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By Mark Walter
Around the globe, data center stakeholders are under mounting pressure to reduce their energy consumption and adopt sustainable practices. One of the most energy-intense building types1, data centers consume five to 10 times the energy per floor space than typical commercial office buildings. Collectively, data centers are responsible for around 2% of the total U.S. electrical use2.
According to the International Energy Agency3, data centers worldwide consume upwards of 250 terawatt-hours (TWh) of electricity, representing around 0.3% of global carbon emissions and 1% of global electricity demand. McKinsey & Company4 predicts energy demand from data centers will reach over 30 gigawatts by 2028, with each gigawatt roughly equal to the amount of power a large nuclear plant creates.
In response, governments worldwide are introducing regulations and requirements to reduce the energy data centers use. Improving energy efficiency remains a critical goal for data centers as well, as they strive to minimize their environmental impact. To meet and prepare for internal and external expectations, data center stakeholders are wise to embrace self-regulation.
REASONS FOR SELF-REGULATING DATA CENTER ENERGY CONSUMPTION
Data centers have myriad reasons for adopting self-regulating energy consumption and efficiency practices, including financial benefits. Environmental requirements often come with hefty penalties for failing to adhere to critical deadlines and milestones. For example, data centers that fall short of meeting Washington state’s Clean Building Performance Standard requirements can be penalized up to $5,000 per year on top of a $1-per-square foot fine5. By self-regulating, data center stakeholders are taking proactive measures to avoid penalties like these.
Conversely, data centers that meet requirements before imposed deadlines may be able to capture financial incentives that offset the cost of upgrading equipment and technologies. The New York State Energy Research and Development Authority (NYSEDA) Commercial Challenge provides up to $15 million in its fourth round of funding to applicants with a clear energy management plan for their state’s buildings6.
Meeting environmental standards also makes good business sense. The 2023 Data Centers Global Outlook7 report presented by JLL indicates that data center operators who react quickly to improve efficiency benefit the most by:
Recognizing the compelling business case for self-regulation, global data center giants Microsoft and Google are leading the charge. They both announced commitments to achieving net zero emissions by 20308-9. Amazon Web Services plans to power its operations with 100% renewable energy as soon as 202510. Now, data centers of all sizes and locations around the world are following suit and striving to implement sustainable goals ahead of impending regulations.
BEST PRACTICES FOR SELF-REGULATING ENERGY USE
Many data centers have already started on the path to self-regulation by exploring and investing in energy-efficient technologies and renewable energy sources such as solar and wind power. Self-regulating data center owners and operators run their operations effectively while also demonstrating a return on investment for their efforts to reduce energy consumption.
The following represents five best practices for achieving successful self-regulation and staying ahead of the environmental compliance curve.
1. Support operational transparency with energy benchmarking
Benchmarking energy use is the first step on the path to meeting mandates. According to ENERGY STAR® DataTrends research11, building owners and managers who benchmark and monitor energy data consistently reduce building energy use by an average of 2.4% per year. The ENERGY STAR Score for Data Centers is an effective online tool for benchmarking.
2. Stay informed of industry standards for data centers
Resources and organizations are available to help data center stakeholders stay in front of current and developing environmental regulations that impact them. The International Organization for Standardization (ISO) 50001 for energy management provides a framework of requirements data center owners can use to develop energy-efficient policies, define targets and goals, leverage data to make better energy-use decisions, and continually improve energy management.
3. Conduct an energy audit
Compliance mandates usually require commercial owners to conduct and share the findings of energy audits of their buildings. Proactively completing an energy audit is an effective self-regulatory strategy. A thorough audit of data center operations will reveal how it uses energy across all systems and opportunities for optimization and improved efficiency. An energy audit also provides insight into where to deploy new technology and equipment that could drive more energy-efficient operations.
4. Consider renewable energy and renewable energy credits (RECs)
Adopting alternative energy sources is another critical component of self-regulation. Data center providers like Google are becoming the largest corporate buyers of clean power, primarily from wind and solar farms12. Renewable energy sources are more viable for data centers thanks to rapid advancements in solar, wind, geothermal, and hydrogen technologies.
Data center stakeholders have the option to purchase RECs to support sustainability goals, as well. Recognized by the government, regional electricity transmission authorities, nongovernmental organizations, and trade associations, RECs certify that the bearer of the certificate owns one megawatt-hour (MWh) of electricity generated from a renewable source. Once that energy has been fed back into the grid, the REC can be sold on the open market as an energy commodity and purchased by other entities to offset their carbon emissions. Emission Reduction Credits (ERCs) or Capped Allowance Systems also offer incentives to help mitigate the costs of meeting local and city environmental compliance mandates.
5. Embrace innovation to improve energy efficiency
In a 2023 Data Center and Infrastructure survey13 of over 900 participants, data center stakeholders identified new technology adoptions as their third most pressing challenge. The following systems significantly impact energy consumption and are worth strategic investments in upgraded technology, software, equipment, and services:
Optimizing IT equipment efficiency, managing airflows, and implementing energy-efficient strategies are essential steps toward reducing the energy footprint of data centers. Adopting best practices transforms environmental compliance challenges into business advantages that drive cost savings, competitive positioning, and operational performance while preparing for tomorrow’s regulatory realities.
ADDITIONAL RESOURCES TO SUPPORT SELF-REGULATION
Data center stakeholders have myriad resources to turn to for information, guidance, and best practices in support of energy-efficiency initiatives, including:
SOURCES
Mark Walter is Vice President of Sales for Data Center Solutions at Albireo Energy. He can be reached at [email protected].
