Navigant Research Blog

Data Centers Drive Market for DC Distribution Networks

Peter Asmus — July 15, 2015

The market for direct current (DC) distribution networks is not a single, cohesive market. Rather, it encompasses several disparate opportunities—telecommunications towers, data centers, grid-tied commercial buildings, and off-grid military networks—that revolve around different market assumptions, dynamics, and drivers.

Given the expense of current existing redundant alternating current (AC) uninterruptible power supply (UPS) systems, DC data centers would appear to be a no-brainer from an engineering point of view. Despite this, energy remains a small portion of the overall operations budget of data centers. As a result, the value proposition to conservative operations managers may still be a hard sell in the near term. However, DC microgrids can actually offer higher reliability than status quo AC solutions, so validating early adopter DC microgrids is a critical step forward for this market opportunity. The ABB 1 MW DC data center located in Zurich, Switzerland, is just one example of how this application is gaining momentum.

Distributing DC enables replacement of AC-DC converters within individual devices with a smaller number of larger, more efficient converters. LED lighting installations that run on 24V DC lines, for example, require up to 15% less energy than the same lights running on fixture-level rectifiers. Nevertheless, losses in the linings limit 24V DC distributions to just 10 meters, so manufacturers are developing 380V DC wiring to extend comparable benefits to entire data centers and other commercial buildings. Asia Pacific is expected to lead this market in both the near and long-term, with China alone having already deployed hundreds of DC data centers.

DC Data Center Network Implementation Revenue by Region,
Base Scenario, World Markets: 2015-2024

DC Data Network Implementation Revenue

(Source: Navigant Research)

The core challenge facing DC distribution networks lies with the need for standards and open grid architectures that can help integrate the increasing diversity of resources being plugged into retail power grids. Even DC advocates maintain that distribution networks operating at the municipal level may always remain AC systems. The efficiency gains accrued by sticking with DC instead of converting to AC (and then back to DC) are not as great at this higher voltage level. This may remain the sweet spot for AC technology, serving the vital role of interconnecting large wholesale transfers from high-voltage DC (HVDC). In fact, DC microgrids and nanogrids could, ironically enough, extend the life of the incumbent AC distribution system by taking loads off that system in an intelligent and dynamic way.

The focus of the industry, working through the efforts of the EMerge Alliance, is currently medium-voltage DC distribution networks. These systems are mostly concentrated on the data center market segment, but can also apply to commercial buildings—especially those of considerable scale, such as big box retailers (Costco, Walmart, etc.). At present, the majority of progress in developing DC-based technologies has occurred at either the high-voltage (more than 1,000V) or low-voltage (less than 100V) level of electricity service. Since microgrids and building-scale nanogrids typically operate at medium-voltage (roughly 380V to 400V), much work needs to be done to bridge this voltage innovation gap, and this goal is the focus of companies such as ABB, Bosch, Emerson Network Power, and others.

As noted in a previous blog, Bosch is encountering a few regulatory issues when it comes to deploying DC microgrids, primarily an artifact of assumptions that distributed renewables and energy storage are interconnected to the alternating current utility grid. But surprisingly, DC fits in well with AC infrastructure, and is especially accommodating for integrating cutting-edge distributed energy resources.

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