Flexible Integration of Data Centres into the Energy Sector: Regulatory Frameworks and Energy Systems Modelling

Data centres have become indispensable infrastructure for modern economies, supporting society's increasing digitalisation. However, their energy-intensive operations pose significant challenges to energy systems and decarbonisation efforts due to their substantial electricity consumption. In Denmark, data centres are projected to consume 15% of the national electricity demand by 2030, straining local energy systems and challenging energy and climate goals. In this context, leveraging their cooling flexibility and waste-heat recovery potential offers a pathway to mitigate their environmental impacts and support the energy transition.

This thesis investigates the role of data centre integration as a strategy for decarbonising the energy system through their integration with electricity and district heating systems. It advances methodological frameworks for analysing such integration, shifting the focus from a facility-level perspective to a system-wide approach.

The analysis employs macro-scale energy systems modelling, techno-economic analysis, and bilevel optimisation. This methodological framework evaluates the systemic benefits of integration and cross-sector cascading interactions. It further investigates how stakeholder decision-making influences these benefits, focusing on interactions between district heating utilities and data centre operators, as well as policymakers and district heating utilities. The methodology is applied to the Danish context, where significant data centre deployment coincides with extensive district heating infrastructure, a large share of renewable energy sources, and ambitious decarbonisation goals.

The findings reveal that integration could offset up to two-thirds of the energy-supply costs from new data centres while simultaneously achieving net decarbonisation through 2035. These benefits emerge from data centres becoming a source of decarbonised heat supply, as their electricity consumption drives renewable generation expansion. However, realising these benefits depends significantly on stakeholder coordination mechanisms. The analysis demonstrates that strategic behaviour and pricing structures in bilateral agreements between district heating utilities and data centres substantially influence the magnitude and distribution of cost and emission savings. Furthermore, technology-specific subsidies for waste-heat recovery prove inefficient for decarbonising district heating systems, as their inflexibility and structure fail to align the cost-minimising objectives of district heating utilities with the decarbonisation goals of policymakers.

This thesis demonstrates that data centres can play a significant role in decarbonising the Danish energy system by acting as sector-coupling interfaces between the electricity and district heating sectors. This can effectively transform the data centre industry, often seen as a burden to energy systems, into an asset supporting the energy transition. However, fulfilling this role requires efficient coordination among multiple stakeholders through appropriate price and policy signals.