With a lack of regulatory protection for data centres to safeguard against power outages, Ruari Cairns, Director of Risk Management and European Operations at True, Open Energy Market, explores the critical importance of managing energy procurement in a strategic way.
Data centres are the unsung heroes of the digital age, powering the very infrastructure that underpins our connected world. These facilities house and process the vast troves of data that drive our daily lives, from streaming videos to processing financial transactions. However, there’s a critical aspect of data centre operations that often goes unnoticed – their vulnerability to power outages and the lack of regulatory protection to safeguard against them.
Energy usage
Data centres rely on a continuous, stable, and high-power supply to function. A recent report by the International Energy Agency (IEA) revealed that data centres account for 1% of global energy consumption, with that number potentially tripling by 2030.
Any interruption, no matter how brief, can lead to costly downtime and disrupt essential services.
While data centre operations invest heavily in backup power systems, including uninterruptable power supplies (UPS) and backup generators, there are limits to their effectiveness in mitigating the impact of prolonged power disruptions.
This presents an issue: a dangerous combination of an industry which relies on such a significant supply of energy, growing at the rate it is, with an increasingly volatile energy market, could cause significant disruption.
The regulatory gap
What makes the situation even more precarious is the lack of regulatory protection for data centres against power outages. Unlike critical infrastructure sectors such as healthcare or emergency services, data centres do not benefit from the same level of regulatory oversight and protection. While regulations exist to ensure the reliability of the electrical grid and the resilience of critical facilities, data centres fall into a regulatory grey area.
The lack of regulatory standards has been exposed in a new report from Aggreko, which found power outages were a major concern for the sample of 700 data centre professionals across Europe. These outages could result from various infrastructure issues, including a lack of grid power, aging equipment, and fluctuating power requirements. The report further argued that the absence of regulatory oversight in the industry was significant compared to other major industry sectors.
This regulatory gap means that data centres must take the initiative to manage their energy procurement and resilience strategies actively. Relying solely on external interventions or hoping for improved grid reliability is no longer a viable approach.
The intersection of energy procurement and data centres
Another factor that makes data centres unique is that they often serve multiple customers, each with distinct energy consumption profiles and risk appetites. These customers may include major corporations, government agencies, or small businesses, each with varying degrees of tolerance for downtime and data loss. As such, data centres must carefully navigate the complex landscape of energy procurement to meet the diverse needs of their customers.
Strategic energy procurement
To address these challenges, data centre operators must adopt a strategic approach to energy procurement. This involves evaluating various factors, such as the reliability of energy supply, the environmental impact of energy choices, and the potential for future cost volatility. Strategic energy procurement goes beyond selecting the lowest-cost energy source; it considers the long-term sustainability and resilience of the data centres operations.
When dealing with energy markets, the only guarantee is to expect the unexpected. The Ukraine war looks to be moving into another winter and more recently the conflict in the middle east is acting as a driver of prices. This pressure on the market combined with the uncertain future of renewable energy has caused major uncertainty.
While the recent relaxation of carbon targets by the UK government has not yet shown its effects, many in the industry believe that it could undermine investment in green energy. The market will always be subject to the push and pull of external geo-political and environmental factors. Strategic energy procurement can bypass this and allow organisations to get ahead of the game.
The role of data-driven analytics
In the quest for strategic energy procurement, data-driven analytics play a crucial role. Leveraging advanced analytics, data centre operators can gain insights into their energy consumption patterns, identify potential vulnerabilities, and optimise their energy procurement strategies. This level of precision enables data centres to make informed decisions that align their customers’ needs and long-term business objectives.
An effective energy procurement strategy can also align with sustainability goals. A well-crafted energy procurement strategy can help data centres transition to cleaner energy sources and reduce their carbon footprint, in line with evolving regulatory compliance.
Partnering with energy procurement specialists can also help data centres optimise their assets and revenue streams. Many data centres have large on-site generators that could generate additional income by selling excess power to the grid through what are known as Demand Side Response (DSR) incentives.
Anticipating regulatory changes
In an era where environmental consciousness and energy efficiency take centre stage, data centre operators are facing a new wave of regulatory changes designed to safeguard the industry’s environmental impact. The EU Taxonomy Regulations are set to compel data centres to adhere to energy efficiency standards outlined in the EU Code of Conduct for Data Centres, with mandatory third-party verification every three years.
Also, recently the Taxonomy Climate Delegated Act (TCDA) has brought in a new assessment framework, offering capital providers the ability to incentivise sustainability compliance with cost premiums. In the UK, legislation like the UK Emissions Trading Scheme and the Climate Change Agreement for Data Centres adds further layers of scrutiny. This constantly evolving regulatory landscape underscores the importance for data centres’ commitment to energy efficiency, sustainability, and environmental responsibility.
Final thoughts
The lack of regulatory protection for data centres in the face of power outages is a pressing concern. However, it also presents an opportunity for data centre operators to take control of their energy procurement strategies actively. By partnering with specialists and adopting a strategic approach, harnessing data-driven analytics, and aligning their operations with sustainability goals, data centres can usher in a new era of resilience and reliability.
As the digital landscape continues to evolve, data centres must adapt and innovate to meet the demands of the future while minimising their environmental footprint. Navigating vulnerability in a volatile world requires data centres to embrace change, champion sustainability, and lead the way in responsible energy procurement.
