Hydrogen-based data centers are in Singapore's decarbonized, digital economy vision

Singapore is stepping up efforts to explore the prospects for hydrogen in data centers as it prepares for a carbon-free digitalized economy, a move that could expand the scope of the clean fuel beyond some of the main focus sectors like transportation.

With hydrogen offering a strong alternative for cutting the carbon footprint and reducing dependence on fossil fuels, the move signals the city state's increased focus on speeding up initiatives and prepare itself for the energy transition.

Earlier this month, Keppel Data Centres and Mitsubishi Heavy Industries signed an agreement to jointly explore the implementation of a hydrogen powered trigeneration plant concept for data centers in Singapore through the Steam Methane Reforming process, according to a statement from Keppel. By incorporating carbon capture and storage capabilities, both parties will seek to ensure that the process is carbon neutral.

The companies will study how a hydrogen powered trigeneration plant-supported data center can meet the expanding needs of the digital economy in a safe, reliable and environmentally friendly manner, the statement added.

Since a trigeneration plant produces heat, power as well as cooling, a trigeneration plant-supported data center can not only tap the electricity produced by the plant, thereby reducing its reliance on the national grid, but also tap on the chilled water produced by the plant to cool the data center's systems and facilities.

One of the possible projects that might benefit from the hydrogen powered trigeneration plant concept is a floating data center park project in Singapore that Keppel Data Centres is currently pursuing, the statement said.

"The exploration of hydrogen infrastructure is part of our strategy to work towards de-carbonization," said Keppel CEO Wong Wai Meng.

Bright prospects, costs a challenge

Data centers are big consumers of power, with a large data center requiring as much as 30 GWh/year. In the UK, it is estimated that data centers alone consume 2-3 TWh of electricity annually. This puts quite a large strain on power grids, besides also inflating their operational costs. Energy costs usually make up 40%-60% of data centers' operating costs, according to Energy Aspects.

Data centers require consistent, reliable and uninterrupted power supply, and almost always have onsite generators to kick in if the grid collapses or is strained. Thus, it is not yet feasible to power data centers with renewables, such as wind and solar power, due to the intermittency and unpredictability of the power supplied. Consequently, data centers are often connected to the grid and tend to be big carbon emitters, the firm added.

"There seems to be quite a bit of innovation around how data centers are powered. Improving on the current grid-solution could drastically reduce operating costs, lessen the strain on the grid, and reduce carbon emissions quite significantly. Hydrogen gas, and the use of fuel cells, is a possible solution with a number of promising benefits, but also some noteworthy downsides," said Caroline Still, Cross Energy Analyst at Energy Aspects.

While hydrogen-powered fuel cells provide a consistent and reliable source of power, easy to refuel and can be stored onsite easily, high costs would be a challenge. Both blue and green hydrogen production is far costlier than gray hydrogen – gray hydrogen costs about $30-$63/MWh of hydrogen produced, whereas blue hydrogen costs $51-$90/MWh and green hydrogen costs $90-$195/MWh.

"Using grey hydrogen would defeat the purpose of powering data centers with fuel cells. Using blue and green hydrogen would inflate the costs of operation even more," Still added." This is not to say that I don't think the idea has potential."

Barclays said in a recent research note that for blue hydrogen, the largest cost is the natural gas itself, followed by capital costs and water. And for green hydrogen, the main costs are electricity as well as the capital costs of building the project.

Expanding the scope

The move by Keppel and Mitsubishi to explore hydrogen's prospects in data centers come three months after five Singaporean and two Japanese companies signed an agreement to study how hydrogen as a low-carbon alternative can contribute to a clean and sustainable energy future for Singapore.

Under that agreement, PSA Corp. Ltd., Jurong Port Pte. Ltd., City Gas Pte. Ltd., Sembcorp Industries, Singapore LNG Corp. Pte. Ltd., Chiyoda Corp., and Mitsubishi Corp. will develop ways to utilize hydrogen as a green energy source.

This would involve research and development of technologies related to the import, transportation and storage of hydrogen.

"As the world recovers from the COVID-19 pandemic, we expect the issue of sustainability to come back into sharp focus with energy once again at the heart of this," Barclays said.

"Big changes are clearly needed to move the world to a lower-carbon pathway without a sharp step-down in GDP, and hydrogen is rapidly emerging as a viable option to help de-carbonize the hard-to-electrify parts of the economy and even help in the deployment of renewable power by acting as a form of energy storage," it added.