Energy regulation needs ‘fundamental behaviour change’

A “fundamental change in behaviour” is needed among policy makers in relation to energy regulation, a new report has claimed.

Digital technology trade body TechUK said energy regulatory requirements were often “poorly focused, overcomplex and unduly burdensome” and were holding back the potential for data centres to play a more dynamic role in the electricity market.

The group’s Data Centre Energy Routemap highlighted 10 key areas for the sector to focus on to do its part in achieving net zero by 2050. Three of these were marked as ‘red’ meaning they were areas needing improvement.

Under regulation, the report said the result of regulatory requirements was that “disproportionate resource” was diverted towards demonstrating compliance rather than delivering improvements.

It further highlighted how non-mandatory schemes and incentives provide a mixed picture as a result of the unusual characteristics of the sector combined with low awareness within government, meaning most schemes are a poor fit.

The report said the best scheme “by far” was the climate change agreement, a scheme to reduce energy and CO2 emissions, but added that its reach was limited to commercial operators and that it had been closed to new entrants.

It also said the expectation of data centre operators that regulation will be appropriate, deliver the required policy outcomes and will not impose disproportionate burdens was not being met.

“A fundamental change in behaviour is needed among policy makers, who are increasing the complexity of the compliance landscape without necessarily improving effectiveness. There is also an unfortunate tendency to impose regulations on business while exempting their own organisations”, the report said.

It also said that new regulations have even been introduced purely to correct previous policy failures.

“Any operator wanting to understand their obligations now must contract external expertise. This is damaging, costly and unnecessary”, it added.

Other areas that were highlighted in red were heat reuse and “becoming an energy prosumer”.

The data sector produces a considerable amount of heat from computer servers and in parts of Europe centres already export heat waste with nearby customers and/or heating networks.

However, such projects in the UK are “thin on the ground” and the government’s industrial heat reuse support scheme in selected sectors is a “poor fit” for data centres.

The report also highlighted the potential of the data sector to produce its own power. It roughly estimates that the sector could have around 2GW of embedded generating capacity in the form of diesel plant which in theory could be deployed under demand side response schemes.

Data centres have embedded generating capacity because IT functions cannot tolerate interruptions or fluctuations in electricity supply.

In practice however, all forms of DSR from diesel plant are being ruled out by UK air quality legislation therefore despite significant embedded capacity, it is unlikely that data centres will be able to provide balancing services from their diesel plant due to legislative constraints, unless operators can make the business case to fit abatement, which TechUK expects to be rare.

Gas turbines are being introduced on some sites; these emit far lower levels of air pollutants than diesel but uptake is limited.

TechUK believes the following are key areas the industry should focus and has colour-coded them in order of progress, with green being the most and red being the least.

• Strategy and policy
• Security of supply
• Energy stewardship
• Moving to renewables
• Becoming a prosumer
• Disclosure and reporting
• Transparency
• Heat reuse
• Air quality
• Regulation

The trade body added that the routemap is not intended to be a finished article but is more a work in progress which helps it to establish the route for the sector to achieve its energy objectives.

Emma Fryer, associate director for data centres, TechUK said: “The data centre sector is consistently challenged about energy use, energy stewardship, emissions and growth.

“We need to look at these challenges much more strategically at sector level, not just how we respond to them but how the sector is positioned within the energy ecosystem. We have to reconcile the facts that we are a growing sector operating in an energy constrained world.

“Although we do well in key areas like energy stewardship and resilience, there is always more that can be done, and performance is not always consistent across the sector.

“As industry representatives, TechUK can help with guidance, sharing best practice and facilitating dialogue with policy makers and other stakeholders.”