Data center waste heat utilization in district heating in a volatile low-carbon electricity market

Data center waste heat utilization in district heating could be one solution to reduce carbon dioxide emissions, since it reduces emissions in the heating sector while increasing data center energy efficiency. The profitability of this solution depends on regulations and incentives in the data center location. In this paper, the tax regulation of data center waste heat utilization in district heating in Finland is examined with proposals for more sustainable outcomes. The large amount of variable wind power combined with nuclear and hydro power has caused low carbon dioxide emissions but volatile electricity prices in Finland. Two cases with data center waste heat utilization are inspected, Espoo (310 000 inhabitants) and Seinäjoki (66 000 inhabitants). In Espoo, a large data center is expected to be vital in abandoning coal and achieving 95% fossil-free district heating. In Seinäjoki, data center waste heat would replace carbon-intensive peat in district heating. This paper shows how district heating connected heat pumps can together with waste heat sources provide balancing in energy systems with a large share of renewable energy sources. The methods include analyzing the district heating networks with energyPRO software and related profitability calculations. The results show that the Finnish tax incentives for waste heat utilization seem sufficient if district heating is fossil-fuel intensive and carbon dioxide emission prices are high. The analysis presents benefits for both district heating and data center operators. The challenges and lack of regulative support are stated, and ways to increase waste heat usage are proposed. • Data center waste heat reduces emissions in carbon intensive district heating. • Waste heat and heat pumps provide balancing for wind power dominated systems. • Low electricity tax makes heat reuse more interesting for data center. • Obligation of heat reuse for data centers may be needed for full utilisation.