Data centers are at the center of the information age. They host our databases, cloud applications, and AI models. They are also growing increasingly unpopular. The environmental impacts and public outcry surrounding new developments pose data center risks that threaten all industries that rely on data center expansion. A recent investor guide published by Ceres explores these risks and proffers some solutions:
- “Clean energy deployment — generation resources that can come online faster than new fossil-fuel plants (such as solar, wind, battery storage)
- Flexible interconnection and contract design — agreements that let data centers accept reduced power during grid emergencies, while shielding everyday customers from the financial risk of new infrastructure built to serve large loads
- Demand-side management — distributed generation and demand response programs that help balance peak load and reduce strain on the grid
- Grid-enhancing assets — energy storage, smart-grid technology, and virtual power plants that help meet and manage demand in real time
- Proactive grid planning — forward-looking assessment of grid needs to ensure reliability and affordability as demand grows”
There is a certain irony to AI overtaking ESG as the market’s “next big thing.” Primarily because sustainability can solve many of the data center risks driven by AI. ESG professionals often assess local resources such as electricity and water, identify sustainable ways to use and preserve them, and share this information with local populations.
Perhaps companies cannot “hyperscale” as quickly as they would like sustainably, but the alternative is losing their social license to operate. If that happens, then we’ll likely see more moratoria on new development like the one in New York. Some growth is better than no growth, and sustainability professionals are uniquely positioned to ensure developments don’t endanger the resources in their communities. Companies reliant on data centers would be wise to leverage sustainability departments to minimize their data center risks.
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