What IT needs to know about energy-efficiency directives for data centers

Creating energy-efficient and sustainable data centers makes a lot of sense from a business standpoint. Aside from the obvious environmental impact of lower carbon emissions, the potential business benefits include lower operating costs, reduced space requirements and a positive brand image.

There’s another good reason for building more sustainable and energy-efficient data centers: Regulations and standards are emerging around the world that will require or recommend such actions.

IT and networking executives and their teams need to get up to speed on a host of sustainability regulations and standards that are going to require a response on their part. Energy efficiency and sustainability are not just issues for facilities teams anymore. They are a concern for IT teams that will be asked to provide metrics, so the need for reporting will become more urgent. They will also need to select more energy-efficient hardware.

“IT executives need to be aware of current and future regulations because they can have a significant impact on their organizations,” says Brian Lewis, advisory managing director at consulting firm KPMG. “Environmental, social, and governance [ESG] concerns have become top of mind for most businesses.”

In a recent report, the Uptime Institute, a provider of educational services and certifications for data center professionals, predicted that the energy-efficiency focus will shift to IT this year.

“Ever-larger data centers have mushroomed across the globe in line with an apparently insatiable demand for computing and storage capacity,” the firm said in its 2023 data center predictions report. “The associated energy use is not only expensive – and generating massive carbon emissions – but is also putting pressure on the grid.”

Despite major achievements in energy performance in recent years, this has created challenges for data center builders and operators. Because server and storage infrastructure accounts for the largest proportion of a data centers’ power consumption and physical footprint, it offers the greatest potential for energy-efficiency gains, according to Uptime.

Research firm Gartner, too, noted that enterprise sustainability responsibilities increasingly are being “cascaded down” to infrastructure and operations leaders to improve IT’s environmental performance, particularly around data centers including colocation, edge and cloud.

“The environmental benefits of sustainable data centers and cloud services are clear, but the business benefits they deliver are often overlooked,” Gartner wrote in its report, Unlock the Business Benefits of Sustainable IT Infrastructure. Infrastructure and operations leaders “must make sustainability a focus of their infrastructure strategy to uncover new opportunities for cost efficiency, innovation and resilience,” it said.

Sustainability strategies tend to focus on environmental impact, Gartner said, but sustainability also can have a significant positive impact on non-environmental factors such as brand, innovation, resilience and attracting talent.

Regulations target data center efficiency and operations

New regulations springing up in various regions will be among the drivers of data center sustainability in the months ahead. There are two main groups of regulations emerging that affect data center operations, according to Jay Dietrich, research director of sustainability at Uptime Institute.

One is financial reporting modeled on the Task Force for Climate-related Financial Disclosures (TCFD), which requires reporting on energy consumption and efficiency and associated greenhouse gas (GHG) emissions. The other is the European Energy Efficiency Directive (EED), which requires an energy management plan, an energy audit, and reporting of operational data.

In addition, there are voluntary, country-specific standards and siting requirements for data center efficiency and operations in various countries around the world, Dietrich says.

A current example of a TCFD-related regulation is the E.U. Corporate Sustainability Reporting Directive (CSRD), with reporting requirements rolling out from large to small enterprises beginning in 2025 and continuing until 2028.

Another is the U.K. climate-related financial disclosure, which rolls out from 2022 and goes through to 2026. “Agencies in Brazil, Hong Kong, Japan, New Zealand, Switzerland, and the U.S., among others, are also in the process of finalizing similar regulations,” Dietrich says.

The climate-related disclosures include requirements to report corporate-level energy consumption for operations under the company’s control, programs to improve energy efficiency and increase the work delivered per unit of energy, and reduce the quantity of GHG emissions from owned and supplier operations, Dietrich says.

“These regulations/directives also require enterprises to assess their climate-related risks and opportunities and their financial implications,” Dietrich says. While they are typically managed by an enterprise’s financial and legal organizations, IT/data center and facilities operations teams will manage the inventory process to track energy consumption and GHG emissions, he says.

“They will also lead projects to improve operational energy efficiency and increase the consumption of carbon free energy – the two key means to reduce operational GHG emissions,” Dietrich says.

EED requires all enterprises that have a three-year annual average energy consumption of more than 23,600 megawatt-hours (MWh) per year to maintain a certified energy management system (EMS).

“An independent body must perform the certification – energy – audit,” Dietrich says. “The EMS requires a demonstration of continual improvement in energy performance as measured by the work delivered per unit of energy consumed, and companies must publicly report on the findings and corrective actions identified in the certification audit.”

Most, if not all, companies with data center operations in Europe will need to maintain an EMS, Dietrich says. EED also has specific data reporting and metric requirements for individual data center facilities, he says.

In addition to these two regulatory initiatives are a variety of voluntary data center standards specific to countries, states, and provinces worldwide. These provide checklists for assessing efficiency, in some cases involving detailed assessments of the efficiency of the IT infrastructure, Dietrich says.

There is no actual legislation in the U.S. as yet, but there are various reports on the subject and the Department of Energy is setting standards for energy consumption of servers, says Tony Harvey, senior director and infrastructure and operations analyst at Gartner.

“In the short term, there will be little movement on this. But over time, standards and regulation in the U.S. will be adopted,” Harvey says. “And it is likely they will use the E.U. regulations as a base. State and local governments may also legislate. We are already seeing state and local governments trying to prevent more data centers being built in areas where power is limited.”

How IT can prepare for energy-efficiency directives

Given the regulatory climate, it’s clear that IT leaders need to become more involved in sustainability efforts.

“Executives need to understand that their operations are likely to be regulated in some form in the next 12 months to five years,” Dietrich says. “The physical size and energy and water intensity of recently constructed or proposed hyperscale and colocation campuses have captured public and governmental attention. There is also a well-founded concern that the IT equipment infrastructure could be better utilized, so that operations deliver more work for each MWh of power and liter of water consumed.”

IT executives need to be aware of the regulatory climate, “as any multi-national company will be directly impacted by the moves in the E.U.,” Harvey says. “And it is very likely, not to mention desirable, that a set of common metrics and data collection rules is applied worldwide so that you do not have to run multiple sets of tools for data collection.”

In order to manage the coming regulatory wave, data center and IT managers need to give energy performance (work per MWh) and GHG emission reduction equal importance to resiliency, reliability, and performance in their operations, Dietrich says.

“These five operational attributes – two affecting environmental performance and three that [meet] customer operating requirements – are not mutually exclusive and they can, in fact, be mutually supportive,” Dietrich says.

One key area that IT leaders must address is the need to increase utilization of the IT infrastructure, Dietrich says. For example, if servers supporting enterprise and office applications run at about 50% utilization and batch jobs approach 80%, that can reduce capital and operating expenditures by up to 50% and increase work per MWH by factors of two to three, he says.

Also, IT equipment should be run with power management functions enabled, where workloads can tolerate slower response times. “Deploying these functions can reduce average server energy use by 10 percent or more,” Dietrich says. An Uptime Institute survey of data center operators indicates that over 30 percent are enabling power management on some portion of their server fleet, resulting in energy and cost reductions.

Another good practice is to establish tactical and strategic plans to increase the MWhs of carbon-free energy consumed at the data center. “These plans are best accomplished by working with trusted energy retailers in open markets and regulated or monopolistic utilities in regulated markets, to increase the quantity of carbon-free energy supplied to the facility over time,” Dietrich says.

“They will take five to 20 years to come to fruition, depending on the generation assets available in a given market, but will enable operators to reduce operational carbon emissions in line with governmental expectations,” Dietrich says.

Furthermore, central cooling and IT equipment infrastructure should be managed and optimized using automated control packages.

“These systems can improve system energy efficiency by 20 percent or more by scheduling central cooling units, adjusting IT space cooling delivery, and managing workload placement on the IT equipment infrastructure,” Dietrich says. This maximizes the use of these assets while minimizing their energy consumption to deliver the required workloads, he says.

The degree to which technology executives need to maintain awareness of current and future regulations will largely depend on their organization’s approach to data center operations, says Samir Datt, global technology strategy and architecture leader at global consulting firm Protiviti.

“Those that rely on third parties to provide services such as managed colocation, hosted systems, or cloud services will generally find themselves at arms-length from the impact of current and likely near-term regulations,” Datt says. “In this case, impacts will generally be mediated by the service provider and translated into pricing and operational requirements.”

On the other hand, those with large, in-house data center operations might find themselves held accountable for data reporting, or improvements to efficiency by various means including improved compute/storage density; improved thermal/airflow management and more, Datt says.

“We have already observed a number of clients with large data center footprints in urban E.U. settings encountering scalability issues related to limitations on data center power consumption for reasons that include self-imposed enterprise-wide energy efficiency measures, local utility restrictions, and legislative limitations,” Datt says.

“In some cases, this has led to a significant reduction of physical device footprints in corporate data centers, as successive generations of hardware improve compute and storage density but consume larger amounts of energy on a per-device basis,” Datt says. “We have observed physical footprint reductions as high as 50 percent in some cases.”

Efforts to create more energy-efficient data centers should be top of mind for technology leaders. With the introduction of regulations calling for sustainability, there might be an even greater sense of urgency.