Europe wants more cities to use datacenter waste heating. How's that going?

There's a cost, and operators are worried it will fall on them

As part of its 2035 energy targets, the EU wants the heating and cooling sector to be carbon-neutral, using renewable sources including waste heat from datacenters. Germany has gone even further and tried to mandate this with targets. How's it going?

If you judge by recent successful EU-funded initiatives, quite well. But some DC operators are concerned they'll be left shouldering the bulk of the costs.

Industry reps facing down a potentially prescriptive law about energy reuse in Germany have said companies running DCs have no issue with this – they're totally game to donate waste heat – it's uptake by consumers that's the issue. And, of course, inevitably, there is the question of money.

"We're ready to finance a lot of this," Anna Klaft from the German Data Center Association told Bloomberg earlier this year. But she added that this doesn't mean "everything should be shunted off onto this sector."

Hot enough for you? Well, no, not really...

The temperature of an average datacenter's waste heat is not high enough for a heating system network; you need a heat pump for amplification to sort out the difference. But transferring the thermal energy to a higher temperature point draws a significant amount of power too. According to an Uptime Institute report last year, designing a DC or any other industrial site for waste heat reuse can "often" increase the use of energy "since heat pumps are needed to increase outgoing heat temperature," though it can also "lower overall carbon emissions by reducing energy that would otherwise be needed for heating."

The report also notes that the option to reuse datacenter waste heat is "typically limited to colder climates," and would require connections to district heating systems or manufacturing sites. It adds that this means mainly Northern Europe, the bits roughly around and above the 54th parallel north.

You could see why Europe is concentrating on heat. According to the European Commission's Directorate General for Energy, heating accounts for 50 percent of the energy demand and 70 percent of that is fossil fuels. Even before the current energy crisis, and Germany's misguided, own goal nuclear switch-off (which happened last weekend, months after government officials jawdroppingly suggested they'd only keep nuclear plants working if they were used as an "emergency reserve" – before having it explained by patient engineers that you can't just switch a nuclear plant off and on again), it seems straightforward for EU lawmakers to prioritize the use of waste heat from industrial and commercial applications in district heating.

"District heating," if you're wondering, refers to a network distributing thermal energy through to buildings, usually through the medium of water. There are some, among them the manufacturers of the requisite heat pumps, who are unhappy about this focus on district heating at the expense of other services their pumps might deliver, for example power generation when delivered to the grid.

Marco Baresi, marketing director at heat pump maker Turboden, who is also a board member at Euroheat and Power, said he found the directive "limiting" because it "focuses only on datacenters when there are many other equally interesting energy intensive sectors (steel, glass, cement)."

Baresi told The Register: "Energy audits in large enterprises have been mandatory for four years but unfortunately there is no evidence of a strong push towards investments in heat recovery (for heat or power generation or both purposes) despite the huge potential."

He added that any cost-benefit analysis for these investments should consider not "only the pure economic factors but also the external benefits, already well known from the famous IEA report" – this one – published in 2015, which he said were "often left only on paper."

Baresi also noted that the regulatory evolution of district heating provides for an increasing use of heat recovery.

A March 2023 paper from the European Commission's Directorate General for Energy, meanwhile, cites, among other projects, the Horizon 2020 funded Grow Smarter project:

The technical innovation it uses is "a heat pump model that can produce hot water at a temperature of 85°C instead of around 68°C." According to the paper:

This measure is applicable to any city where there is a heating system nearby into which the waste heat can be fed. The DSO (Distribution System Operator) needs to allow, and pay, for third-party feed-in into the network. Therefore, the upscaling possibility of this measure is good when there is a DH-network in place and a DSO who are willing to apply a waste heat business model towards third parties.

Technical feasibility: Since the excess energy recovered is not a high-level heat (25-40°C), the energy can be consumed either in the return lines or in the supply line after being further heated by efficient heat pumps (using renewable electricity) … The business model is based on the balance between connection/pipe investment and value of avoided other own production due to purchased waste heat. The heat supplier can lower their operating expenditure due to a new income for waste heat and avoid reinvestment cooling system costs.

However, the technical feasibility issue, as well as the question of added costs, is a problem for some in the German DC operator world, under pressure by an upcoming law – the Act to Enhance Energy Efficiency, Improve Climate Protection and Implement EU Legislation (Energieeffizienzgesetz, EnEfG).

Germany and the UK, by the way, have the greatest density of DCs in Europe, with Germany's mostly clustered around Frankfurt, where over 20 percent of the electricity demand is caused by bit barns.

While the UK's DC operators are already reportedly smarting over being excluded   from a list of sectors eligible to receive government-backed discounts on their energy bills, German DC operators are also loath to face potential increased costs as upcoming legislation comes into play.

A paper [PDF] published late last year from the Borderstep think tank on the economy of waste heat from datacenters in Germany (auf Deutsch) says obstacles to the economic use of waste heat from datacenters lie in particular in the high electricity costs for the operation of heat pumps. In order to advance the use of waste heat in Germany, cooperation between politicians, the datacenter industry, energy suppliers, project developers and municipalities is required, it adds.

With its Energieeffizienzgesetz draft from October 2022, the German government sets out a legal framework for datacenters that contains references to mandatory reusing of excess heat. The Federal Cabinet approved the draft law this week.

It all kicks off in 2025, when newly built DCs will have to reuse 10 percent of their excess heat. That was meant to start at 30 percent and rise to 40 percent for datacenters that started operation after January 2027, but has since been adjusted down to 20 percent from July 2028.

Dr Béla Waldhauser, spokesperson for the Alliance for the Strengthening of Digital Infrastructures in Germany, said in a statement that the draft of the act released on April 3 "in our view, missed the technical and economic realities of the datacenter industry in essential aspects," although he conceded that "the revised draft now available at least offers a basis for discussion, as some of our fundamental points of criticism of the first version have been addressed."

He added: "Admittedly, the adjustment of the waste heat levy obligation from the previous 30-40 per cent to the current staggered 10, 15 and, from 1 July 2028, 20 percent waste heat is an important step in the right direction. Unfortunately, the obligation remains unimplementable, as seasonal fluctuations between summer and winter demand for waste heat remain unconsidered in the new draft act."

The digital policy spokesman for the FDP parliamentary group, Maximilian Funke-Kaiser, told The Register in a statement that the new EnEfG law does take the datacenter operators into account, noting that (translated from German): "We try to meet the special requirements of the datacenters, while at the same time ensuring compatibility with their social obligations. That's why we want the waste heat from the centers fed into the heat cycle in a targeted manner in order to achieve better energy efficiency.

"According to Section 4, §11 (3), 'Exceptions to the specifications for energy consumption effectiveness exist if the heating network operator does not accept the offer to use heat, there is a long-term heating network agreement with nearby communities or the proportion of reused energy is lower through no fault of their own.'"

He added that another part of the bill would account for "datacenters whose reused energy is largely absorbed for use via a heating network" as they would be exempt from the obligation to set up an energy or environmental management system if their annual average total energy consumption within the last three years did not "exceed the threshold of 25 gigawatt hours."

As for the European Commission at large, it updated targets for the sector in 2018, with a directive establishing a "binding" renewable energy target for the EU for 2030 of at least 32 percent, including a "clause for a possible upwards revision by 2023." How each member state gets there will be, to a large extent, their own problem.

The proposed revision of the directive is being looked at by the Council and the European Parliament, along with the "rest of the legislation aiming to deliver on the European Green Deal," according to the European Commission. Its adoption is expected by first quarter 2023. ®

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