Government Energy Plans Could Prompt Data Centre Exodus

Data centre operators have become the latest group to threaten to quit the UK over government regulation of their industry.

In a statement released this week – reminiscent of the threats made by some financial services firms that they would quit the country over banking taxes and other regulations – data centre specialists have warned that the coalition government’s recently announced energy policies could prompt an exodus of computing facility operators for more favourable climes.

Alex Rabbetts, managing director of data centre company Migration Solutions, said he was extremely concerned by the government’s recent energy statement. He cited a section of the statement which allegedly promised that domestic bills would only rise by 1 percent by 2020 while business’ bills would rise by up to 43 percent as policies are implemented to reduce carbon emissions.

Moving Off-Shore

“This pricing difference between business and home users will definitely make data centre companies think about moving off-shore to more attractive energy locations, like France or Germany,” said Rabbetts.

Liam Newcombe, one of the founders of the data centre specialist group at the British Computer Society and also co-founder of data centre analysis specialist Romonet, agreed with the issues raised by Rabbetts. He said that concerns about the energy policy voiced by Migration Solutions were also valid for the UK’s Carbon Reduction Commitment (CRC) legislation and energy policies in general.

“Between the CRC and the lack of any structured energy policy in the UK we do appear to have a problem,” he said. “We appear to be heading for a power generating capacity shortfall which has resulted in this need to raise prices. The combination of rising cost and complex regulatory burdens may well be the tipping factor for operators building in the UK versus elsewhere.”

To address the issue, Newcombe said data centre groups, and industry body Intellect, are working with the Department of Energy and Climate Change on an Climate Change Agreement (CCA) as an alternative to CRC for data centres.

Carbon reduction

The Carbon Reduction Commitment is a “cap and trade” scheme designed to reduce the amount of energy used by the largest energy consumers in the country. Although it has already started, very few organisations have registered – even though failure to comply with the rules could eventually mean a £50,000 fine, according to some experts.

According to figures cited by Migration Solutions, a data centre can use up to 50 times as much power as the equivalent business office space and an average facility in the UK will pay a power bill of around £1million per year.

While admitting that data centres do consume large amounts of energy, Rabbetts was keen to point out that applications and communications technologies they support – such as video conferencing and remote collaboration tools – are a substitute for carbon intensive air-travel for example.

“Undoubtedly Data Centres do use a lot of electricity. However, they are also key to the new low carbon economy,” said Rabbetts. “Information Technology (IT) uses 2 percent of the country’s electricity but it also provides many of the solutions that will reduce our domestic power consumption and carbon emissions.”

Rabbets also cited the recently announced UK smart-meter and grid roll-out – which the government claims will contribute to the overall target of its energy policy to cut carbon emissions by 80 percent by 2050. The government published the energy policy – alongside a prospectus on the smart meter rollout – at the end of July.

“Initiatives proposed by the government such as smart meters, home-working and stream lining their ICT strategy all completely depend on the information storage and computing power of our data centres,” said Rabbetts.

EU Code Of Conduct

But while it may be possible for some data centres to be migrated abroad, issues of latency mean some facilities connected to financial services have to be situated close to where trading happens. Some reports claim that applications and services that need near “real time” communication cannot be located further than 40 miles from the hosting site.

But while Rabbetts is opposed to elements of the UK energy policy, he claimed that his organisation has been promoting the EU’s Code of Conduct for Data Centres. The code, introduced in November 2008, is a voluntary scheme to encourage data centre operators to improve energy efficiency and reduce power consumption.