Digital Realty Signs 10-Year PPA with Engie

Digital Realty signed a 10-year power purchase agreement (PPA) with Engie, a French utility. Engie will provide Digital Realty with an estimated 120 gigawatt hours per year from a new solar park in Brandenburg, Germany. Digital Realty says it made this move to expand its access to renewable energy sources in Europe. 

What makes PPAs so attractive to data center operators, such as Digital Realty, is the guarantee of price certainty for energy during a time when pricing and availability in that sector can be volatile. The added benefit is that PPAs source energy from renewable sources, which in Digital Realty’s case is the sun. 

Several hyperscalers pioneered usage of PPAs. For instance, Google has matched energy consumption with wind and solar PPAs since 2017. Microsoft signed a PPA last year to provide 900 megawatts of wind and solar energy to its data center campus in Ireland.

The hope is that lawmakers and environmental advocacy groups will see PPAs as a way to reduce strain on the local power grid while reducing carbon emissions.

The trend towards sustainable energy for data centers is only going to continue, say industry insiders. "This is not just to meet carbon reduction targets but for improved market credibility,” said Harsh Macwan, founder and CEO of Scriptics Technologies.

Reducing Emissions in Europe

To formalize renewable energy efforts, local, federal, and international governing bodies are putting legislation around sustainable energy requirements. For instance, the European Union introduced the Corporate Sustainability Reporting Directive (CSRD) in January 2023. One portion of the CSRD requires many companies to report on sustainability efforts. Digital Realty’s push for renewable energy comes at a time when they will be expected to report on climate-related efforts. A prominent factor in fluctuating energy prices is the ongoing Russian war on Ukraine.  The energy shortages are exacerbated by rapid expansion of data center development to meet customer demand in Europe. 

These factors lead companies like Digital Realty to search for alternative, long-term sustainable energy sources and rely less on foreign energy and fossil fuels. Additionally, Digital Realty is a publicly traded company, so they come under more public scrutiny when it comes to Environmental, Social and Governance (ESG) efforts. 

Engie has similar sustainability goals and plans to double renewable energy generation by 2030. This news comes on the heels of the company’s partnership with Google to boost wind farm power efficiency. This isn't the only PPA that Engie negotiated recently. Telecommunications company, The Iliad Group, signed a 15-year PPA with Engie to purchase energy generated by the Labrit solar farm. The utility company is positioning itself as a partner to data center and telecommunications providers in decarbonization and sustainability efforts.

The Brandenburg solar park is under construction now by CEE Group. ENGIE designed the PPA and then connected the supplier with Digital Realty. The Brandenburg solar park is set to begin operation this year.