POWERING A
CLEAN ENERGY
FUTURE

POWERING A CLEAN ENERGY FUTURE

CONTENTS
INTRODUCTION

4THE IMPACT OF HYPERSCALE DATA CENTRES

5

1. THE MOVE FROM VOLUME MATCHING TO 24/7 CLEAN ENERGY

6

2. THE CHALLENGE OF ACHIEVING 24/7 CLEAN ENERGY IN APJ

8

3. HOW HDCS ARE RESPONDING TO THE CHALLENGE

11

4. SIX UNLOCKS TO ACHIEVE 24/7 CLEAN ENERGY GOALS IN APJ

12

5. BUILDING THE ECOSYSTEM FOR 24/7 CLEAN ENERGY IN APJ

17

CONCLUSION

18POWERING A CLEAN ENERGY FUTURE

2

INTRODUCTION

Forging a pathway to 24/7 clean energy is
critical for a zero-carbon future. The potential totap clean energy every hour of the day in
the Asia-Pacific & Japan1 (APJ) region has
yet to be realised. To achieve it will require
collaboration in six key areas which will be
explored in this report.

Data centres are playing
an important role in moving
towards 24/7 clean energy

Hyperscale data centres (HDCs) can playa vital role in this transition as they scale
operations in response to the demand for cloudinfrastructure and continue to champion the useof renewables.
The United Nations, the internationalorganisation that supports sustainable
development and climate action, continues
to advocate for a reduction in greenhouse gas
emissions at an accelerated speed to meet theParis Agreement commitment made by almost
200 countries. In response, companies aroundthe world have made ambitious commitments
to reduce these emissions and, in many cases,
achieve net zero by 2050.
The technology sector has led the charge, withlarge companies like Google, Microsoft, Amazon,
ByteDance and Oracle among the first to commit
to bold climate targets2 including setting theaspiration to procure 100% clean energy.
Google and Microsoft have already committed
to achieving 24/7 clean energy across theiroperations by 2030. These companies havemade more aggressive commitments because
their carbon intensity is usually much lower thanother sectors.
To achieve these global ambitions, uniqueapproaches need to be adopted at a regional,
country and city level based on available
resources. Furthermore, it will requireinnovation, collaboration and partnerships
across industries and borders. APJ, in particular,
faces the challenge of low availability of carbonfree energy and this report provides a range ofopportunities to solve these challenges.

1
2

POWERING A CLEAN ENERGY FUTURE

The western rim of the Pacific including Japan and excluding China
Google Sustainability website, Microsoft Sustainability website, ByteDance‘ByteDance Commits to Operational Carbon Neutrality by 2030’ Media release,
March 2023; Amazon Sustainability website

3

THE IMPACT OF
HYPERSCALE DATA CENTRES
Driven by the most innovative and forwardthinking global businesses, cloud infrastructure
in all its forms has become a foundational
component of all societies and industries. HDCs
are the critical digital infrastructure that supports
the growth of cloud from large cloud service
providers (CSPs). They play an essential role indigitalising economies, enabling CSPs to maketheir digital products and services available tocommunities. These critical assets are expected to
double between 2022 to 2030 (measured by theirpower consumption) in the U.S. market alone3.

According to the United Nations, 24/7
carbon-free energy, or clean energy,means that every kilowatt-hour of electricity
consumption is met with carbon-freeelectricity sources, every hour of every day,everywhere.

As people move their consumption habits
online, demand for HDCs will continue to growand, in turn, so too will the amount of electricity
required to manage this critical infrastructure. It
has been estimated that data centres currently
account for approximately 1% of global electricity
consumption4.
To minimise these emissions, HDCs have a unique
opportunity to implement a 24/7 clean energy
model. By doing this, they will be significantly
advancing decarbonisation worldwide, defining
standards, driving energy innovation andaccelerating progress to net zero.
About this report
This report intends to build momentum towards
achieving 24/7 clean energy in APJ, and therole HDCs can play in this energy transition.
It analyses the potential technology pathways,
costs and sourcing options for 24/7 clean energy
by 2030 across four key growth markets –Australia, Singapore, Japan and Malaysia.

The report outlines:
1. The move from volume matching
to 24/7 clean energy
2. The challenge of achieving
24/7 clean energy in APJ
3. How HDCs are responding to
the challenge
4. The six ‘unlocks’ to achieve
24/7 clean energy goals in APJ
5. Building the ecosystem for 24/7
clean energy in APJ

McKinsey & Company ‘Investing in the rising data center economy’ Report,
January 2023
4
IEA ‘Data Centres and Data Transmission Networks’ Report, September 2022
3

POWERING A CLEAN ENERGY FUTURE

4

1. THE MOVE FROM VOLUME MATCHING
TO 24/7 CLEAN ENERGY
HDCs remain committed to investing heavily inenergy efficiency initiatives. For example, AirTrunkis implementing a liquid cooling technology at its
JHB1 facility reducing energy consumption by up
to 20%. In sourcing energy, the sector continues toprioritise renewable energy. A large majority of the31.1 gigawatts (GW) of corporate power purchaseagreements (PPAs) signed in 2022 were sourced
by only three major cloud players (Amazon,
Microsoft and Google)5.
The effectiveness of these efforts is evident
with data centre workloads increasing by 340%
between 2015 and 2022, and their energy use only
increasing by between 20 to 70%6.
When it comes to renewables, many CSPs and
HDCs have set 100% renewable energy targets.
AirTrunk, as an example, has committed toworking with its customers to have 100% ofelectricity consumed at its data centres matchedwith clean energy by 2030. Still, there remain

5
6
7

challenges to achieving this including the limited
availability of carbon-free energy in many markets
across APJ, as well as annual volume matchingtargets relying heavily on fossil fuels during hours
or days when renewable energy is not sufficiently
available.
The International Energy Agency (IEA) recently
observed that ‘goals based on annual matchingof electricity or only targeting emissions do notdeliver all the technologies that will be needed
as power systems decarbonise7’.
To transition towards a fully decarbonised powersystem, the aspiration should be to deliver every
kilowatt-hour of electricity from carbon-freeclean energy sources, every hour of every day.

BloombergNEF ‘Corporations Brush Aside Energy Crisis, Buy Record Clean Power’, February 2023
IEA ‘Data Centres and Data Transmission Networks’, July 2023
IEA ‘Advancing Decarbonization through Clean Electricity Procurement’, November 2022

POWERING A CLEAN ENERGY FUTURE

5

Figure 1 shows the difference between volume
matching over a day or a year, and 24/7 clean
energy. In volume matching, the HDC may not use
all the renewable energy available to it in periodsof high sunlight or wind. That excess is ‘banked’
against other times when the HDC draws on
fossil-fuel grid energy, so that the HDC can relyon ‘net’ 100% clean energy.
For 24/7 clean energy, the hourly matching of
consumption and supply requires carbon-freeelectrons regardless of weather conditions.
As pointed out by researchers at the Princeton
University Zero Lab, 24/7 clean energy needs‘dispatchable’ carbon-free technologies suchas batteries, long-duration energy storage (LDES),
hydrogen or biogas, and many of these are not
yet available or affordable at scale8.

The APJ region is projected to account for half ofthe global colocation market by 20269. As a leading
HDC operator10, along with setting its
own 100% carbon-free energy target, AirTrunkhas joined a global group of companies,
policymakers and investors in committing to
the 24/7 Carbon-Free Energy Compact. The
Compact is coordinated by the United Nations
and Sustainable Energy for All.
By pursuing 24/7 clean energy, HDC operators
can be invaluable partners for the clean energy
sector. In aiming for 100% volume matching, theglobal tech sector has been one of the strongest
buyers of renewables11, helping to dramaticallyaccelerate the downward trend of prices andcatalyse massive investments in renewableenergy. With 24/7 clean energy targets, the techsector could also accelerate the deployment
of dispatchable carbon-free energy solutions.

Figure 1: 24/7 a significant step up from volume matching

VOLUME
MATCHING

24/7 CLEAN
ENERGYPower generation from a
Renewable Energy Sources (RES)
PPA over a day, MW

Power generation from a
24/7 contract over a day

HDC consumption

HDC consumption
CLEAN
FIRMING
POWERED BY RES

POWERED BY RES

24HRS

24HRS

Xu Q and Jenkins DH ‘Electricity System and Market Impacts of Time-based Attribute Trading and 24/7 Carbon-Free Electricity Procurement’, September 2022
Structure Research Market Share Report Series, Global Markets February 2022
‘HDC operators’ mean large tech corporations who operate their own HDCs, as well as those like AirTrunk who lease HDCs to them
11
American Clean Power NEW REPORT: Corporations Purchased More U.S. Clean Energy in 2022 Than Ever Before, Media Release, January 2023
8910POWERING A CLEAN ENERGY FUTURE

6

2. THE CHALLENGE OF ACHIEVING
24/7 CLEAN ENERGY IN APJ
While there is a growing amount of research
investigating the pathway to 24/7 clean energy
on a 100% hour-by-hour basis, more informationis needed on how to achieve this in the APJ region.

expensive in the APJ region due to resource
limitations, financing and technology costs14. As
a result, for example, solar in Japan is currently
US$87 per megawatt hour (MWh), compared to
US$61 in Germany and US$55 in California15. In
addition, ‘new’ renewable generation opportunities
need to be identified, given carbon-free sources
account for only 5-40% of the total power
produced in APJ grids, against 40-100% in Europe:
see Figure 2.

In Europe, if you are buying 100% renewables, you
may already be sourcing clean energy more than
60% of the time12. Princeton University and Google
confirm similar findings for the United States13. In
the APJ region however, the cost of reaching even
90% clean energy is likely to be more expensive
than in Europe or the U.S.

Australia is an exceptional case in the APJ region –it has abundant solar and wind resources withcapacity factors in some areas over 30% and 40%
respectively, yet it is still highly reliant on coal for
power generation. Nonetheless, the cost ofachieving even annual volume matching inAustralia (~US$60/MWh) is significantly cheaper
than achieving it in Japan (~US$85) or Malaysia(~US$80): see Figure 3 on the next page.

The cost in each APJ country is driven by two
factors: the cost of the renewable resources
available; and the cost of carbon-free,
dispatchable technologies to maintain, or firm,
the intermittent renewable energy resources fora long period of time. The first largely relates tovolume matching; the second will, if managed,
set benchmarks in 24/7 clean energy.

Given land scarcity constraint, Singapore must
import most of its renewable power throughexpensive undersea interconnections, so thecost of volume matching is expected to start
above ~US$150.

1. The cost of renewable resources available.
Sourcing renewable energy is typically more

Figure 2: Grid carbon intensity across Asia Pacific and Japan is significantly higher than Europe
Share of Clean Energy*, %
100
95
90

Americas

Norway

APAC

EMEA

85
80
75

Sweden

70
65
60
55

Arizona

United Kingdom
Italy

50
45

Spain

France40

Australia

Netherlands

IrelandJapan

Hong Kong

35

Virginia

30

India

Poland25

United States

20

Malaysia

South Korea

15
10
5
0

Singapore
0

20

40

60

80

100

120

140

160

180

200

*Carbon-free electricity
Source: Enerdata, IEA, Eurostat, NRD

220 240

260

280

300

320

340

360

380

400

420 440460

480

500 520

540

560

580

600 620

640

660

680

700 720 740

Grid carbon intensity, gCO2eq/kWh

Iegor Riepin, Tom Brown, ‘System-level impacts of 24/7 carbon-free electricity procurement in Europe ’, October 2022
Xu Q, Manocha A, Patankar N and Jenkins JD ‘System-level impacts of 24/7 carbon-free electricity procurement’, November 2021
14
Engie Impact How The Tech Sector Can Drive Renewable Energy Opportunities In APAC
15International Renewable Energy Agency ‘Renewable Power Generation Costs in 2021’, July 2022
12
13

POWERING A CLEAN ENERGY FUTURE

7

2. The cost of carbon-free, dispatchable
technologies to firm the intermittent renewableenergy resources. The technologies themselves
vary in cost and availability and include pumpedhydro, nuclear, biogas, batteries and LDES
technologies. The nature and availability of thesetechnologies in each country determine thecost premium for hourly matching above annual
volume matching.

Malaysia and Japan are likely to rely on more
expensive green hydrogen and battery storage
technologies, leading to premiums of US$45-60.

Some regions in Australia (e.g. New South
Wales, Victoria) have access to relatively cheap
pumped hydro resources to firm its alreadycompetitive renewables, leading to a premiumof ~25% or ~US$15/MWh.

Figure 3 indicates how the firming cost can climb
exponentially the closer you get to 100% clean
energy, with the ‘last mile’ of 5-10% needing moreadvanced firming and storage technologies thanare currently available. For example, in Malaysia,
it would cost an extra US$10/MWh to move from
80% to 95% hourly matching, yet the last 5%
increase would cost an additional ~US$20/MWh.

For India and Indonesia, the IEA similarly suggeststhat significant new forms of clean dispatchable
energy are needed to lift clean energy matchingalready from 60% to 80% of the time on the path
towards 100% matching16.

Singapore is next best placed as far as the firming
premium is concerned, assuming it can draw
more heavily on its international supplies, witha premium of ~US$35.

Figure 3: Excess cost to deliver volume matching and hourly matching in four APJ countries17

155
+35

Volume matching

95% hourly matching

80% hourly matching

100% hourly matching

160

145

140
130

125

59

69

67

Australia

16
17Singapore

+45

100

85

80

75

120

120

+60

110

+16

Premium for 100% hourly
matching over volume matchingin US$/MWh

X

MalaysiaJapan

IEA ‘Advancing Decarbonisation through Clean Electricity Procurement’, November 2022
McKinsey & Company analysis

POWERING A CLEAN ENERGY FUTURE

8

Figure 4 contains the volume and hourly
matching costs for Japan, with a breakdown of
the contribution by each technology. HDCs could
secure annual volume matching from solar andonshore wind for a cost of ~US$84/MWh, andhourly matching 60% of the time for a similar~US$90/MWh with some hydro and batteries.
However, costs increase markedly to ~US$120/
MWh for the 95% target and ~US$130/MWh forthe 100% goal.

In Japan, those technologies would contributeto over 25% of the ultimate power sources, yetthey are not currently available at commercial scaleand still relatively expensive18. In Europe and North
America, by comparison, development of bothtechnologies is more advanced, and they
are now supported by comprehensive policy
packages, for example the U.S. Inflation Reduction
Act of 2022.
Given the much lower starting position in APJ,
considerable actions would be required todecarbonise the region’s power grid. Section 5of this report outlines the encouraging signs that
demonstrate that the challenge can be overcome.

Well-tested existing technologies are capableof bridging most of the firming gap. However,achieving 100% matching in most markets will
require innovative carbon-free dispatchable
technologies such as green hydrogen-powered
turbines, or LDES.

Figure 4: Technology mix required to deliver 24/7 clean energy for a HDC in Japan

Scenario set% matching
Sourcing cost,
US$/MWh

Volume matching$84

24/7 clean energy
60%

95%

100%

$90

$119

$127

Power stack, MW
Hydrogen
Battery
Hydro
Wind
Solar
Rooftop

18

The LDES Council reached a similar conclusion when looking at the premium required to shift from 80% hourly matching to 100% hourly matching

POWERING A CLEAN ENERGY FUTURE

93. HOW HDCS ARE RESPONDING
TO THE CHALLENGE
Market conditions are favouring clean energy
investment, led by the HDC industry. Corporate
PPAs for renewables have proliferated in recent
years – for example, Taiwan enabling companies
to source renewables directly in 2017, Korea
following in 2021 and Japan in 2022; Malaysia
recently launched a pilot PPA programme in 2023.
With the regulatory environment opening andcommercial offtake structures maturing, the APJ
region is projected to attract more than 25% of
global renewable capacity investment over the
next three decades19.

HDC operators have also begun to innovate todeliver 24/7 clean energy. In November 2022,
AirTrunk announced a first-of-its-kind renewableenergy solution in Hong Kong that will match
Microsoft’s data centre electricity consumption
with local renewable energy certificates. The
solution will be directly linked to the West
New Territories (WENT) Landfill Gas Power
Generation Units of CLP Power and features hourly
matching of renewable generation to data centre
electricity consumption. The facility generates
100% of power with landfill gas captured at the
WENT landfill site and is issuing RECs for all thepower we receive.

As HDC operators partner with the energy sector to test and build-out 24/7 clean energy solutions,they are well positioned to be catalysts for accelerating the technologies, commercial structures andpolicies needed in the APJ region due to a number of factors:

SCALE THAT
MATTERS

HDCs are an essential asset for economies as they rapidly digitalise and they,in turn, rely on increasing amounts of clean energy. Their scale and permanence
are a strong foundation for long-term supply agreements with energy providers
upon which 24/7 clean energy mechanisms and technologies can be based.

CONSTANT
DEMANDPROFILES

HDCs have a strong commercial incentive to find 24/7 clean energy alternatives
given their constant load profiles, with little variation in energy demand between
hours or seasons. Such a flat load profile is subject to price risks outside of the
midday solar peaks.

COMMERCIAL
AND TECHNICALKNOW-HOW

HDCs have the commercial and technical knowledge to partner in complex,
large-scale and long-term energy projects.

TRACK RECORDAND KNOWLEDGE
BASE IN CLEAN
ENERGYINVESTMENT

HDCs have long collaborated with the energy sector in developing clean energy,both by enabling renewable project investments and supporting appropriate
regulatory reform.

This positions HDC operators as ideal partners
for the energy transition as they drive demandfor 24/7 clean energy solutions. In doing so, theconcept of additionality is important, meaningthat this demand results in new firming capacity
and technologies being added to the system,
given limitations around existing capacity. This

19

is consistent with the approach to renewablesourcing where many corporates and data
centres already follow the additionality principle.
Additionality ensures that 24/7 clean energy
targets benefit the wider market, with HDCs
helping to move the market along.

IEA ‘World Energy Outlook Investment Outlook’, October 2022

POWERING A CLEAN ENERGY FUTURE

10

4. SIX UNLOCKS TO ACHIEVE 24/7
CLEAN ENERGY GOALS IN APJ
Narrowing the cost gap of clean energy
24 hours a day will be key to driving wide
adoption among HDC operators and otherlarge energy consumers in the APJ region. As
noted above, this requires two steps. The firstis ensuring there is enough renewable energy
available in the APJ region, either directly or
through the grid, at a reasonable price. The
second is overcoming the intermittency ofsolar and wind generation with a range ofinnovative carbon-free firming technologies.
There are six actions required to reduce the cost
to unlock the 24/7 clean energy potential thatare particularly relevant across APJ markets.
With appropriate government intervention andindustry collaboration, alongside theseactions, the potential for 24/7 clean energy
across APJ can be accelerated dramatically.

POWERING A CLEAN ENERGY FUTURE

01

Increase and strengthen gridinterconnection between APJ markets

02

Accelerate ‘green molecules’ and othernew firming and storage technologies

03

Diversify the portfolio with local
firming solutions

04

Leverage on-site infrastructure to
support local grids and power markets

05

Shift non-latency-sensitive loads
to lower cost markets

06

Start the discussion to achieve 24/7
clean energy in a cost-optimal way

11

01

Increase and strengthen grid interconnection between APJ markets

The larger an area is, the more likely that sunny or
windy conditions in one part can make up for stilland cloudy conditions in another. A portfolio ofrenewable sources across a large area is therefore
a low-cost solution to deliver 24/7 clean energy.
For example, the 10,000km of network
interconnections planned for Australia’s east
coast National Energy Market (NEM) will offer‘Europe like’ portfolio effects: it will make firmed
100% clean energy in Sydney 5-10% cheaper thanin locations such as Queensland and Darwin20,
despite those locations being closer to stronger
renewable resources.
Power grids in the APJ region currently have
limited international connections. Singapore’spilot to import 100MW of clean energy from Laosthrough Malaysia is a positive sign in advancing
interconnection, with longer term plans and work
underway for up to 4GW in total renewable imports
by 2035. Relying on green hydrogen imports to

02

supply baseload power by 2030 would increase
the overall cost of generation by more than 30%
compared to importing renewable power fromneighbouring countries.
Stronger grid interconnections can also support
bi-directional energy flows. For example, in
Vietnam, an effective grid connection would
enable solar power to be exported to a ‘still’north, and wind power to be exported to a‘dark or cloudy’ south.
International or large intranational powerinterconnections often need years of governmentto-government negotiations. For many potential
interconnections, such as between the Associationof Southeast Asian Nations (ASEAN), there needs
to be a thorough assessment of the value at stake,and work towards the mechanisms and market
signals that would enable cross-border power
trade.

Accelerate ‘green molecules’ and other new firming and storage technologies

Where interconnection is not viable, shipping‘green molecules’ of hydrogen or ammonia
produced with carbon-free energy may support
the transition, with green hydrogen able to store
clean energy indefinitely.

energy in markets like Japan by as much as 35%,
from US$200+/MWh to ~US$130/MWh21. For greenhydrogen, large investments in infrastructure to
produce, ship, convert and safely distribute volatileliquid hydrogen will be required.

Potential LDES technologies such as redox flow
batteries, metal-air batteries, and thermal andcompressed air energy storage, can also store
energy for multiple hours or days.

While global research may solve the technicalproblems, local and regional policies may beneeded to support pilot schemes and regional
adoption. For example, wind and solar photovoltaic
only started growing at scale after legislators
introduced attractive feed-in tariffs. The US
Inflation Reduction Act of 2022 is now supporting
firming technologies in the same way. Unlesssimilar policies are adopted in the APJ region,
investment and talent may be diverted from theregion to other more advanced regions22.

However, most of these firming and storage
solutions are not yet commercially viable, withthe process technology still in development.
If key players in the region can solve thesechallenges by 2030, LDES and green hydrogen
could reduce the overall cost for 24/7 clean

McKinsey & Company modelling
McKinsey & Company modelling
22
Energy Networks Australia ‘2022 Energy Insider’, October 2022
20
21

POWERING A CLEAN ENERGY FUTURE

12

03

Diversify the portfolio with local firming solutions

Some APJ markets already have valuable
resources and technologies that can be better
leveraged to firm renewable power including:• Biogas in Malaysia and biomass in Indonesia.
In Malaysia, biogas is not yet widely converted
into electricity and fed into the grid, despite
significant natural potential, due in part to thedifficulty in aggregating smaller, distributed
pockets of biogas for conversion. If thatbottleneck were overcome, biogas could reduce
24/7 clean energy cost by ~15% in Malaysia
compared to where green hydrogen or LDES
alone are used for firming23.
• Hydropower could be leveraged whereappropriate, with environmental approvals
and social license constraints considered.
For example, large pumped storage hydroassets like Snowy Hydro in Australia may help
to achieve a 24/7 clean energy target at morethan 10% lower total sourcing cost than withother technologies24 (e.g. green hydrogen).

• Geothermal energy in Indonesia andPhilippines. Geothermal energy may be a
relatively lower-cost option for constant clean
energy generation in these markets (~US$70/
MWh) – and 24/7 clean energy targets may
create the right incentives for its developmentin suitable locations25.
• The nuclear industry in Japan may be able toadd small modular reactors to its portfolio todeliver power at a reasonable US$80/MWh26.
Elsewhere, where there is no existing industry
and regulatory institutions, the cost andtimeline needed to get new projects
approved and built may be prohibitive.
The commerciality of leveraging these andother potential firming opportunities should
be fully explored.

McKinsey & Company modelling
McKinsey & Company modelling
International Renewable Energy Agency, ‘Geothermal: the solution underneath’, Policy Paper, 2021
26
Wood Mackenzie, ‘Small modular nuclear reactors could be key to meeting Paris Agreement Targets’, Media Release, August 2021
23
24
25

POWERING A CLEAN ENERGY FUTURE

13

04

Leverage on-site infrastructure to support local grids and power markets

To protect against interruptions in grid power
supply, HDCs typically use batteries that kick in
immediately, followed by diesel generators to
run until grid supply is restored. Where this isoperated with a ‘grid interactive’ capability,
HDCs can provide balancing support to local
power systems, enabling a higher renewablepenetration on the grid.
In a net zero future, we expect diesel generators
to be gradually replaced by onsite energy storage
systems (BESS or LDES), or potentially hydrogen05

fuel cells or generators operating on carbon-freefuels. With carbon-free backup power available
on site, HDCs would rely less on dispatchable
offsite firming solutions, and the cost of achieving
24/7 clean energy targets could fall by as muchas 10%.
Backup would not only consider the availabilityof utility supply, but also the carbon content at
the time of utility supply. Meanwhile grid supportand demand side flexibility could still be offered,this time carbon-free.

Shift non-latency-sensitive loads to lower cost markets

HDC loads are typically highly sensitive to factors
such as latency requirements, cloud networkarchitecture and data sovereignty regulation.
As a result, HDCs often need to be physicallylocated in an availability zone close to the end
data or application user.
Some applications, such as artificial intelligenceor video streaming, may be more flexible in termsof location given the strong fibre connectivity
between markets. With a wider push towards

POWERING A CLEAN ENERGY FUTURE

24/7 clean energy targets, shifting flexible server
loads to locations with lower cost of achieving thetarget may become a growing consideration. For
example, shifting 20% of the compute and energy
load from Singapore to Perth or Malaysia would
reduce overall cost for 24/7 clean energy by ~10%
in 2030, according to our modelling results. This
may lead to growing optimisation of energy loads
across locations depending on the type ofunderlying server compute demand and thecost of meeting clean energy commitments.

14

06

Start the discussion to achieve 24/7 clean energy in a cost-optimal way

Although there are many carbon-free firming
technologies available, it only takes one of thesetechnologies to reach commercial scale to makesignificant progress towards achieving 24/7
clean energy.
While it is not yet clear how some of thesetechnology costs may mature, governments
offering subsidies or premiums will drive forward
the commercial viability of these technologies.
In addition, local industry players aiming toachieve 24/7 clean energy in the most costoptimal way should investigate the different
options available in the coming years and alignon building the ecosystem to support the optimal
solution. For example, in the case of greenhydrogen, investments in storage and distribution
infrastructure will be required.
Figure 5 below shows an illustrative map ofdecarbonisation pathways to reach the clean
energy procurement target, categorised into fourmain decision points to consider: ambition levels,
technology options, data centre location, andtime horizon to achieve 24/7 clean energy.

The graph shows the respective sourcing costs
for achieving 24/7 clean energy for a data centre
in Australia with different solution parameters,
and highlights the key cost sensitivities acrossthe decision points. For example, the blue line
suggests that reducing the target matching
percentages reduces sourcing costs. Conversely,
meeting the target with existing technology
only increases the sourcing costs. The graphalso highlights the extent to which totalsourcing costs are driven by firming cost. For
example, in Darwin the share is highest due tolack of portfolio effects and the concentrationof renewable resources. The lower cost of
renewable needs to be considered against thehigher firming requirements.
Stakeholders need to align on the right set oftechnologies to support, the right balance of costpremium and how that may change over time,to achieve the targets and the level of target
ambition.
To reach that alignment, more dialogue andanalysis are required, especially in APJ where
the discussion is in its infancy.

Figure 5: Potential pathways to reach 24/7 clean energy for a HDC in NSW, Australia

Portfolio sourcing cost, USD/MWh
125
Existing tech
H2

85
80

2025

75

Queensland

H2, 2035

LDES+

Pumped hydro70

Volume matching

55

Technology

Time variation

Inclusion and exclusionof various technologies(e.g. hydrogen, nuclear,
LDES) to identify
different pathways
to decarbonise

80%

60

Location

Variations of 24/7
aspiration (e.g. platinum
99%, gold 95%, silver
80%, etc.)

Testing of optimal input
mix for varying locationsin the same country

DarwinPerth2035

Diversified wind
95%

65

50

6

Ambition level

Evolution of cost basedover time, especiallywith declining costs offlexible technology

Grid

0

5

10

15

20

25

30

35

40

45

50

55

Firming cost share^, %^Source: Flexible capacity cost share of total cost, including batteries, LDES, hydrogen, pumped
hydropower and reservoir-based hydropower

POWERING A CLEAN ENERGY FUTURE

15

5. BUILDING THE ECOSYSTEM FOR
24/7 CLEAN ENERGY IN APJ
While the above ‘unlocks’ will help to drive down cost across APJ markets, these needs to align with
developing the policy and commercial ecosystem to operationalise 24/7 clean energy for energy
suppliers and large energy consumers, such as HDCs.
Reaching 24/7 clean energy in the APJ region will take strong leadership from energy consumers,
collaborating with energy suppliers and policy makers, including to:

A

B

C

Align on standards to define
and trace time-based energy
certificates. Many of thecertification standards forrenewable or clean energy in
APJ do not currently include
tracing the time of generation(time-stamping). Energy
consumers can refer to guidancefrom industry initiatives suchas EnergyTag and software
solution providers27. Alternatively,
time-stamping could be built into
government-administeredcertificate schemes – notably
the Australian government
has recently proposed future
renewable energy certificatesto include time-stamping28. In
Hong Kong, AirTrunk sources a
new hourly Renewable Energy
Certificate from the utility
provider, CLP Power.

Innovate commercial structures
to enable sourcing. Large energy
consumers need a greater rangeof commercial options to build
up a portfolio of generation andfirming sources. While corporate
PPAs are increasingly common
to source renewables in APJ
markets, these consumers would
need to be able to contract
other forms of dispatchable
clean energy solutions, whether
that is green hydrogen PPAs or
contracting energy from hydropower, nuclear energy or storage.
This could include energy
providers innovating solutions tocommercially aggregate portfoliosof technology solutions (e.g.
round-the-clock renewable PPAs
developed in India). In addition,
PPAs could start incorporating thebenefits of the onsite HDC backup
facilities (e.g. onsite batteries),
which, when considered as partof the portfoliotdeliver 24/7, could
increase reliability and lower costs
for all parties.

Build partnerships to drivecommercialisation of newtechnologies. As shown in Figure
5, in many APJ markets, achieving
24/7 clean energy will require
new technologies such ashydrogen and LDES. Highlighting
early demand for these nascenttechnologies will help toaccelerate and de-risk the financerequired for broader adoption.
HDCs have the scale, expertiseand appetite to be valuable
partners to trial, and if successful,invest in the acceleration. Theirprojects may also benefit from
grant schemes for which futurecommercial demand is a
pre-condition.

27
28

Examples include FlexiDAO, nZero, Enosi or Powerledger
Australian Department of Climate Change, Energy, the Environment and Water, ‘Policy Position Paper for renewable electricity certification’, December 2022

POWERING A CLEAN ENERGY FUTURE

16

CONCLUSIONThe Task Force on Climate-related Financial
Most major economies
in the APJ region
havetoDisclosures(TCFD) is a framework
designedset
ambitious
renewable
anddecarbonisation
enable transparency and standardization acrosstargets for 2030,
onpublic
the pathto net zeroby midcompanies
in theirdisclosureof climatecentury.
Toachievethesetargets,
they
will
need
related risks and opportunities.
all the energy storage, green hydrogen and otherfirmingtechnologies theyarecandevelop.
TCFD
recommendations
structured
around four thematic areas that represent
By seeking
to eliminate
its power emissions
core
elements
of how organisations
operate.
by2030
through
24/7
clean
energy, theThe areas are governance, strategy,
riskHDC
industry has a anduniqueopportunity
to collaborate
management,
metrics
and targets.
with the tech and energy sector as a powerful
conduit to accelerate the policies, technologies
and commercial structures needed for this APJ
energy transition. This makes them the ideal
partner to accelerate renewables strategies.

Fifteen years ago, governments and corporations
began setting renewable targets and in doingso, helped stimulate the market for renewablegeneration. Now, the HDC industry in APJ,
supported by regional policy makers andregulators, can lead the way and move themarket forward on the firming and storing
technologies that renewable energy generation
now needs to achieve 24/7 clean energy.
Strong collaboration and intent are needed so
the industry can unlock the potential of 24/7
clean energy across the region. By prioritising
the enablement of innovative strategies like
24/7 clean energy, major players in the tech andenergy sector can play a lead role in this oncein-a-century global transformation.

POWERING A CLEAN ENERGY FUTURE

17

GLOSSARY

Additionality principle – The notion that carbon
emissions reductions would not occur without the
support from carbon credit sales.
Battery Energy Storage System (BESS) – Devices
that use batteries to enable energy to be stored
and then released as electric power when needed.
Clean energy – Energy derived from carbon-freeenergy technology sources. Examples include
solar, wind, green hydrogen, geothermal or nuclear
energy.
Colocation – A data centre in which equipment,
space, and bandwidth are available for rental tocustomers.
Dispatchable technology – An electrical powersystem, such as a power plant, that can regulate its
power output to the grid on demand.
Energy transition – The gradual shift of global
energy use from fossil-based sources to azero-carbon system through the move towards
renewable energy sources like wind and solar.
Firming – Balancing output from variableintermittent power sources (e.g. wind/solar) fora specified period of time with dispatchable
technology.
Grid carbon intensity – Measure of how much
CO2 emissions are produced per kilowatt hour ofelectricity consumed in a specific electric grid
system.
Hyperscale Data Centre (HDC) – A class of data
centres that carry 50+ megawatts (MW) of IT load.
They tend to have onsite high voltage infrastructure
built from the outset to enable this scale.
Long-Duration Energy Storage (LDES) – Storage
through technology such as mechanical, thermal,
electrochemical and chemical storage that can be
deployed to store energy for prolonged periods tosustain electricity provision.
Power Purchase Agreement (PPA) – A long-term
contract for the purchase of power between an
electricity generator or supplier and a customer,
usually a utility provider, government or company.
Volume matching – The achievement of 100%
clean energy on a volume consumption averageover a year.

POWERING A CLEAN ENERGY FUTURE

18

Unless otherwise indicated, material in this publication may be used freely,
shared or reprinted, so long as AirTrunk is acknowledged as the source.
About AirTrunk
AirTrunk is a hyperscale data centre specialist creating a platform forcloud, content and large enterprise customers across the APJ region.
The company develops and operates data centre campuses withindustry leading reliability, technology innovation and energy and water
efficiency. AirTrunk’s unique capabilities, designs and construction
methodologies allow it to provide customers with a scalable andsustainable data centre solution at a significantly lower build andoperating cost than the market.
A private company, AirTrunk is well capitalised to fund its development
of data centres across the APJ region. In 2020, a consortium led byMacquarie Asia Infrastructure Fund 2 (MAIF2) and including Public Sector
Pension Investment Board (PSP Investments), acquired a major stake inthe business, investing alongside AirTrunk’s Founder and CEO Robin Khuda.
MAIF2 is managed by Macquarie Asset Management, one of theworld’s leading alternative asset managers and part of the ASX-listed
Macquarie Group Limited (ASX:MQG).
For more information on AirTrunk, visit airtrunk.com
Acknowledgment
This report has been authored by AirTrunk. AirTrunk would like to thank
McKinsey & Company whose research helped inform this report. AirTrunkacknowledges the valuable contributions of McKinsey & Company in thedevelopment of this report.

POWERING A CLEAN ENERGY FUTURE