Green Data: a global perspective on a new trend for data centers

Hogan Lovells
Contact

Hogan Lovells

The data center market is rapidly gaining strength worldwide but with the inherent energy demands, the sector is increasingly focussed on targeting renewable energy.

ESG is the topic of the moment for all sectors and data centers are no exception.  The sector has recently launched the Climate Neutral Data Center Pact, which has been signed by the major European data center associations and many of the major operators. The Pact is targeting 100% renewable energy for the sector by 2030 across Europe, which, compared to other sectors, is pretty impressive.

The data center market is increasingly attractive and investors have embraced data centers as an institutional investment class resulting in pricing for core data centres becoming extremely competitive and many more investors entering the space.

What is green data?

The significant energy demand of data centers raises challenges in terms of cost and sustainability. Businesses are increasingly concerned about the energy requirements of their data and whether this is in line with their overall ESG, climate change and sustainability goals. Sustainable and renewable energy resources can be a decisive criteria for the choice of location for any new data center.

In this context, green data is data generated from renewable energy. By adding green or renewable sources to the power supply chain, data center operators can show that they are promoting the green agenda. Future trends include the development of onsite clean hydrogen solutions for onsite power generation, both for backup electricity as well as for base and peak energy demand. Clean hydrogen, a renewable energy source, could provide additional energy capacity which will future proof resilience of the business.

On-site energy generation – what does this involve?

Operators should carefully assess options for on-site power generation. Due to the high energy consumption and large amounts of roof space, data centers can be in an excellent position to integrate on-site energy generation facilities such as hydrogen applications, solar panels or Combined Heat and Power solutions (CHPs) into their overall energy strategy. By using energy that has been generated on-site, operators may avoid paying grid usage fees or system costs, electricity tax and, in certain cases, even further levies. On-site energy production is also a safeguard against rising energy prices. Furthermore, operators should consider opportunities to benefit from government subsidy programs for investments in on-site renewable energy facilities or CHPs.

Flexibility or how to deal with peak loads

Any data center operator needs to ensure that a sufficient energy supply is secured at all times while keeping its costs predictable. When offering flexible capacity models, two key elements must be kept in mind: base load and peak load.

To be able to provide customers with the data center capacity they require at all times, the data center operator needs to ensure it can provide this flexibility and that this is suitably mirrored in its own energy supply agreements.

To sufficiently cater for a fluctuating power supply, data center operators can:

• Purchase energy on the energy exchange spot market;

• Agree with their energy supplier on base load belt/peak-load belt energy models;

• Negotiate energy options or package models in which data center operators can call in certain energy option rights.

Differences between the US and Europe

Data centers can vary in certain key respects between the US and Europe as illustrated below.

 

Europe

US 

Planning controls

 

 

Strict planning regime which controls where data centers can be located.  With an increase in demand, planners have to balance the competing demands of different land uses.   

Much greater flexibility with less regulation.

Land available

 

 

In Europe it is more difficult to access suitable land particularly in the primary markets such as London, Paris, Amsterdam and Frankfurt.

Very wide availability of suitable land.

Availability of natural resources for renewable energy (wind/water etc)

 

 

Depends on location and jurisdiction.

Relatively easy access to wind and solar but some areas resist water intensive businesses, especially if they don’t generate many jobs for the local community.

Innovation and self-regulation

 

 

Increasingly we are seeing innovation to reduce energy waste.  The sector is now self-regulating with the introduction of the new Climate Neutral Data Center Pact. 

Appetite for ESG innovation is growing but not yet at the speed of Europe. 

Use (e.g. computing and networking or storage?)

 

 

Increasingly used for computing and networking whilst data storage is becoming less important.   

The same applies to the US.

Growth of green data center market

 

 

 

This is a growth market and presents a lot of opportunity. 

The same applies to the US.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Hogan Lovells | Attorney Advertising

Written by:

Hogan Lovells
Contact
more
less

Hogan Lovells on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.