Sustainability in the data centre industry is rapidly transforming from a key selling point to a regulatory requirement in Europe, as more scrutiny is being applied to energy use, efficiency, building design, and water use.
Regulation is Coming Thick and Fast
“The focus is shifting away from emissions towards a more holistic view of sustainability,” Dawn Childs, CEO at UK-based Pure Data Centres, tells Capacity. Data centres are expected to contribute to 3.21% of electricity demand in the European Union by 2030 if current growth trajectories are maintained, a statistic that has received significant attention from the European Commission.
As part of a target laid out in The European Energy Efficiency Directive (EED) to reduce EU energy consumption by 11.7% by 2030, relative to forecasted energy consumption for that year made in 2020, it has identified ICT as a sector of increasing importance. The scheme intends to increase transparency and promote new designs and efficiency developments in data centres that can not only reduce energy and water consumption but also promote the use of renewable energy, increase grid efficiency, or the reuse of waste heat in nearby facilities and heat networks.
The EED is not requiring data centres to meet certain requirements yet; for now, it is more interested in gauging a benchmark, but targets will be set in the future. Although not specific to the industry, the EU’s Corporate Sustainability Reporting Directive (CSRD) is requiring a new level of scrutiny of the materials used to build data centres amid other reporting requirements.
A voluntary organisation comprising over 100 European data centre operators and trade associations has gone beyond reporting and already set targets for members. The European Climate Neutral Data Centre Pact has imposed predefined metrics around PUE (power usage efficiency) depending on the climate where a data centre is located, water use, and renewable energy consumption.
In Germany, targets are already in law. Its Energy Efficiency Act requires existing data centres to achieve a PUE of 1.5 from July 2027 and 1.3 from 2030. Meanwhile, new data centres must achieve a PUE of 1.2 if they are to start operating from 2026 onwards.
Working with the Regulators
“We need to work with regulators to make sure they understand the industry,” Childs says, using the close collaboration between data centre operators and European regulators on CSRD as an example of how the industry should continue moving forwards. Germany’s move from reporting to requirements is a good example of why close collaboration between industry and regulators is required.
The initial draft of the bill required all new data centres to reuse 30% of their waste heat by 2025, a task the German Data Centre Association (GDA) deemed completely infeasible as not all data centres are built adjacent to district heating systems and demand for heat is not consistent throughout the year. A dialogue between the GDA and other industry participants with German lawmakers succeeded in avoiding these unrealistic requirements, securing a delay in heat reuse rules to 2028, and a reduction in the quantity to 20%.
Emma Fryer from global data centre operator Cyrus One has first-hand experience working with policymakers as director of public policy, Europe. Prior to joining Cyrus One, she represented the UK data centre industry at TechUK. Both Fryer and Childs see reporting regarding tenant activity within a facility as a potential stumbling block as data centre operators may not be privy to the data they need to report. “It’s easier for us with hyperscale customers and it’s easier for the hyperscaler themselves,“ Childs says, “But if you have a co-location provider with 100 customers in the same data hall it will be much harder to collect and report accurate information.”
The EED requires data traffic to be reported, but this doesn’t necessarily correlate with efficiency,” Fryer tells Capacity. “For example, the Met Office might be processing vast amounts of data in a high-performance computing style environment, but will not have much traffic, in or out. Whereas Ebay would be processing less data but data traffic in and out would be much higher. This isn’t helpful when it comes to telling you how efficient a data centre is, and to make matters worse, as a co-location provider, we simply wouldn’t know,” Fryer says.
Anna Klaft, the CEO of the GDA, agrees. “Colocation providers already collect a major part of the data required for EED today,” she says. “But usually they have no information about the capacities of servers, storage, and network components installed by their customers or the data volumes processed there. As such, they cannot make any statements about key figures required by the EED, and they are dependent on receiving this information from customers.”
The GDA is also not a fan of enforced PUE metrics, as a low PUE requires racks to be operated efficiently and a data centre to be full, both of which are in the hands of tenants rather than the operator. These challenges call into question whether the regulation is aimed at the right businesses. Colocation data centre providers are already incentivised to act as efficiently as possible, doing so is inherent to their business model as providers of infrastructure leasing to multiple tenants.
“We’ve seen massive improvement in the co-location data centre space in terms of average PUEs across the industry,” March Garner, SVP, secure power Europe at Schneider Electric says. “But as data centres become more energy efficient, the more resources you have to put in to squeezing that extra bit of efficiency out.” This is why Schneider Electric is working with data centre operators such as Digital Realty to survey equipment like uninterruptable power supplies (UPSs) and backup batteries. Using a data lake collected from thousands of installations across its customer base, Schneider Electric can inform data centre operators how well a piece of equipment should be functioning, compared to its actual performance. Doing this at scale across a portfolio can have a profound impact on improving PUE, helping data centre operators identify where improvements can still be made.
“But by setting the lower limit for reporting at 500kw, the EED omits from the requirements those that are reported to be the most inefficient data centres; smaller, on-premises deployments. “If it's supposed to be an energy efficiency directive, it has, at least partially, missed the target” Fryer says. “Hyperscale and large colo operators are already incentivised to be as efficient as possible; why only target the end of the market that is already incentivised? Why not also address the policy to the areas where there is significant room for improvement?”
Fryer points to the European Commission’s EURECA Project, which included an analysis of 350 public sector on-premise data centres in 2018, that found an average PUE of around 5.0. “They also found that 40% of the servers were over five years old and that those older servers used 66% of the power, but only delivered 7% of the compute. Those figures are the most alarming I've seen reported on data centres and yet the EED cuts facilities like this out of scope.”
Sustainability vs Growth
A further bottleneck that could emerge as legislation takes shape is around the rapid increase in demand for compute capacity. CSRD requirements on using sustainable building materials, for example, are posing a challenge because they are in short supply, and there is not enough to build the number of sites that are planned. “Materials such as low carbon concrete and fire-resistant timber that can be used to build data centres are in short supply,” Childs explains. “As they are emerging technologies their production is not industrialised to the extent that their supply can match the scale and pace at which data centres need to be built.” Lack of access to these materials can lead data centre developers to use less sustainable alternatives.
In addition to the materials themselves, the AI infrastructure driving much of the demand for new data centres requires different designs. “As we're designing and building data centres, the customer hasn’t always decided whether it will be used solely for cloud, cloud with an AI overlay or even pure AI,” Childs explains. Depending on when this decision is made, developers might have already begun planning or constructing a site that has different spatial requirements to its intended workload. “You might end up with a slightly wider corridor than you needed for example, or perhaps a more robust floor loading that requires more concrete than if you'd known exactly what it was going to be used for at the point you were designing it.”
When asked if investing in the growth opportunities brought about by AI are at odds with honing in on operations to squeeze out every drop of efficiency, Childs’ says “they do oppose each other in a way.” Planning and construction need to be swift to capitalise on demand, but due to advancements in technologies reducing power draw from each chip and increasing rack densities, there is always going to be a lag between the optimal solution from a sustainability perspective and what data centres can access immediately.
It's clear that the data centre industry as a whole is taking sustainability seriously, but as more stringent regulations are imposed, it's crucial that a dialogue is maintained between stakeholders to ensure that it helps the industry rather than hinders it.
