The Data Centre Tax Break Might Offend PUE-rists

So Britain now has a green tax exemption for shared (colocation) data centres. To qualify for a break that effectively cuts energy cost by ten percent, organisations have to promise to increase energy efficiency.

Unlike other business sectors, data centres don’t have a measurable output, so industry group TechUK convinced the Department of Energy and Climate Change to determine efficiency by cutting wasted energy. They agree to measure efficiency using the industry standard: PUE (power usage effectiveness).

Or did they?

To PUE or not to PUE?

The details are still being worked out, but PUE-rists got a small surprise at the meeting where TechUK explained the deal, which is known as a Climate Change Agreement. As it turns out, the mechanics of the deal means it doesn’t exactly use PUE.

To qualify for the tax break, an organisation has to use almost all its energy in the data centre. That’s so general businesses can’t get a tax break on all their energy, just because they have a few servers. But this does mean it only applies to shared facilities and hosters.

The Government wants to make sure that businesses don’t sneak in other parts of their business into the data centre CCA, and get a rebate on power that isn’t being used for the data centre. So they have carefully defined which power uses are eligible and which are not. To apply, a firm will have to carefully mark out which parts of the site are engaged in data centre work (the servers, the cooling etc) and which are not (the office space etc).

To apply for the tax rebate, the data centre owner will have to take just the eligible parts of the data centre site, work out the efficiency of that, and hit a target for improving that figure.

At this point in the TechUK meeting, hands shot up. The Green Grid has drummed into people that a proper PUE calculation should include the whole building. That’s how PUE is defined, because when PUE is used as a selling point for a data centre, site owners will be tempted to tweak it, leaving things out in order to improve it.

How come the CCA uses a different efficiency figure, that isn’t exactly PUE? Because it has a very specific aim: measuring eligilibity for a Government tax rebate, not the broader aim of improving overall efficiency.

Should we be concerned about this? Absolutely not! PUE was only ever a pragmatic idea to get the industry to focus on efficiency. It’s never been an end in itself.

In this case, it’s the results of the CCA programme we have to watch. In five or ten year’s time, will it produce an actual measurable reduction in the energy used by our data centres, while keeping the national sector vibrant?

Let’s hope so.

A version of this article appeared on Green Data Center News