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Change or be changed – The looming threat of regulation for data centre energy use

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By Simon Harris, Head of Critical Infrastructure at BCS

Climate change and the global response of Net Zero has dominated the political discourse in recent years. There appears to be widespread agreement within the data centre industry – as a major and growing consumer of power – that it has an important role to play in the debate and resulting actions to implement change to limit and ultimately reverse the damage caused by historical methods of power generation.

According to the findings of the latest BCS Summer Report 2022, which showcases the views and insights of over 3,000 senior industry professionals, there is a firm commitment amongst respondents to move towards a renewable-sourced future.  However, there are also strong concerns that regulation could be placed on the industry to push initiatives for the greater use of renewable sources of power at a more rapid rate, with around 90% of those surveyed believing that this could be introduced to ensure greater compliance.

Despite the industry taking action, the direction of travel in the political realm suggests that regulation could be placed on the industry due to increasing socio-political pressures and Net Zero requirements

Should the industry self-regulate?

The issue of regulation is always difficult. There is of course a need for industries to operate within a regulatory framework to ensure standards on many aspects. However, the extent of that regulation lies at the very heart of the fundamental debate of state intervention in the private sector and its implications for how business operates. There is a real and practical debate to be had, and in the real world there are industry groups to influence policy makers and legislators to ensure positive outcomes without stifling industry growth. Sensible policy makers accept and welcome this knowledge as it provides – accepting a degree of self-interest – knowledge, experience, and expertise on an issue from those with the greatest exposure to it.

In turn those reputable businesses accept the need to operate their business within a sensible regulatory framework as it provides a stable and secure environment and gives their customers confidence around industry standards. The argument around self-regulation is to what extent processes within the industry need to guide and frame within a legal process and how much can be voluntarily supported and provided.

For the data centre industry there is little doubt that the industry recognises the need to move forward with power optimisation and sensible sourcing initiatives. There are several high-profile groups and initiatives already in operation including the voluntary European Code of Conduct for Energy Efficiency in Data Centres and the Climate Neutral Data Centre Pact for example. The argument here is that those within the industry – and whose bottom lines it will directly impact – are best placed to know how to innovate and produce solutions. Around three-quarters of all our survey respondents believe that self-regulation offers the best course of action to aid the push to meet Net Zero targets. Around 94% of developers and investors, and 85% of service providers indicated this view.

There are ambitious targets to be achieved by 2025 and 2030 under the green deal, and it begs the question that if our sector doesn’t get ahead of these targets, will this be the catalyst that sees the self-regulatory initiative become legislative and regulated?  Our sector is at a crossroads with one route being proactive, investing in new technologies, self-generation and looking at innovative storage solutions to reach climate neutral targets. The other route is having legislation and regulation imposed on us and having to react to the imposition of energy, water and emission targets that we have no influence over. The outcome is uncertain.