Are Data Centres Going The Wrong Way On Green Power?

Are IT people out of touch – or just congenitally awkward? Just as events seem to suggest that renewable energy is losing popularity amongst the political classes, we have been receiving a steady stream of announcements that data centres are switching over to it.

Energy Secretary Chris Huhne promised a “new economy” last year, with his Department of Energy and Climate Change (DECC) backing renewable energy such as solar and wind power, in a bid to reduce the country’s carbon emissions by 20 percent before 2020.

But in the past week, a letter has been leaked from David Cameron’s energy adviser Ben Moxham, which warns that the government’s support for green energy will cost UK citizens money.  The Daily Telegraph and others reported that higher costs for renewable electricity would add about £300 to average annual domestic energy bills which are currently about £1,000 .

Against that background, why are data centres moving to renewable energy? Level 3 has had three of its data centres certified as using only renewable power, while Interxion’s data centre in the East End of London is also 100 percent green-powered. Are they out of step?

Dump renewables, save money?

Firstly, we should point out that the reports of consumer energy price hikes are likely exaggerated. As Damian Carrington pointed out in the Guardian, the price of renewables only affects the electricity component of energy bills – which for most consumers means a rise of about £135.

That is still a rise, though. DECC has argued that eventually fossil fuels will run out, and their price will inevitably go up before that point. So it is trying to make people change now.

The trouble is, at this point, renewable energy costs more, and we don’t know what the price difference will be in future. That depends on what happens to gas prices.

Domestic energy prices hit poorer people hardest, says Andrew Orlowski  in The Register, and the increasing level of fuel poverty may push David Cameron to decide that green energy is a policy he can’t afford.

This  brings us to people playing politics with figures. As James Murray suggests in his blog at Business Green, the leak of the letter comes during the party conference season and may show anti-green Conservatives attempting to engineer a government U-turn.

What about the numbers? Orlowski quotes figures for the lifetime cost of onshore wind at £178 per megawatt hour (MWh), and offshore wind at £254/MWH, contrasting this with £60/MWh for nuclear, and official government figures of £55/MWh for offshore wind and £84/Mwh for onshore.

But both these figures are out of context, and actually come from the same person: former director of the National Grid Colin Gibson. We find the lower figures in a submission to the Scottish Parliament, and the higher, lifetime, figures in a story from the Global Warming Policy Foundation, a thinktank backed by climate change denier Lord Nigel Lawson.

GWPF also recently published a report, The Myth of Green Jobs from Gordon Hughes, professor of economics at Edinburgh University, which argues that green power diverts resources from the rest of the economy. This deserves a close read, even given the known bias of its publisher.

So why switch your data centre?

Against this background, what are data centres doing  moving to renewable energy? There are several good reasons. There is a PR benefit by showing themselves to be green (well, they got coverage in eWEEK Europe).

More concretely, there will be some businesses that will choose to go to a green-powered data centre over a fossil burning one. Companies who are affected by green taxes such as the CRC scheme will tend to use services powered by renewables, if those services show up in their carbon accounting.

The move costs a certain amount of money – renewable energy costs more, as I said, and anyone who has looked at ticking the “renewable” option on their electricity provider’s contract will know this.

But it’s not an irreversible move. Interxion and Level 3 didn’t have to build windmills . They get the same electricity off the grid, but they just pay a company (in Interxion’s case it is SmartestEnergy) which puts renewable energy into the grid.

Whether or not green energy is economical for the consumer, it begins to look like a good bet for data centres.