The data centre industry's role in emissions reduction
As the globe increasingly turns its attention to the action required to limit the damage being done to the environment by human activity, the data centre sector is getting to grips with the role it must play in reducing carbon emissions. Energy consumed by data centres is attracting more attention as a matter of concern, as global computing capacity continues to rapidly increase.
The European Commission has estimated that by 2030 electricity consumption in European data centres will exceed 3% of global energy consumption. In response, industry bodies and individual businesses are committing to initiatives designed to improve the performance of their assets including the areas of energy consumption, carbon impact and water use aligned with their ESG imperatives.
The BCS Summer 2021 report is the twenty second edition of this unique survey of data centre clients, investors and professionals. One of the fundamental themes emerging from it is the race for space and power that is playing out across the thirty-eight European countries from which we have received insight.
Nearly three quarters of the respondents in our survey cited power availability as the most important consideration for data centre location selection. A significant risk exists that rapidly growing demand for information services and compute-intensive applications will begin to outpace the efficiency gains that have historically kept data centre energy use in check.
Potential remains for substantial efficiency gains, but investments in next-generation computing, storage, and heat removal technologies will be required to avoid potentially steep energy use growth later this decade, and parallel investments in renewable power sourcing will be required to minimize the climate implications of unavoidable data centre energy use
The challenges facing the development of new sites is clear but what of the existing stock of data centres spread throughout Europe? It has been estimated that around 60% of these are in excess of eighteen years old. Consistent with buildings in other real estate sectors, there is a material and differentiated challenge in dealing with the existing stock of data centres built from the early noughties onwards which are either partially or fully occupied.
By 1st January 2030 The Climate Neutral Data Centre Pact (CNDCP) requires signatories to make a binding commitment to achieve Power Use Effectiveness (PUE) of between 1.3 and 1.4 in sites built up to 2025, reflecting the increased challenges of interventions within operational environments.
Amongst these the older data centres will have often been constructed with PUEs of 2.0 or more. In their current form they could be significantly distant from the required standard and in breach of their owners CNDCP commitments. They will also look increasingly unattractive to tenants pursuing socially responsible energy and carbon agendas. These operational sites will be challenging to upgrade, especially those with high availability requirements. They will require experienced design and construction teams, working closely with operational teams, in order to effect the changes to the engineering infrastructure that are required without service interruption.
The simplified response to this problem would be to demolish and reconstruct at a convenient point before the deadline through a manged vacation and migration of IT processing. The simplified answer is not necessarily the best answer however. The original design and financial plans for these sites were often authored with the structural and architectural elements having a life expectancy of sixty years.
There is also a significant embodied carbon penalty to pay in demolition and rebuilding. A substantial amount of the construction work involves the use of energy dense concrete and steel to such an extent that refurbishing an existing facility can save in the order of 70% - 80% of the carbon cost of a new build.
An upgrade and refresh to critical infrastructure could liberate trapped electrical capacity for deployment to serve higher density and growing IT loads, for example through UPS replacement or cooling solution changes. These types of interventions will be more easily accommodated in Tier III facilities having two concurrently maintainable power and cooling paths, although the work will require careful planning and right first time execution. Nevertheless, such a solution overcomes the power availability challenges and takes the facility down a path towards better PUE performance.
However, the PUE thresholds are not the only challenge embedded the CNDCP. The pact requires data centre electricity demand to be matched by 75% renewable energy or hourly carbon-free energy by the end of 2025 and 100% by end 2030. These requirements are to be delivered in a period when demand for renewable resources will be universally increasing as a result of competing demands from the growth in big data, the decarbonisation of industry, commerce, transport and domestic consumers
The years between now and 2030 are critical in the race to net zero. For the world to get on track, there will need to be an immediate, unprecedented acceleration in deployment of new and existing technologies within renewable energy generation. In one of the scenarios modelled by Bloomberg in their New Energy Outlook 2021 report; in the years up to 2030 over 5.2-times the amount of wind, 3.2-times the amount of solar and 26-times the amount of battery storage needs to be deployed globally on average per year compared to that added in 2020.
We have already seen a slew of technology businesses announcing their plans or achievements in moving to green power. These businesses have been using their muscle to hoover up large amounts of green power availability but the simple expedient of going 100% green will not be sufficient. Efficiency improvement opportunities within existing facilities need to be taken whether that is through smarter management of the IT itself or the supporting engineering infrastructure.
At BCS we have seen significant energy efficiency improvements delivered as part of a general refreshment of assets that are beyond their economic life. In mission critical environments there are a number of project success factors that need to be attended to in order to realise the environmental and economic benefits:
Clarity of brief – within existing facilities it is easy to allow the scope of the project to expand as operational stakeholders have their say and more facts and shortcomings about the facility come to light. The brief points the way in preventing budget and programme pressures being realised by focussing on scope that enhances or protects asset performance and value.
In briefing project scopes clients should take the opportunity to consider adaptations required to respond to climate change and extreme weather events including periods of hot weather, high humidity and any changes that have occurred to flood plains in order to future proof where appropriate.
Surveys and validation of record information – it is often assumed that record information is accurate and up to date. That assumption should never be made. Surveys and validations should always be commissioned early in the project. Energy monitoring surveys conducted in the early stages of a project should identify easy wins that can be executed quickly and provide a baseline from which to measure delivered benefits for the project as a whole.
Budget setting and consideration of the detail of the project – broad-brush cost estimates based upon historic norms are usually inappropriate and likely to give misleading answers. Consideration needs to be given to the project specifics and prevailing working constraints. Benchmarking of elements or the entirety of the scheme may be useful to give confidence that estimates are in the correct order of magnitude but not as the sole basis for business case approval.
Recognition of working constraints and the speed limit inherent in projects – operational procedures at data centre sites often prevent uninterrupted working and change freezes are not uncommon. Projects tend to have extended execution times compared to new construction. Additionally, as a result of Covid protocols we are seeing restrictions on workforces coming onto functioning sites. Typical constraints include limits on where personnel have been in the two weeks prior (overseas or in other facilities) or only being permitted onto site if vaccinated. These restrictions, whilst often appropriate, make resourcing projects more challenging with inevitable programme effects.
Risk management processes – project planning and execution needs to be aligned to operational risk issues and downstream impacts. Well considered risk registers are required providing clarity about owners and actions. Risk plans require review at appropriate intervals to ensure they are relevant, up to date and in active use.
High levels of engagement with operational teams – ensuring that project work can take place in a way that is congruent with the continuing business as usual operation of the facility is essential. High quality look ahead planning will be needed to integrate construction and operation activities.
Back out plans agreed before change overs are executed – many projects will have one or several key change over activities that require right first time execution. These will often be programmed to occur over evenings or weekends. To ensure full service availability at key times, plans should exist to determine when and how reverse out plans should be enacted if work does not proceed as planned.
Capable teams with relevant expertise and experience – selection of skilled and experienced design and construction teams are essential to successful project delivery. Appointing project participants should therefore be done on the basis of a thorough pre-qualification process or through pre-existing knowledge of the capability of organisations key individuals. Skills shortages in the sector make this process essential.
We advocate that the full project financial picture is considered, inclusive of the tax position. Government tax Incentives in the form of capital allowances are available to support and encourage businesses to undertake capital investment. These incentives are obtained through savings in Corporation Tax. With expenditure on qualifying plant and machinery likely to be substantial, Corporation Tax paying UK based data centre owners should ensure that capital allowance benefits are maximised in order to improve their return on investment.
Obtaining the relief is not an automatic process and the tax rules are complex and often misunderstood. As a result, many businesses miss out on the tax relief available to them. Appointing a specialist capital allowances consultant with complex engineering systems experience will deliver tangible benefits.