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“When a new data centre is built, or any new development for that matter, it needs power. Requirements for utility infrastructure needs to be considered, designed and installed according to the needs of the site and end user. There’s clearly a cost to this and that can vary considerably depending on various factors such as proximity to the most suitable point of connection to the network, and this has risks associated with it – laying new infrastructure under roads and railways for example is no walk in the park. So, in some parts of the country, typically areas which are of focus for economic development, specific sites might be marketed to data centre developers as ‘construction ready’ – i.e. groundwork and utility infrastructure has already been installed, essentially removing the risk factors to aid the fast-track development of a new data centre.
“This is an immensely attractive offer for anyone looking for a more rapid return on their investment. At UK Power Distribution we’re part of a larger Group with a construction business, Matrix Networks, operating as a specialist utility infrastructure provider for the industrial and commercial market. This means we know only too well the risks and costs associated with building out this part of the plan. So, if a site is available with infrastructure in place, isn’t it just a case of just ‘plug and play’?
“No, is the simple answer. When it comes to connecting a new data centre to the National Grid there are options available. A developer can either go to the host Distribution Network Operator (DNO) for that geographical area, or have an Independent Distribution Network Operator (IDNO) adopt and maintain the electrical network for them. UK Power Distribution is an IDNO. Both DNOs and IDNOs are regulated by Ofgem and have equal service and performance standards to adhere to, but that’s where the similarities end. Compared to DNOs, IDNOs are able to offer a far more agile solution, they can tailor access to power over time and according to need – but perhaps, and most attractively, they can pay to adopt networks. This essentially gives the developer an injection of cash at a time when it’s probably needed. It’s called the ‘asset value’.
“To anyone who doesn’t work in the energy industry, most of what I said in the last paragraph probably isn’t going to make a lot of sense. Afterall, if you didn’t know you could choose who manages your electrical network in the first place, then the idea of benefits of using one option over another isn’t going to seem relevant. Let me backtrack.
“Great Britain is divided up into 14 geographical zones. DNOs are licensed by Ofgem to provide electricity to region-specific areas - and many of these DNOs are household names. IDNOs on the other hand are also licenced by Ofgem, but with the key difference that they
can provide electricity to any location nationwide. So, when a developer is looking to see who can provide the power needed for a new data centre, they can either opt for the host DNO, or choose from any of the 14 Ofgem-licensed IDNOs which are currently operational in Great Britain.
“If there’s a choice, then what factors should help drive a decision? The electricity market is heavily regulated and part of that is for safety reasons. But the difference comes down to what an individual customer is looking for. DNOs tend to be quite traditional, some might say rigid in their approach, which usually means they’re not usually working with the customer’s needs in mind.
“To give an example, Company X wants to build out a data centre and connect it to the Grid. The infrastructure is in place, the substation is built, but they want increase its power demand over a period of five years. The incumbent DNO can make the connection for them and require them to declare their maximum power load and pay for it from day one. An IDNO however, can also make the connection and maintain the network for them, but with three further benefits:
1. They can offer an ‘asset value’ or AV to adopt the network – essentially cash back which could help Company X with their construction costs. This could be £millions, depending on the scale of the project
2. The IDNO can also secure Company X’s future capacity with the host DNO, only charging them based on an incremental ramp-up as the data centre matures
3. In addition, the IDNO can just be more flexible in their approach – providing a network connection solution which suits the requirements of Company X.
“If all of this is news to you, then great, this is something which could save you a lot of money. But with anything which is considered new, there are always doubts. If the DNOs have been doing this for years, aren’t they a better option to work with? Surely they’re more experienced? Not at all. There’s nothing new about working with an IDNO – they’ve been adopting owning and operating networks for new homes and businesses for more than 20 years. And as I said, DNOs and IDNOs are regulated in exactly the same way – and actually, around 80% of new electrical connections in Great Britain are now made by IDNOs.
“So how you do engage an IDNO? This might be dictated by the ICP (Independent Connections Provider) who installed the utility infrastructure prior to you arriving on site – in which case, you wouldn’t have a choice. But, if you have free reign, of course I’d recommend looking us up, or you can visit the Independent Energy Networks Association https://ina.org.uk/our-members/
“I’ve worked in this industry for a while. It’s complex and confusing for many, but there are always simple and cost-effective solutions to be found, if you know where to look. Most people have never heard of an IDNO, let alone know what benefits they can deliver. But for a new development but in the data centre industry, where power is critically important, I’d say it pays to do your homework and find the solution which suits you.”
UK Power Distribution is part of Matrix Group which delivers tailored energisation and asset adoption services to new industrial and commercial developments. It’s a complex projects specialist with capabilities in the high voltage (HV) and extra high voltage (EHV) networks which are synonymous with the data centre industry.