Hydrogen is not a silver bullet for data centres
Authors

Andrew Moore
View bioHydrogen has gained considerable attention in recent years as a potential solution to meet the growing energy demands of various sectors, including data centres. Promoted as a green, sustainable fuel, hydrogen offers a seemingly straightforward path to reduce carbon emissions while maintaining – even expanding – current energy consumption levels.
While hydrogen is a powerful tool to potentially change specific applications, it is not the universal solution – or 'silver bullet' – that many in the industry hail it as. For hydrogen to truly contribute to sustainability goals, we must address several challenges and acknowledge that, first and foremost, reducing energy demand and improving efficiency are far more effective in achieving net zero carbon in data centres.
The hydrogen hype
At first glance, hydrogen appears to be an ideal fuel for data centres. As organisations strive to meet ambitious sustainability targets, hydrogen can provide a powerful, low-carbon energy source. However, relying on hydrogen as a ‘drop-in replacement’ for existing energy sources overlooks a more pressing issue; the need to improve efficiency.
Data centres are energy-intensive facilities. According to the EIA (Environmental Investigation Agency), data centres are estimated to account for around 1.0-1.5 percent of global energy consumption. While hydrogen can play a role – possibly in backup power systems replacing diesel generators - it is not a one-trick fix.
There are key challenges with hydrogen that should first be understood before data centre operators begin designing their new facilities with hydrogen in mind. For hydrogen to become adopted, these must first be addressed:
Manufacturing inefficiencies: Hydrogen production is not simple, especially when aiming for a net zero emission process. Green hydrogen is produced by electrolysis and powered by renewable energy. Electrolysis produces hydrogen by splitting water into its base atoms of hydrogen and oxygen using electricity. While green energy uses renewable energy, it is energy-intensive, with around 20-30% of the energy lost during electrolysis. From there, the hydrogen must be compressed and stored, which incurs another approximately 10% energy loss—finally, converting the stored hydrogen back into electricity results in another approximately 30% loss. These inefficiencies make it less attractive as a primary energy source for data centres especially compared to direct electrification which can achieve greater efficiency.
Distribution: Unlike electricity, which can be distributed through existing grids, hydrogen requires a totally different supply chain – one that is not currently in place at scale. It is still unclear whether existing gas pipelines would be suitable for transporting pure hydrogen. Additionally, the cost of retrofitting would result in expensive, complex, and time-consuming processes. There is an alternative of storing it near power plants; however, this results in logistical challenges given the safety concerns of hydrogen, particularly in urban sites.
Safety: Storage leads us to the next concern: safety. Hydrogen is highly flammable and presents a huge safety hazard if handled improperly. While safety protocols are sure to be implemented, the scale at which it must be produced, stored, and transported for widespread use exacerbates those risks. This requires careful management, a team experienced with this elements' unique properties, and full buy-in from the insurance industry to minimise risk.
Implementation at scale: For now, we have seen successes with small-scale hydrogen projects. The data centre industry would require the production to scale enormously to handle the huge energy demands of these facilities. To do so would require significant investment from organisations and governing bodies to enable the infrastructure and training of workers to be in place. This growth would likely come with pains and should be considered when looking to fuel an entire sector.
To be clear, hydrogen is not without merit. In applications that require very high energy intensity, such as industrial applications and battery storage, hydrogen may offer a solution. However, in the high-power consumption in the data centre sector, improvements to the grid structure can provide a more efficient path. Instead, focusing on enhancing grid stability and reliability, might facilitate a reduced reliance on the need for local backup power. This aligns better with the ongoing decarbonisation of the electric grid and the industry’s overall sustainability goals.
Reducing demand as a path to net zero carbon
Rather than relying on hydrogen as a quick fix, the focus should be reducing overall energy demand. This could involve better re-use of waste heat and optimising equipment to minimise energy use in data centres. Focusing on improvements in IT energy usage effectiveness (ITUE) - which measures the efficiency of IT equipment – could further reduce parasitic power losses. Additionally, rather than diverting resources to develop hydrogen distribution infrastructure, investing in strengthening the existing electric grid may be more beneficial. This would ensure it can handle the increased demand from renewable energy sources and be more efficient in its energy transfer.
For data centres, standby generators' enormous cost and environmental impact—as highlighted in our previous blog—could be addressed without turning to hydrogen, depending upon the regional likelihood of mains failure. At Cundall, we see the greatest option for achieving zero carbon as reduction. This can be a reduction in materials, operating costs, or, in this case, reducing the reliance on generators. We could see greater results by removing the need for generators and instead investing in high-level, diverse grid connections. Improving this efficiency will lead to greater sustainability.
While hydrogen will have a place in the future energy landscape, our industry must not see it as a 'silver bullet'. It is not the sole option for decarbonising data centres or other energy-intensive sectors. To reach our ambitious net zero carbon goals as an industry, we need to first reduce our total demand and make most effective use of the available energy and heat re-use. It is only by doing this that we can scale. Once the reduction and energy re-use comes, net zero carbon can follow.