EY: Why Data Centres and Tech Need Cleaner Energy Solutions
Global electricity demand is forecast to double by 2050 and businesses are expected to drive three quarters of this growth according to EY.
This surge is being fuelled by factors such as the rise of data centres, electrification, reshoring of manufacturing and investment in new technologies.
EY’s report asks how soaring energy demand can drive lasting prosperity and explores how the energy transition isn’t a straight path.
Rising energy ambitions
Over five years, EY’s Navigating the Energy Transition research programme has surveyed nearly 100,000 residential energy consumers and more than 2,400 energy leaders and decision makers at mid-sized to large businesses.
These businesses were surveyed across eight countries with differing economies and at different stages in the energy transition and renewable energy deployment.
The data found that businesses are increasingly ambitious about their energy futures.
The report shows that 70% of businesses are set to focus on electrification, emissions and energy costs over the next three years, with 74% saying that traditional energy provider account management isn’t enough anymore.
EY estimates that 71% of businesses have energy strategies, however they are waiting for energy specialists to buy or collaborate on these with them.
Affordability is also key. Roughly 70% of businesses are planning to invest in on-site generation and battery storage within three years, paying more for faster access to sustainable energy, while expecting a higher standard of tailored solutions.
The study makes it clear that expectations of providers are changing.
“Successfully navigating accelerating business energy growth will drive energy prosperity and define the economic and energy transition winners of tomorrow,” says Greg Guthridge, EY Global Industrials & Energy Customer Experience Transformation Leader, in EY’s report.
The report states that today’s energy needs are diverse and complex, with mid-sized companies struggling to adapt.
The neglected middle
Mid-sized businesses, which make up a significant share of global employment and GDP, often feel overlooked.
They share the same energy ambitions as larger peers but report lower confidence in achieving them.
These organisations are 20% less likely to have clear energy plans and face barriers such as financing challenges, regulatory complexity and lack of support from providers.
More than two-thirds of mid-sized businesses are considering on-site renewables, battery storage, demand response programs, electrification of equipment and EVs.
However, EY says that “progress is slow because of barriers including the high cost of financing, complex regulations and challenges working with energy providers".
Addressing this “neglected middle” represents a lucrative opportunity for providers to step in with targeted, sector-specific support.
Digital tech and data centres
Digital tools are emerging as a key enabler of the business energy transition.
The impact of the generative AI explosion on data centre consumption is certainly a key factor in rising demand of global electricity, but it is by no means the only driver.
The report found that 71% of businesses want AI to deliver energy advice and provide insights into learning about energy solutions.
This reflects a wider demand for advanced analytics, digital portals and automated systems to optimise energy consumption and reporting.
“Data centres are multiplying, electrification is accelerating and manufacturing is ramping up – all driving electricity demand to levels not seen in decades,” says Greg.
“Rising energy demand and infrastructure investments are impacting affordability and raising important questions about who should pay for it.”
An example of utilising smarter energy solutions is US-based utility AES.
AES operates across 15 countries, supported by a global ecosystem that helps bring smarter energy solutions to business customers.
The company has partnered with Siemens to create Fluence, a company offering battery storage designed for industrial applications.
Investment in Uplight, a cloud-based energy efficiency provider, enables AES to also offer digital energy engagement platforms for businesses and residential consumers.
Partnering with Google has also helped AES to develop a 24/7 carbon-free energy solution that is used by Google’s Virginia data centre.
AES has also joined forces with Australian solar company 5B, helping business customers accelerate faster access to more renewable energy.
Taking care of businesses
An estimated 42% of businesses want their providers to be energy transition advocates.
EY states there are four potential roles that offer opportunities for providers to better support:
- Core energy operator: Providing simple rates and programs tailored to business
- Energy transition advocate: Helping understand and adopt clean energy solutions
- Energy platform orchestrator: Providing platforms to control and optimise energy
- Specialised solution provider: Offering energy-related products and services (e.g., solar panels, battery storage and energy-as-a-service)
As the report makes clear, energy is every business’s business.
