Oct. 23, 2008 - Investment bank Morgan Stanley has announced plans to build an off-grid datacenter in Scotland that's powered directly by tidal energy. Working with turbine developer Atlantis Resources, Morgan Stanley proposes to install tidal turbines (which work the same as wind turbines, only underwater) off the coast of Scotland. If the project is approved, the first series of turbines will be operational by 2011.

Tidal turbines are an attractive form of renewable energy for the bank s datacenter because they do not require the long wait for connection to the national power grid, Morgan Stanley says. Once the turbines are installed, the energy will be transferred directly to the datacenter via a private cable funded by Morgan Stanley.

The bank says its aim in building the datacenter is to attract tech companies with growing demands for datacenter space. The tidal turbines offer companies easier access to clean energy for their datacenter needs.

"The datacenter is the key to the tidal project," says Roy Kirk, area manager for the Highlands & Islands Enterprise, the Scottish government s economic development agency. "The biggest barrier for any large-scale renewable energy project is grid transmission."

However, government regulations could put the project on hold for some time.

The first snag is obtaining planning permission. The government is working to change laws to make renewable energy sources easier to build. But to date, no large-scale tidal turbine project has been considered. A spokesperson for the U.K. Department for Energy and Climate Change says, "The planning bill currently before parliament will streamline the consent system, and our renewable energy strategy, to be published in the spring, will be aimed at overcoming barriers such as grid connection."

In addition, Atlantis must still obtain consent from the Scottish government, and Morgan Stanley must also get approval from the Highlands Council to build the datacenter and lay the private cable to transmit power from the turbines. Atlantis must also apply for a seabed lease for installing the turbines.

Given the current economic climate and the governmental obstacles ahead, Morgan Stanley recognizes that environmental projects such as the tidal turbines offer longstanding benefits that outweigh the shorter-term financial risks.

"The longer-term risks and opportunity presented by climate change and energy security remain," says John Woodley, co-head of Morgan Stanley s European and Asian power, gas and related businesses. "We will continue to seek investments that promise scale and commercial viability."