Climate change and sustainability: Two topics that come up in the news almost every day. Not only are the risks of climate change becoming increasingly obvious to people outside of academia, but time is running out to prevent some of the more extreme and expensive consequences of an intensified greenhouse effect. The culprit is easily established: we are using far too much fossil fuel. Solving the problem, however, is an entirely different matter. The challenges of climate change, and the dedication to solve them are also increasingly becoming part of the cultural zeitgeist in the tech world. Take, for example, the Project Grid eXchange Fabric (GFX). This proof-of-concept initiative looks at how the tech industry can use open-source technology to achieve climate goals in the real world.
One key word that keeps coming up in the discussion is data centers. More and more data center groups are committed to achieving climate goals, or even climate neutrality. In view of the fact that data centers account for 200 TWh, or 1% of global energy demand, this commitment is justified. More so in the Netherlands, where this demand could quickly grow to 30% of national power demand. By 2030, global data center energy consumption is expected to approach 10%.
A rise in energy consumption has consequences for politicians, policy makers and large companies, but also for people who are not responsible for decision-making or the future of a Fortune 500 company. Data center sustainability naturally affects those who use it. So, for the decisions of today, it is useful to be aware of future developments on the path to a green world.
What is a "green" data center?
There are dozens of factors that can play a role in classifying a data center as green or sustainable. In short, it comes down to the net CO2 emissions of the data center being at or as close to zero as possible. Some companies are also aiming to develop carbon-negative data centers in the future, with a variety of technologies to offset emissions and capture carbon. Important factors determining sustainability include the energy used to cool the data center, water consumption, recycling of heat in municipal heating systems, maintenance and sustainability of construction.
These factors are not always reflected in current measurement systems. Currently the most important index for data centers in Europe is the PUE, or Power Usage Effectiveness. This specifically measures how effective the data center is in using energy for IT equipment. In other words, how much energy do you need for each usable kWh, including extra energy due to power distribution losses, cooling, and so on. The formula is simple: PUE = Total facility power / IT equipment power. While as a method of measurement it isn’t perfect, it does give an indication of the efficiency of a data center and is often used in policymaking. For example, Amsterdam has set a PUE max of 1.2 for the construction of any new data centers.
Despite its current popularity, the use of PUE is unlikely to continue for long. It poses too many problems for green policymaking. PUE lacks any integration of factors that would actually make a data center green. Given the political climate this means the current approach to measuring efficiency has a limited lifespan. Energy sources matter for sustainability, and the EU is committed to making the measurement of data center energy use more focused on emissions.
Legislative changes in the EU
As the 2030 deadline approaches for emission reductions set by the Paris Climate Agreement, the regulatory burden on countries in the EU is growing. While many data centers are already working towards compliance on their own, it is clear that the free choice to go green will slowly be replaced by regulatory coercion in the future, if the EU finds that progress is not fast enough.
Regulatory changes, such as energy, emissions and air quality taxes, are also being discussed. The EU Green Deal, which is expected to be approved by the European Commission in the second half of 2021, is one of the first steps toward a legally binding approach to boosting renewable energy. Pressure for stricter regulation is also coming from commercial data center providers who are already working with greener solutions or have plans to do so. Their motivation can be attributed to uncertainty about the risks posed by an approaching climate deadline and the slow response of politicians and regulators.
This lack of action has put many data center groups in an uncomfortable position. If a data center is built today, it is under regulations that are a lot less strict when compared to what we will face in the near future. By building a less green data center, one benefits in the short term. In the long term, however, the risk is taken that taxes or stricter regulations will make it impossible to keep businesses running. If, instead, the decision is made to incur more initial costs by building a modern CO2-neutral facility then there are fewer risks in the long run. This does however come with the caveat of more costs being passed on to consumers, or less potential growth.
Since data centers are a long-term investment, it would naturally make sense to build green. Unfortunately, there are other factors at play. Many "legacy data centers" use similar technology in terms of IT hardware, but with infrastructure that is much less sustainable. These are usually company owned data centers, a market that is seen by new independent data center operators as a potential source of new business. These large independent operators have a strong incentive to convince companies to switch to their services over to them. If the EU adopts stricter regulations, companies will therefore either need to switch to third parties or invest in sustainable infrastructure. If this investment is not profitable, they will have no choice but to outsource business operations to external data center operators.
In other words, the EU and the tech sector are caught between two fires. Regulate too late and risk political pressure that could potentially lead to extremely strict and draconian regulations - with huge economic consequences on top of what climate change is already causing. Regulate too soon or too strictly and stifle competition by forcing legacy data centers, both enterprise and commercial, to compete under unfair economic conditions.
Cost allocations clearly have long-term implications and everyone should consider this in their decision-making for green investment, but there are other economic factors at play. A company that is willing to take the risk of advancing the cost of ‘greening’ must also ensure that this process is consistent with its business objectives. The fundamentals are appealing of course: Doing more with less is a direct result of greater efficiency. In other words, you get more processing capacity with less energy, or much more capacity with the same amount of energy. For most companies, large and small, this added value is a no brainer. Why then, doesn't everyone switch to green at once?
The answer, in many cases, is that they do only if they have the resources to build facilities entirely from the ground up. Companies like Google, Microsoft, and Amazon are exceptionally vocal in praising their sustainability victories and achieving their emissions goals. In some cases, this is much sooner than expected, thanks to a combination of energy consumption driven by machine learning and customized servers with energy-efficient components.
If you happen to have that much capital to invest, this is obviously the most strategic choice. For other companies, however, it's not so simple. They must decide whether to redevelop existing technology, try to compete with sustainable giants by building new data centers, or outsource all data center operations. In addition, monitoring is needed to determine the total carbon impact of cloud, co-located and on-prem IT infrastructure. There are significant risks associated with these activities, including a data center migration, a large initial investment, and a range of other risks that may emerge over time as a result of the changes being made.
Meanwhile, market conditions are evolving in favor of team green. Good news for our planet, but not necessarily pleasant for those who do not want to change or take on additional financial risks. A recent study by DLA Piper and the Inframation Group found that investors expect the cost gap between assets with poor energy efficiency and those with a high standard of environmental performance to narrow. As green energy becomes cheaper and we rely more and more on cloud computing and machine learning to maximize efficiency, infrastructure investment concerns will have more to do with sunk costs than current economic conditions.
Some things to consider
Going green is not easy, and while there are numerous economic and regulatory reasons to do so, the underlying moral good should not be completely forgotten. This does not mean that companies should put aside their customers to focus on zero carbon emissions. Realistically, they can't. What is striking, however, is that sustainability is now a public issue, with consumers willing to reward those who take risks. Businesses, in turn, are only too happy to enjoy the positive brand recognition, "goodwill" and real impact on the world that result from sustainable decision-making.
Yet the underlying economic and legislative conditions must be rewarding for any business to thrive. And they do. The market is constantly moving toward rewarding efficiency and sustainable technology. The regulatory environment is increasingly behaving in the same way. This is a ship that will reach its destination naturally or, eventually, through regulatory coercion. A somewhat uncomfortable idea, then, because what is now a free decision with potential brand and reputation benefits may soon become a legal requirement. By the time this happens, no one will be giving credit for simply complying with the law.
The luxury is now is that sustainability makes commercial sense. If you were to make decisions today for the long-term good of your company and your customers, you would be following the same pathways that will likely be written into Dutch law ten years from now. Regardless of how one views it politically, it is simply a reality that needs to be taken into account for the long term. This is not to say that we should rush into infrastructure developments to the detriment of customers and products. This is more to indicate that a healthy company will be aware of the energy consumption of its data centers and should understand the long-term costs and benefits.
A green data center
If you are looking for a green data center, or if you are curious about the benefits and the different technologies found in them, then NorthC Datacenters is a great example. It is also one that we can stand behind, as we make use of them ourselves.
When building data centers, NorthC has focused on both the materials used and the energy consumed throughout the entire lifecycle. All of NorthC's data centers use 100% green energy. They also go a step further by getting involved in several local sustainable projects. Excess heat is used to heat nearby schools and recirculated air to keep IT infrastructure at an optimal temperature. By both being involved in local infrastructure and ensuring the long-term sustainability of IT operations, NorthC does a good job of showing where the industry is going and where it needs to go.