Project Summary

Electricity demand from heating could quadruple by 2050 to over 100TWh per year, almost a third of GB’s current annual electricity demand. 

Hot Chips will demonstrate how data centre surplus heat could reduce the energy demand of district heat (DH) networks and explore how DNO’s and data centres can work collaboratively to decarbonise DH networks.

Using water-sourced heat pumps in an ambient loop array, this project will reduce electrical demand and increase system efficiency. Coupled thermal storage will provide thermal flexibility for homes as well as electrical demand flexibility for DNOs.

Innovation Justification

Our project will propose a framework that incentivises collaboration between electricity network operators, heat networks and data centres to seek opportunities to decarbonise heat. This will become part of the business-as-usual assessment and planning activities for these parties.

We will achieve this by exploring:

·       Commercial Business Model – We will investigate new commercial arrangements between data centres, network operators, and heat networks to incentivise participation. This will include assessing best practice world-wide. 

·       System Modelling – creating a user-friendly framework to determine benefits to different customers in the value chain. This will consistently evaluate whole system benefits considering residential heat network demands, costs and flexibility solutions such as thermal storage and dynamic tariffs.

·       Ambient Loop Systems – Identify opportunities to leverage 4th and 5th generation district heating networks to repurpose low-quality heat (25-40°C) from data centres to water-source heat pumps. This will boost temperatures (55-60°C), making surplus heat a viable low carbon heating source. 

For electricity networks the counterfactual is that electricity demand to serve Data Centres continues to be assessed without accounting for their capability to reduce the load of decarbonising heat in the vicinity. The installation of data centres and decarbonisation of heat will continue as distinct activities. Data centres will be installed, but valuable heat will be lost to the environment and as a result consumers will eventually pay more for less efficient heat networks or individual heat pumps. 

Heat pumps and Data Centres are commercially available, however the system we are proposing in this project will require further development and testing – TRL6. In addition, the commercial and integration levels have continued to lag at CRL2 and IRL2. 

The development of the waste heat market for Data Centres is too slow, jeopardising Net Zero targets. Previous Innovation investments in individual projects to collocate Data Centres and Heat Networks have not resulted in wide-spread adoption, as they were not focussed on deploying a repeatable planning approach and establishing new commercial models. Hot Chips is therefore needed, to understand the business models, blockers and motivations of the different actors in this market to find an appropriate enduring solution for them to coordinate. 

Impacts and Benefits

DH Networks have shown varied success in the UK, with many being described as inefficient and expensive. Consequently, a third of existing heat networks are expected to be so inefficient they will need to be almost entirely replaced to comply with new technical standards.

For energy consumers, the average cost of running a heat pump is currently more than a gas boiler. This coupled with the high installation costs will deter many consumers switching their supply, thus delaying the decarbonisation of heating. 

Apart from a few isolated instances, the concept of heat recovery from data centres is still sparse. For the pre innovation baseline, we have assumed that all surplus heat from data centres is currently expelled to the environment. 

There is also no joined up approach between DH Networks, DNO’s and Data Centres.

Expected benefits that we would like to investigate as part of this project, include but not limited to:

Financial - future reductions in the cost of operating the network

·       Supplying low grade surplus heat (20–40°C) to nearby residential buildings will result in significantly increasing residential heat pump performance and therefore reduce electricity consumption from heat pumps, which provides cost reductions in operating the network.

·       Integrating individual thermal storage will further reduce peak electricity demand and provide financial benefits to network operation. 

Financial - cost savings per annum on energy bills for consumers

·       Improved efficiency of heat pumps due to data centres surplus heat recovery and the integration of thermal storage solutions and dynamic tariffs will lead to a reduction of heat pumps electricity consumption, leading to cost savings on energy bills for consumers. 

Environmental - carbon reduction – direct CO2 savings per annum

·       A reduction in heat pump electricity consumption will lead to a reduction of operational carbon emissions.

·       Supporting data centres in making use of their surplus heat and supporting their own, and a wider, green transition and therefore reduce data centres’ operational carbon emissions.

The Discovery project will confirm the above expected benefits and compare the solution with a Business as Usual scenarios from a technical, financial, and environmental perspectives.