Examining the new reporting measures for European data centres, Stephen Lorimer, Group Technical Director at Keysource, discusses the benefits of KPIs for operators to become more efficient while acknowledging the security risks and consequences of non-compliance with regulatory changes.
Data centres have become the backbone of the modern digital age, storing vast amounts of valuable information and serving as crucial hubs for the online services we rely on daily. They are also some of the world’s biggest consumers of power, so it is unsurprising that regulations surrounding our industry are under constant scrutiny. We are now facing several regulatory changes regarding our energy performance with the European Commission’s (EC) recast of its Energy Efficiency Directive (EED), setting out new and strict reporting requirements for data centres operating in the EU.
It is likely that from May 2024, the EED will require all data centres in the EU with an annual energy use of over 2780 MWh to report their energy performance which in turn may be made public, with the directive set to be signed into law this year. There will be an increased requirement on enterprises and data centre operators to publish energy action audit plans publicly, and as the reporting period began in May 2023, they’ll need to act quickly.
Reporting demands will require colocation operators to source data traffic and data storage statistics from their customers. Data centre operators will need to create/modify/adapt strategies to comply with the new reporting thresholds – including ensuring data collection, reporting processes and metric calculation are sufficiently robust to stand up to scrutiny.
The new thresholds for reporting from Articles 11 and 11A have been aligned to ensure that a representative segment of the market is captured, however, it remains a risk that the ever-increasing Edge and a proportion of enterprise operators will be missed. Reporting requirements are likely to involve information relating to the facility, its capacity and infrastructure redundancy in addition to the temperature set points – key metrics covering Power, Water and Carbon Usage Effectiveness; energy reuse factor; renewable energy use and their cooling effectiveness ratio, as well as the data related statistics.
What impact will these EU directives have on the UK?
The European Commission has been quite clear in its response to the climate emergency, stating ‘data centres and telecommunications will need to become more energy efficient, reuse waste energy and use more renewable energy sources. They can and should become climate neutral by 2030.’
The increased requirement for enterprises and data centre operators to publish energy action audit plans publicly must be a top priority for data centres. We need to consider what impact these EU directives will have on the UK and wider non-EU markets, including how they will affect businesses and trade.
We expect that as a minimum, current UK commitments to climate change and net zero laws applying to energy efficiency will be maintained or more likely will evolve to incorporate elements of the EUEED recast. Both corporate ESG requirements alongside global customers and operators are likely to drive the adoption of similar reporting standards ensuring consistency in reporting regimes across jurisdictions.
Consequences of non-compliance
Despite the monitoring requirements having started in May 2023, our industry is still drastically underprepared for the forthcoming regulatory changes and new reporting thresholds. Data centres must align their practices with the changing legal landscape to avoid the pitfalls of potential penalties and to safeguard their reputation. Those that fail to adequately prepare for forthcoming legislation risk facing severe consequences that may include legal penalties, damage to reputation and resulting loss of business opportunities and revenue.
To comply with climate change targets our industry needs to be more accountable and these regulations should help to ensure everyone is working towards net zero. There are many potential benefits associated with the use of data related to the new reporting requirements including the potential for increased informed ‘green’ investment to drive improvements alongside operational savings achieved through the use of better historic data and KPIs. At Keysource we welcome greater transparency for the data centre industry and are working with several clients to help them prepare and maximise the potential benefits resulting from new regulations.
Real concerns over reporting requirements
However, these reporting requirements raise several concerns for data centres. One concern is that some of the information is simply difficult to collect. Most colocation operators do not currently have control or insight into the data traffic, storage and processing being performed on their customers’ IT equipment. Some parties have also raised concerns about the security risks associated with publicly reporting the names of owners, addresses and other details of data centres, especially information that is particularly sensitive for financial institutions. At present, it is relatively easy to find the location of data centres, but far more difficult to find details of the owners and operators of those data centres. Other parties are concerned about the administrative and financial burdens imposed on smaller operators. It is still unclear as to the extent to which local governments will publish data.
As part of the proposed EED recast, the EC is planning mandatory annual reporting of KPIs. The aggregated data will be used to develop sustainability indicators based on energy efficiency, use of renewable energy, water usage and waste heat utilisation. These indicators will be used to define and rate a data centre in terms of sustainability. The EC hopes that by creating a register of energy use based on performance indicator reporting, opportunities for the data centre industry to reduce energy consumption and increase efficiency can be identified and encouraged. It also hopes that future sustainability ratings developed from the KPIs will help to provide transparency and accountability for data centre carbon footprints.
It’s time to take action
To comply with our climate change targets, our industry needs to be accountable and these regulations will help to ensure everyone is working towards net zero. There will also be some benefits associated with the new regulatory changes such as cost savings and a potential for increased investment, as investors will be able to make better ROI predictions using historical data.
