The New York state power plant is the flagship of power plant production optimization with data centers. Power generation has reached a huge milestone in terms of optimization when a district heating plant in New York was a pioneer to set up its own server farm, which we have also reported previously. 7000 servers are connected directly to the power plant’s own power generation, bypassing the state level power network, which allows them to fully subordinate the operation of the miners to the needs of power production. In theory, the industry has already recognized that complementing energy production with minding activities can bring significant added value, but in practice we still know of only a few precedents in which the power plant completely self-financed the construction of an own data center.
New York state heat power plant decided to build its own data center
It is no longer a question whether the industry is moving in this direction
Both Enerhash and other key players in the industry are aware that this type of optimization provides such a notable additional income source and extra flexibility for power producers that we will be referring to it as best practice in the not-so-distant future. When leading companies start treating data centers as an additional type of investment beside energy storage units, it will become an industry standard and a prerequisite of competitiveness. The only unanswered question remains how fast this transition will take place.
The 30 MW data center facility owned by Rosenergoatom
All benefits of data centers without digital know how
We have designed a product, the Enerhash DATABOX, with the vision that power plants can enjoy the benefits of data centers without the extra cost, risk and expertise required to operate them. DATABOX is a data center built on the structure of a standard marine container that can accomodate 156 servers. Enerhash sells or leases this product to power plants and can make them be at their disposal within 30 days.
20′ Enerhash DATABOX
Setting up a server farm requires expertise on both the technical and software side, making the process extremely complex. Our goal was to take this burden off of the shoulders of power plants by managing each step within the Enerhash Group. Thus, the power plant evades the need to build blockchain competence and only rents available server capacity to us under a simplified contract.
How can data centers maximize the value of power?
The space for maneuver in operation of power generators is limited by technical and economic considerations; and predictions on future energy demand can only be based on statistics from previous years with significant variance. It is clear that a stable and predictable consumer can ensure an increased accuracy in planning and quality of service. As a flexible consumer, the data center reduces the volatility of profitability above all, regardless of regulation, as its consumption can be configured in the range of +10/ -100%, thus adapting to maintenance and pre-planned consumption.
A so-called compensatory regulation has been introduced in Hungary that incentivizes the restructuring of production towards more flexibility even further. These regulations basically penalize most of the power generators who feed into the system, and the production deviates from the planned schedule. Data centers can provide flexibility to overcome this problem, as the consumption of the data centers can be changed within seconds. This way, in periods when feeding into the system is not lucrative, generated power can be consumed by the data center, which guarantees a competitive price in exchange for electricity, and when additional capacity is required by the system, the consumption of the data centers can be flexibly regulated within seconds.
Power plants on the search for alternatives due to the expected cancellation of black start fee
Power plants whose main strategy is to participate in regulator tenders may lose one of their key sources of revenue with the cancellation of black start fee. In order to sustain profitability, these plants will be forced to optimize further on a market where margins are already quite tight. Setting up an own data center is a viable alternative for these producers, as server farms can provide both a predictable base load and a stable source of income. By utilizing the data center as a permanent consumer throughout the year, power plants enjoy the benefits of the data center to the full extent.
How does such a collaboration look like in practice?
The data center becomes an asset of the power plant, meaning that the plant is free to use it both physically and in server capacity. The greatest advantage of a self-owned data center is that its consumption can be fully subordinated to the operation of the power plant. Its consumption can be adjusted in a way that maximizes profitability of production without having to comply with any contractual agreements. Power generators can rent the capacity of the computers in the DATABOX – the so-called virtual server capacity – in exchange for a rental fee to professional companies carrying out mining activities. Such a tenant could be, for example, Enerhash or any IT portfolio management provider. The available capacity is then passed on to IT companies without their own servers who pay a rental fee proportional computing capacity.
The Enerhash Group also offers complementing services: we monitor profitability indicators, perform full software maintenance remotely and carry out physical repair of servers. With this combination of services, we have created an alternative that allows power plants to enjoy the benefits of mining under a simple contract without having any know-how. It is only the professional code related to operating computers that must be recorded within the scope of the energy producer’s activity.
Our solutions for different types of power generators
The Enerhash DATABOX can be installed to any source of energy, including renewable energy sources with volatile production. If the market environment allows electricity to be sold at a higher value, the data center can be switched off easily, thereby accelerating the return on investment. We can install the data center in a remote location, as well, as the 4G antennas secured to the side of the containers provide a stable and fast internet connection.
Moreover, the DATABOX is an optimal consumer of hydropower plants with more stable productions, standing out slightly in terms of volatility among other renewable sources. For them, our data center can provide a stable base load consumption that matches the predictability of the power production.
As for oil and gas wells, flare gases are often burned, because gas cannot be transported at a profit. In this case, the DATABOX can function as an on-site consumer if gas engines are available.
In case of natural gas-fired power plants, data centers primarily provide a hedging option. Should electricity prices be lower than the price of natural gas, positions can be hedged against the data center, thus improving plant utilization in the long run. At volatile market conditions the data center can provide a stable base load consumption.
15 MW data center connected to a gas fired power plant
The foundation of Enerhash was actually inspired by district heating plants using cogeneration that often have unused capacity. Cogenerated electricity is available almost all year round, therefore, the power plant can utilize electricity at a high efficiency in production. During the summer period, when less local heating is required, the steam can be used by industrial grade absorption coolers to utilize cold air for the cooling of the servers.
For small and medium-sized power plants, a stable base load consumer adds flexibility to the production and allows the avoidance of intermittent operation. It is a clear advantage to participate in a tender with a power plant that is already in operation.
What is the expected return?
The cost of the investment is about 1000 EUR / KW depending on the configuration of servers. Counting with the capacity of base load consumption, return on investment can be achieved over a period of 1.5 years. Return depends on the performance of the equipment purchased, the cost of electricity production, and the exchange rate of Bitcoin.
However, in addition to the return on investment, the power plant will enjoy a number of additional benefits: easier participation in regulator tenders, more flexibility when following regulations and easier participation in the power exchange, and avoidance of selling energy at unfavorably low prices. The power plant can reach a much higher d selling price of electricity, than the market price on exchanges, if we convert the sales price of renting out server capacities to electricity. An in-house data center enables the power plant to always sell to the customer offering the most favorable price.
