Challenge

Both the digital and energy infrastructure industries are at crucial inflection points:

• Energy utilities are rapidly decarbonizing while facing increased demand for flexibility as intermittent renewables replace traditional power sources

• Data centers are becoming essential infrastructure while struggling with rising energy costs, heat management, and location constraints

• Both sectors face critical talent shortages and similar reliability requirements

Despite their complementary needs and capabilities, these industries have operated largely in isolation - missing valuable partnership opportunities that could address their respective challenges.

Our Approach

The SDIA research team conducted a comprehensive analysis of both industries, examining:

1. Current state assessment: Detailed analysis of trends, challenges, and drivers in both the data center and energy utility sectors

2. Value proposition mapping: Identification of four key areas where partnerships could create mutual benefits

3. Case study examination: Analysis of successful implementations like the Yandex data center in Mäntsälä, Finland

4. Recommendations framework: Development of practical steps to realize partnership potential

Key Findings

Heat Recovery: Transforming Waste into Resource

• Data centers will soon account for 4-6% of global power consumption, with one-third used for cooling heat that could be utilized

• This heat is often generated in urban areas where district heating demand is highest

• Recovered heat is CO₂-free and can significantly contribute to heat network decarbonization

• Technical solutions already exist to integrate data center waste heat into district heating grids

Demand Response: Data Centers as Grid Stabilizers

• As renewable penetration increases, grid flexibility becomes increasingly valuable

• Data centers with their size, delay-tolerant workloads, and real-time management capabilities are ideal candidates for demand response

• A federation of data centers could "migrate" workloads between locations to address local grid constraints

• Europe is currently accessing only 20GW of demand response potential, while the European Commission estimates the total at 100GW (rising to 160GW by 2030)

Location Synergies: Repurposing Energy Assets

• Energy utilities own significant plots of land in and around cities with redundant power and fiber connections

• Utilities will vacate many urban coal power plants in the next decade as part of decarbonization efforts

• These sites are perfectly positioned to serve as colocation data centers, addressing key data center location challenges

• Combined Heat and Power (CHP) plants are particularly suitable for data center conversion due to existing connections to district heating networks

Operational Synergies: Shared Competencies

• Both industries deliver critical infrastructure requiring near-continuous availability

• Both industries face similar talent shortages and recruit from the same talent pools

• The electricity grid's development path provides a blueprint for the evolving digital grid

• Digital applications are progressing from business-critical to potentially life-critical, mirroring electricity's evolution as essential infrastructure

Impact and Recommendations

Our analysis produced several actionable recommendations:

1. Energy markets improvement: Energy services markets need clearer price signals and value communication to make demand response viable for data centers

2. Standardized partnerships: Development of standard contracts between district heating grids and data centers to resolve CAPEX responsibility questions

3. Heat valorization: Create proper market mechanisms to value recovered heat, which currently lacks clear pricing structures

4. Organizational shifts: Data centers should bring energy management under IT staff jurisdiction to overcome aversion to complexity

5. Policy alignment: Energy regulators should recognize data centers as potential flexibility resources in their market designs

6. Strategic site selection: Hyperscale providers should factor district heating integration into their site selection processes

7. Municipal coordination: Local authorities should evaluate decommissioning utility sites as potential data center locations

Conclusion

The "Utility of the Future" report reveals that the integration of digital and energy infrastructure offers mutual benefits that neither industry could achieve alone. By reconceptualizing their relationship, these industries can create new value through heat recovery, grid flexibility, shared locations, and operational synergies.

The report provides a comprehensive framework for understanding how data centers could evolve into combined heat and computing power (CHCP) facilities, while energy utilities could leverage their assets and expertise to enter the digital infrastructure space.

As we move toward a future where digital infrastructure becomes as critical to society as electricity, these partnership opportunities represent not just cost savings or new revenue streams, but a fundamental reimagining of critical infrastructure for the 21st century.