate the data center is used with the highest possible efficiency – up to 80% – leaving the smallest possible ecological footprint.