Electric costs affect data centers research by industry experts

According to newly released research commissioned by Telehouse International Corporation of Europe, nearly eight in ten IT decision-makers indicate that the energy crisis has prompted anxiety about their future sustainability plan. Due to the uncertain political and economic climate, 86% of IT decision-makers have already adjusted their existing business strategies to mitigate the impact on operational costs and assure profitability.

These results add to the existing worries of decision-makers who, despite energy pricing challenges, must assure the successful delivery of green programs to fulfill the needs of their respective organizations and the UK's environmental, social, and governance targets. Eighty-seven percent currently have high confidence that their IT infrastructure can handle the effects of climate change, but this confidence reduces to 67 percent when looking out five years.

The current energy crisis greatly threatens the UK's ability to minimize carbon emissions and reach net zero by 2030, despite the country's ambitious goal of doing so. However, as Telehouse's research revealed the genuine state of progress among organizations present state of progress on their sustainability journey, the volatility of the energy market is not the only obstacle standing in the way of sustainability.

Alarmingly, over a third of organizations (34%), have either not made progress on their sustainability goals or haven't yet defined them. It's estimated that 57% of firms aren't yet optimized to contribute to net zero aims, and 52% aren't employing renewable energy sources. Also, over half of all firms aren't even tracking their impact on the planet.

The reporting of the impact of IT infrastructure against the sustainability roadmap also has to make more strides, as just 20% of organizations presently prioritize Scope 3 emissions, and 43% report either room for improvement or minimal accuracy.

Telehouse's Senior Customer Experience Director, Mark Pentridge, had this to say about the study's findings: "Our recent research demonstrates a perception gap among organizations that sustainability drives decision-making when practical actions haven't been done to enable this in reality. Businesses will need to investigate the advantages of outsourcing services to avoid cost increases and take advantage of green initiatives as the energy crisis threatens to derail sustainability efforts.

94% of decision-makers have already outsourced or are considering outsourcing their IT infrastructure as a result of economic pressure. This group of businesses is more likely to feel confident about achieving its goals and keeping costs down in the face of the energy crisis than any other group (89% confidence vs. 27% high confidence).

Census-wide, working on behalf of Telehouse Europe, questioned 150 UK IT decision-makers from enterprise organizations with more than 100 workers to learn how they are handling the energy and sustainability demands of the climate crunch.

In order to better understand the effects of the rising cost of energy on the data center business and possible solutions, we consulted with three industry experts.

Australian and New Zealand Vertiv Managing Director Robert Lindsell:

The need to optimize systems to reduce footprint and consumption has become crucial as organizations around Asia-Pacific continue creating, storing, exchanging, and working on data.

This is mostly due to the importance of energy, which has stoked interest in renewables throughout the region and has the extra benefit of reducing strain on the system. While this is promising, businesses still have room for improvement without a comprehensive renewable energy plan by increasing the efficiency of their IT infrastructure.

Three years after the epidemic, some data center operators have implemented many of the "low-hanging fruit" optimization strategies. To address thermal and power inefficiencies in the data center, many organizations have implemented energy audits and used energy optimization tools.

The latest energy price crisis, however, is putting our power-hungry data centers back on the agenda of chief financial officers.

For businesses in Asia and the Pacific that want to make a dent in their energy costs, there are still opportunities to implement power and cooling solutions in the data center that use less energy. This is especially true for centers where there have been changes to the IT equipment installed.

Overcooling, inadequate airflow, and anomalies resulting from IT equipment that is added moved, or removed over time can lead to inefficiencies of up to 50 percent. However, by adjusting the airflow in the cooling units, a competent operator can see cost reductions in a matter of hours.

More so, organizations that capitalize on enhancing their total Power Usage Effectiveness by employing cutting-edge technology are quickly becoming major market differentiators (PUE). Directly enhancing PUE with immersion and other high-density cooling equipment, and indirectly through peak looping, are technologies like fuel cells and long-duration energy storage.

In many countries in the Asia-Pacific region, abatement plans exist to financially reward businesses who demonstrate their capacity to participate in carbon reduction projects in the data center, providing additional cost-saving potential coupled with optimization.

Several Australian states have implemented energy-saving initiatives eligible for government subsidies. These refunds can then be utilized to pay for the purchase of new, more efficient machinery that is a better fit for the business.

More than ever before, energy usage is a major factor in the price tag associated with operating a data center. To improve PUE and back deliberate attempts to reduce the power bill and carbon emissions, I recommend data center operators look to optimization exercises, use the newest fit-for-purpose technologies, and take advantage of government financial incentives.

Nutanix A/NZ Managing Director Jim Steed:

The ability to function digitally is no longer a "good to have," but rather a "need to have."

Because of the rise of telecommuting and online shopping as well as the incorporation of cutting-edge tools like AI and ML into even the oldest of sectors, modern organizations produce a staggering quantity of data every second.

All this data creation, storage, analysis, and application take place in a data center. Huge quantities of energy are needed for all the computer power needed to perform this, but considerably more energy is needed to keep all the necessary components from overheating.

Existing data centers are infamous for their inefficiency, which only adds to the problem of their insatiable appetite for energy. Without getting too technical, the standard practice for three-tier data centers has always been to maintain a minimum of two of each component (servers, storage networking ) in the event of failure.

However, this problem is exacerbated by the fact that most servers are grossly underutilized, operating at or below 50% capacity. This is done so that there is room for extra resources to be made available in the event of unexpected demand spikes.

So not only is there a second of everything, but the capacity of the duplicates is considerably lower.

Australia's Department of Industry, Science, Energy, and Resources agrees that "low server use remains one of the major prospects for energy reductions in data centers" as the global energy price crisis continues to impact company bottom lines.

Therefore, when companies in Australia want to make a significant impact on emissions and energy bills, data center transformation is often the first step they take.

The Victoria, Canada, company Natures Organics is a prime example of this new breed of data centers.

Manufacturer of well-known brands Earth's Choice and Australian Pure reduced its IT-related energy consumption by 55% after implementing Nutanix hyper-converged infrastructure, which eliminates the need for redundant infrastructure by virtualizing servers and thereby reducing the number of machines required to process a given workload.

The 1,000 metric tons of annual carbon dioxide emissions reduction was a direct result of this company's dedication to eco-initiatives and the 1299 kW roof-mounted solar array placed at its manufacturing factory.

The present cost-of-energy crisis is having the greatest effect on the data center business because it is drawing attention to how inefficient the traditional three-tier design is. Because of this, businesses all around the region are investing in infrastructure upgrades that will ultimately help them become more competitive.

Chief Commercial Officer of Sustainable Energy First, Anthony Mayall:

It is common knowledge that data centers consume a disproportionate amount of the nation's total energy supply. It is estimated by the International Energy Agency (IEA) that even with major energy efficiency gains, Data Centers still consume between 1.15 and 1.5% of the world's electricity. With worldwide Internet traffic multiplied by a factor of 20 since 2010, it's clear that data centers are becoming increasingly vital to modern society. The question then becomes, "What can be done to fix this?"

Manage your own resources.

The more renewable energy sources are used to power your servers, the more eco-friendlier your business will be. However, it's not always the best idea to move to a "100% renewable" rate from your standard provider. Better solutions exist for you to save money on energy and have more say over where that energy comes from.

Create a local power source.

This entails taking legal title to the fuel that drives your company, and there are a number of viable business plans that accommodate this. You can acquire the asset outright through CapEx, third-party financing, or a lease-to-own agreement. In an alternative approach, a third party would purchase the generators and use your land. Select a financing plan that fits your company's unique needs.

The investment will quickly earn back its cost regardless of the method of financing chosen. Due to rising energy costs, the return on investment for renewable power assets has been drastically reduced from over 10 years to roughly 4 years.

Due of the intermittent nature of renewable energy sources, you will still require energy from the grid even when your asset isn't producing any electricity. Including battery storage in the project will allow you to get the most out of it and use the generated green energy without spending a dime. Selling excess energy to the utility company could also become a source of revenue.

Purchase and Sale of Corporate Power (CPPA)

This is the alternate primary choice. To do this, you would have to source your electricity needs directly from renewable power plants. Although a supplier might have a role in brokering the trade, it is considerably different from a standard supplier agreement.

Through a CPPA, the price of energy is often fixed for the duration of the contract at or below the current market rate. Your company will benefit from reduced exposure to market volatility and welcomed budget predictability if this is settled in advance.

Investing in renewable energy sources is a no-brainer for an energy-intensive company like a data center looking to reduce operational expenses and carbon emissions. But moving at a snail's pace when making major decisions in uncharted land.

In the words of Eccentric’s data center expert Steve Wright:

Even though the data center sector has been struck severely by rising energy prices and a lot of money has been invested in energy efficiency, the necessity of providing electricity to the servers remains. But how can they serve the consumer better by doing this?

Until now, companies have been able to receive some relief from their skyrocketing energy bills thanks to the government's Energy Bill Relief Scheme. However, what will happen once this aid is no longer available is still up in the air.

UK energy bills are expected to jump by over 50% in April due to rises in 2022 and so far, this year, leaving businesses like data centers with no choice except to pass the costs along to customers or risk going out of business.

Supply agreements for data centers

Traditionally, data centers have negotiated energy contracts with a set rate for at least two to three years. Long-term agreements, especially those providing the best possible value, might be hard to come by in today's volatile economy. After all, if the market disruption is resolved sooner than expected, getting set at the highest rate could be a bad move.

To get the lowest prices, data centers are shifting their focus to the day-ahead market. While this method of purchasing electricity is more complex than fixed-term contracts, it often results in significant cost savings that data centers may pass on to their users. The possibility that expenses would keep rising is inherent in the nature of a variable contract. Nonetheless, data centers that keep an eye on these markets will be able to secure a fixed-rate and reasonable contract if and when prices begin to plateau.

Preserving the safety of the consumer against price changes

The economies of scale offered by Data Centers continue to outweigh what the vast majority of businesses could achieve in their own server closets, despite the fact that their prices have increased. They should also be working on other cost-cutting measures, such as passing on increases in energy expenses at cost and keeping those increases to a minimum for the site.

Customers can benefit from data centers in a number of other ways as well, including assistance with budgeting, honesty about price increases, and backing efficiency targets that can make a significant dent in monthly energy costs.

It's worth looking at whether or not transferring IT infrastructure & data digitization technology offshore can save money for businesses that aren't data centers. Data centers still provide higher cost- and energy efficiency despite the price increases. Working with a data center can help your business save money and become more resilient in the face of the energy crisis by improving performance, increasing dependability, and forming a strategic alliance.

Eaton's Head of the Data Center Market, Ciaran Forde:

Large energy consumers, such as those that run Data Centers, are increasingly concerned about the rising cost of electricity. Many people are worried about the future because they don't know if costs will keep going up, if they should pass the cost on to their consumers, or if they have enough money coming in to deal with the situation. Some have been unable to plan or unwilling to invest in infrastructure because of the lack of assurance.

All of this emphasizes the critical importance of efficiency, calling for data centers to drastically reduce their energy use, and highlighting the significance of a rapid shift to renewable energy sources and grid support.

Putting money into green energy

Across Europe, companies of all kinds are investigating the potential of renewable energy. Renewable sources provide for the vast majority of Iceland's electricity needs, while biofuels and garbage make up a considerable percentage of Latvia's energy mix, and Norway has a surplus of hydropower. However, renewables make up a relatively small percentage of the Netherlands' energy mix (8%). Despite these differences, the change is unquestionably happening in all industries and economies worldwide.

In addition, businesses are starting to implement innovative designs like energy storage and primary power generation on-site to lessen their reliance on external sources and make themselves more resilient. Potentially relieving strain on the infrastructure and helping to smooth out the energy market, which is notoriously unstable at the moment. For instance, Microsoft's Dublin data centers expansion will include both primary power generation and banks of Lithium-ion batteries certified for specific grid interaction. With the rise of intermittent renewable energy sources like wind, solar, and other forms of "onshore" and "offshore" generation, this interaction provides the grid with ancillary services to help it cope.

And in the tech industry, many businesses are looking at Power Purchase Agreements (PPAs) after being encouraged to do so by the largest cloud service providers. This allows them to invest in renewable energy while also securing a fixed rate of return on their capital expenditure.

Supplying the power grid once again

The Uninterruptible Power Supply is an essential part of every data center (UPS). This comprehensive backup power system safeguards the data center against unexpected grid interruptions and guarantees consistent power quality. Without compromising the data center's functionality, this energy storage can now be leveraged to deliver auxiliary energy services back to the grid. An example of such a system is the Eaton Energy Aware UPS, which has found widespread use in multiple data centers for a service type known as fast frequency response (FFR).

When data centers adopt such services, the grid operator will be able to incorporate a greater proportion of renewable power, hastening the process of going green. This, in addition to the energy crisis, could lead to closer cooperation among producers, grid operators, and major energy consumers.

Because of their massive energy use, data centers are feeling the pinch of the current energy price crisis. A stronger emphasis on the shift to renewables and on how existing infrastructure may be utilized to improve efficiency and robustness and to assist stabilize the grid is required to address its impact on data center owners and their users.