The road to greener data centers

The data center sector is in the spotlight when it comes to sustainability. In 2021, data centers worldwide consumed around 1-1.5 percent of global electricity, according to the International Energy Agency. In just one day, the average data center uses up to 300,000 gallons of water to cool itself, the same water consumption as 100,000 homes, according to researchers at Virginia Tech.

Under heightened scrutiny as demand for data centers grows, owners and operators are increasingly focusing on having a more environmentally sustainable footprint. This is partly down to pressure from end users.

“The data center market effectively hosts the cloud,” explains Stephen Beard, co-head of global data centers at consultancy Knight Frank. “Amazon, Microsoft and Google, for instance, make up around 80 percent of total occupational take-up throughout Europe. And the two biggest ones – Microsoft and Amazon – have both committed to carbon neutrality by 2025 and carbon negativity by 2030 across all their data centers. So the sector is feeling the squeeze from end users who have aggressive targets to hit.”

A decade ago, end users would first ask about technical requirements or fair market prices; today the first item on the agenda is having the greenest operator, says Ben Stirk, co-head of global data centers at Knight Frank. “That is becoming more and more the case in the last two years than I have ever seen before,” he adds.

Nowadays, data center operators backed by institutional private capital recognize the material benefits of providing sustainable assets for their customers, Beard notes. “Rather than seeing the additional cost as an impairment, they are now able to charge those customers – the cloud entities – a premium for the benefit of enjoying a greener, more sustainable data center.”

Regulatory pressure

In addition to customer pressures, stricter regulations are also becoming a reality. In the US, the Securities and Exchange Commission plans to require public companies – including data centers – to disclose their greenhouse gas emissions and energy use, as well as the climate risk their businesses face.

“The sector is feeling the squeeze from end users who have aggressive targets to hit”

Stephen Beard
Knight Frank

Meanwhile, in the EU, the Corporate Sustainability Reporting Directive (CSRD) entered into force in January 2023. The new directive is much more ambitious than the former Non-Financial Reporting Directive (NFRD), substantially increasing the number of companies that have to collect data on their carbon footprint to an estimate of over 50,000 – compared with under 11,000 under the NFRD. That includes foreign companies doing business in the EU.

“The CSRD will come into play indirectly from January 2024. Companies will have to apply the new rules in the 2024 financial year, for reports published in 2025 – that is a game changer,” Colm Shorten, JLL data centers EMEA senior director, argues.

“It is not necessarily a piece of data center legislation, but data centers are going to be captured in it and, as a result of that, reporting on sustainability metrics has come to the fore.

“Most companies have sustainability reporting, but with this new piece of legislation, they now have to have more structured reporting, and look at their impact on the environment, and the environment’s impact on the data center.”

Beyond reporting, local authorities and governments can also influence data center operators to reduce energy consumption or the emissions footprint of their facilities, Beard says.

“In London, for instance, we have had a couple of recent planning applications in North Acton that have been granted and, as a condition of that consent, the operator has had to commit to paying what is called a carbon emissions levy. It is the first time we have seen that in the data [center] space from the UK,” he says.

Importantly, a group of data center operators and industry associations have created a self-regulatory initiative – the Climate Neutral Data Center Pact. The group has set a number of targets to achieve climate neutrality by 2030. In terms of power usage effectiveness (PUE), for instance, new data centers must meet an annual PUE target of 1.3 for cold climates and 1.4 for warm climates by 2025 – and existing data centers must do so by 2030.

“If operators fail to meet these commitments, it could result in being less favorable to other organizations during the procurement process,” notes services firm JLL in a sector report.

The shift to renewable energy has been key to making data centers more sustainable. New data centers can benefit particularly when they are placed in locations with access to reliable and cheaper clean power – whether that is hydropower, wind, solar or even nuclear sources.

“The Nordics benefit from having an abundance of access to 100 percent renewable energy, particularly hydropower,” Beard says. “But there are requirements for data to be held in certain countries because of data sovereignty.

“And there are certain applications that cannot be sent to the Nordics – it is too far away. So, when data centers need to be placed in locations without [such] access to renewable energy – such as Germany, for instance – what we are seeing in the market is much more investment in on-site generation.”

Facilities located in cooler climates can also take advantage of free cooling solutions. In warmer regions, however, data center cooling represents a significant barrier to sustainability since it can take up to 40 percent of a data center’s total energy consumption.

Some initiatives have emerged to make cooling more efficient, with one solution clearly gaining momentum: liquid cooling. If placed in heat-intensive spots, it can rapidly reduce temperature in a targeted manner, requiring less energy and water consumption.

Data center REIT Digital Realty, for instance, is cutting energy consumption and costs thanks to this technology. “Digital Realty partnered with Singapore-based CoolestDC, a spin-off from the National University of Singapore, to liquid-cool servers at its SIN11 data center in Singapore,” says Jon Curry, vice-president of operations, APAC, Digital Realty.

“In a benchmark study, liquid-cooled servers using CoolestDC’s patented hybrid cooling technology showed a significant reduction in power consumption of up to 29 percent, with an improvement in IT performance of up to 39 percent, compared with conventional air-cooled servers. This equates to a single rack with a power density of 25KW generating up to $25,000 a year in power savings.”

Improving efficiencies

Operational adjustments can also contribute to energy optimization, particularly in legacy data centers. With PUE being one of the key metrics used to determine data centers’ efficiency, data becomes key to measuring, managing and, ultimately, cutting carbon emissions. According to CBRE, data analytics can reduce cooling energy needs by up to 30 percent, for instance.

“Probably the biggest activity [toward sustainability] now is collecting and collating data so operators make daily and intelligent decisions not only to manage PUE but also water usage and IT utilization,” Shorten says.

“Operators can thus see where the opportunities for efficiencies and reducing their CO2 footprint are – mostly found in cooling systems – but also where they can achieve the greatest ROI.”

“Probably the biggest activity [toward sustainability] now is collecting and collating data so operators make daily and intelligent decisions”

Colm Shorten
JLL

One company using the Internet of Things, artificial intelligence and machine learning to provide real-time data analytics is Ecolibrium. The firm measures about 280 different points across an entire facility to create a digital twin which identifies whether the data center operates efficiently and how to reduce energy, water and carbon emissions – as well as costs.

“The refrigeration cycle is probably the most energy-hungry aspect to run a data center. We can identify whether [operators] have to change their maintenance cycle, the way they treat their water to reduce scale or the frequency of when they check the nozzles, for example. It is not just about reporting on the key metrics that are used to operate a data center but also driving continuous improvement,” says Chintan Soni, Ecolibrium’s founder and chief executive officer.

Efforts by data center operators to reduce their carbon footprint are starting to have a significant impact on PUE. According to IT advisory the Uptime Institute, average annual PUE in 2022 was 1.55, a steep drop from 2.5 in 2007, when Uptime began tracking. Although PUE progress has stalled since 2014 – mainly due to challenges in implementing efficiencies in legacy data centers – new data center facilities, with more advanced equipment and optimized designs for lower energy use, routinely achieve PUEs of 1.3 and below.

But while the industry’s efforts have started to bear fruit, rapid growth in workloads handled by large data centers has resulted in rising energy use in this segment over the past several years – increasing by 10-30 percent per year, according to the IEA.

This poses a challenge for the industry on its path to environmental sustainability. In addition, many data center operators are still unprepared for mounting sustainability requirements and regulation, according to Uptime’s latest survey.

Although 63 percent of operators believe authorities in their region will require them to publicly report environmental data in the next five years, just 37 percent collect and report carbon emissions data and only 39 percent currently report their water usage – which is a 12 percent drop compared with 2021.

In the coming years, “new laws, standards, and requirements will force operators to address these gaps and establish more stringent sustainability tracking and reporting practices,” Uptime concludes.

Owners and operators should get ready, then.