Paul Rodden • Season: 2024 • Episode: 353
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Welcome to The Hydrogen Podcast!
In episode 353, In this episode, Paul discusses ECL’s groundbreaking hydrogen-powered AI data center project and the EU’s new rules limiting Chinese electrolyzer imports. He examines the implications for the hydrogen industry, data center sustainability, and Europe’s renewable energy supply chain.
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Transcript:
ECL takes on AI data center power needs with the help of hydrogen and the EU makes good on pushing out Chinese electrolyzers. I’ll go over this news and give my thoughts on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy, where is capital being deployed for hydrogen projects globally, and where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
First up today in a press release on September 25 ECL announces world’s first one gigawatt off grid hydrogen powered AI factory data center. Data Center-as-a-Service pioneer ECL, which unveiled the world’s first off-grid, sustainable, modular, built-to-suit data center on June 20, 2024, today announced that it will build the first fully sustainable 1GW AI Factory data center – ECL TerraSite-TX1 on a 600+ acre site east of Houston, with Lambda as its first tenant. The initial phase of TerraSite-TX1 will be delivered in the summer of 2025 at a cost of approximately $450M, with 50MW of data center capacity to be utilized by data center cloud and AI cloud operators. The entire 1GW site will be constructed at a cost of approximately $8B, with funding to be provided by ECL and financial partners.
“The data center technology committed to by ECL is truly transformative in the industry,” said Ken Patchett, VP Data Center Infrastructure, Lambda. “We believe ECL’s technology could unlock a powerful and eco-conscious foundation for AI advancement. This new infrastructure could give researchers and developers essential computational resources while drastically reducing the environmental impact of AI operations.”
ECL has made breakthrough strides in addressing critical challenges in the data center industry, as exemplified by the launch of ECL-MV1 – now in full production – the world’s first off-grid, hydrogen-powered modular data center that operates 24/7 with zero emissions, minimal noise, and a negative water footprint, replenishing water to the community. It offers a 10x increase in energy efficiency with a power usage effectiveness (PUE) of 1.05 and a 7x improvement in data density per rack, which is ideal for AI high-density demands.
Gartner predicts that by 2030, AI could consume up to 3.5% of the world’s electricity. “AI consumes a lot of electricity and water. This negative impact should be mitigated,” said Pieter den Hamer, VP Analyst at Gartner. “Executives should be cognizant of AI’s own growing environmental footprint and take active mitigation measures. For example, they could prioritize (cloud) data centers powered by renewable energy.”
Designed specifically for the development and deployment of artificial intelligence (AI) technologies, the site will also provide space for tenants to deliver cutting-edge AI cloud and traditional cloud services to their customers. Hydrogen will be provided by three separate pipelines that converge at the site, eliminating the need for additional fuel transportation. The initial 1GW phased development may be expanded to 2GW in the future, enabled by its modularity and based on customer demand.
ECL provides highly-competitive data center Total Cost of Ownership (TCO) and the fastest time-to-market, along with unmatched flexibility in location, size, and density. ECL data centers are modular, allowing for easy expansion in 1MW increments, and are built to suit and delivered in less than 12 months, vs. the industry standard of 36 to 48. By eliminating the environmental impact associated with traditional data center development and utilization, they also give AI consumers assurance that their use of AI is not expanding their carbon footprints.
ECL’s AI infrastructure is enhanced by its advanced AI data center management system, ECL Lightning™, which offers real-time monitoring and micro adjustment control over every aspect of data center operations, from power generation to rack cooling. Its user-friendly interface provides comprehensive visibility and configuration capabilities, ensuring optimal performance for AI and other workloads. ECL’s proprietary cooling innovations include using water from hydrogen-based power generation, along with patent-pending quadruple loop and direct-to-chip cooling technologies for its extremely high-density racks.
ECL Terrasite-TX1 comes at a critical time for the state of Texas, with The Electric Reliability Council of Texas (ERCOT) testifying on June 12 this year that the state’s power grid needs will grow approximately 2X by 2030 due in part to the growth of data centers and AI. In response, Texas Lieutenant Governor Dan Patrick posted to X, “We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off.” ECL Terrasite-TX1 is purpose-built to eliminate the stress on the state’s power grid while facilitating state-level economic development and growth of the AI industry.
“While others talk about delivering off-grid, hydrogen-powered data centers in five, ten, or 20 years, only ECL is giving the AI industry the space, power, and peace of mind they and their customers need, now,” said Yuval Bachar, co-founder and CEO of ECL. “The level of innovation that we have introduced to the market is unprecedented and will serve not only us and our customers but the entire data center industry for decades to come.” Okay, so ECL with a massive announcement and leveraging hydrogen as their fuel source to develop their off grid solutions for AI data centers. And as someone in the Houston area, I applaud this hydrogen application for data center power the grid in Texas continues to be pushed to its limits daily during the summer. Combine that with the accelerating need to grow data centers well then power to support that growth is already in limited supply. But with this project getting developed in an area with a steady supply of hydrogen, this is a perfect solution that addresses several issues impacting Texas today and potentially the world in the near future. So well done. ECL, I look forward to seeing your success.
Next in an article in Reuters by Julia Payne. EU changes hydrogen project auction rules to limit Chinese presence. Julia writes, The European Union announced changes to its rules governing auctions for hydrogen grants in an effort to limit EU dependence on China in its renewable energy supply chain, the new terms published on Friday showed.
China has become a dominant force in solar and electric vehicles, and is increasingly competitive with European wind power producers. The European Commission is taking steps to limit creating a systemic reliance on Beijing with new rules, investigations and possible tariffs on Chinese EVs.
The EU’s Hydrogen Bank will run its second renewable hydrogen auction on Dec. 3 to provide up to 1.2 billion euros ($1.34 billion) in grants to new projects.
Earlier this year, the bank allocated nearly 720 million euros to seven renewable hydrogen projects but Europe’s industry raised concerns that the winners were relying on cheaper Chinese-made parts.
The EU’s climate chief said earlier this month the auction rules would be changed to favour local companies.
In the upcoming round, projects cannot have parts sourced from China exceeding 25% of the plant’s production capacity.
“Chinese production capacity is already more than 50% of global production… it is assessed that there is a significant risk of increased and irreversible dependency of the EU on imports of electrolysers originating in China, which may threaten the EU’s security of supply,” the term sheet said.
A much-anticipated report by the European Central Bank’s former head, Mario Draghi, warned of economic decline in Europe if it did not create a more coordinated industrial policy, sped up decision-making and increased investment to keep up with rivals the United States and China.
On the energy side, Draghi pushed a more nuanced approach to China and other cheaper competition. He suggested it would not be worth competing in industries, such as solar panels, that are already heavily dominated by foreigners and instead nurture newer ones where the EU still holds a competitive edge.
“The introduction of resilience criteria marks a pivotal moment… This bold step, aligned with the Net-Zero Industry Act and the recommendations of the Draghi report, underscores the importance of building a robust European supply chain,” Hydrogen Europe CEO Jorgo Chatzimarkakis said in a statement.
“Equally important, is the need to cut through red tape. Simplicity of implementation is an absolute must for the new mandate.”
European industry has complained for years that bureaucratic hurdles were harming expansion, particularly with the European Green Deal that introduced a raft of complex, new legislation. European Commission President Ursula von der Leyen has said cutting red tape will be one of her goals in this term.
Okay, so again, as we thought, the EU is scrambling to block China from inundating Europe with cheap electrolyzers for project development. Is this the right move, or should they allow China an open door to flood their market with cheaper products? Honestly, from an economics perspective, I don’t know which will ultimately be the best bet. A cheaper electrolyzer could just be that that is a more affordable solution to begin green project development. But have these electrolyzers really been fully vetted. What is their longevity look like? How do they operate during low power points? Are there safety measures in place, and are they up to their European counterparts? Now, the answers to all these could be positive. No way to know until they’ve been put through the paces to really determine their build quality. I’m also wondering if shutting out China will put an economic strangle on project development. If developers were quoting Chinese price points, will this switch change the economic forecasts into a negative NPV for now, we’ll just need to wait and see how this continues to develop.
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another. Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
