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Regulation is coming to the data centre sector

Regulation is coming to the data centre sector

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John Booth, Chair DCA Energy Efficiency SIG & MD, Carbon 3IT, discusses who will be regulating the data centre sector and what the implications will be.

The data centre has always been subject to regulation, but this is more by default rather than direct and targeted legislation. We fall under the Electricity at Work Regulations 1989, for power systems, the Energy Performance of Buildings (England & Wales) Regulations 2012, for cooling systems and recently the Energy Saving Opportunities Scheme Regulations 2014 the EU/UK Emissions Trading Systems legislation. These are general regulations and we fall into them by virtue of the nature of data centres which comprises of power, cooling, UPS/Generators, fire detection and suppression systems etc.

While compliance can be a pain for smaller organisations, larger global colocation and cloud operators will have specific staff for compliance tasks, however, the consensus is that there is too much individual legislation requiring attention. Trade bodies and associations such as The DCA and TechUK continue to highlight these issues at Government level on behalf of the sector – they acknowledge that there is still a long way to go. There are three distinct and separate pieces of EU legislation that are now specifically targeting data centres.

EU Taxonomy

The first is the EU Taxonomy regulations which focus on investment companies with the intention that they will ONLY invest in sustainable projects, with a series of requirements that are outlined in the EU Taxonomy Compass.

For data centres, there is a requirement to implement the expected best practices as contained in the EU Code of Conduct for Data Centres (Energy Efficiency) (EUCOC) or the CLC/TR EN50600-99-1 and that the implementation of those practices is verified by an independent third party every three years. This requirement caused some concern with auditors, as neither of these guides or standards are written in an ‘auditable’ format. Approaches were made to EU Directorate DG CNCT to address this problem. The result was a commission to the TIC Council, the trade body for certification bodies and audit companies, to develop an auditable version of the EUCOC. This work is complete and we await the publication of the revised and auditable EUCOC best practices. These will be published by the EU-JRC as an annex to the 14th Edition of the EUCOC due for publication in Q1 2023.

It’s important to note that this audit can be required for UK data centres if the investment fund has European investors, indeed it can be required globally.

Corporate Sustainability Reporting Directive (CSRD)

This piece of legislation requires qualifying organisations to report sustainability indicators as well as energy and carbon emissions – it’s not focused on data centres but organisations that use colocation or cloud services. They are required to report all organisational energy and carbon emissions. Data centre operators get requests to provide an individual organisation’s Scope 3 emissions that are contained within a specific data centre.

This will cause angst within the data centre community. Most operators bill their customers in two ways, firstly for the rack – this includes the space and cooling. And secondly, for the energy used by that rack and IT equipment contained within. If an operator gets a request to provide this information, how are they going to get it?

Energy Efficiency Directive

The final piece of legislation is the revision to the Energy Efficiency Directive (EED), first published in 2012. This gave rise to the ESOS regulations and mandatory energy audits for qualifying organisations as defined under articles 7 and 8. The recast and how it impacts data centres is currently undergoing a consultation exercise scheduled to end May 2024. Recommendations or changes will commence in 2024/2025.

The recast (revised) EED requires data centres of a certain size or above (this lower limit has yet to be debated, some industry commentors have suggested 50Kw) to report total energy consumption, the percentage derived from renewable energy, water usage and the amount of waste heat reused. This could accompany a mandatory data centre registry requirement in country or at EU level. There is also some debate about looking at IT equipment.

The purpose of the requirement for mandatory registration and reporting stems from a recommendation published in the Science Magazine in Feb 2020 and made three recommendations. The first ‘Policy Support – Energy Efficiency Standards for IT Equipment’ started with the EU Lot 9 requirements. The second was ‘Investment in New Technologies’ by operators – this could be immersed compute or smarter cooling systems and maybe investments in renewable energy. The final recommendation was ‘public data and modelling’ – this is clearly what the EED is trying to achieve.

There has already been push back on these proposals and for valid reasons, but the European Commission has been quite clear in its response to the climate emergency. In Feb 2020, it stated: ‘Data centres and telecommunications networks CAN and SHOULD be carbon neutral by 2030’.

Currently, the commercial data centre sector appears to think it can merely use or invest in renewable energy either via PPAs or via direct ownership of renewable energy schemes, but will this be enough?

The following questions might be considered: What impact will all these EU directives have on the UK? Do these directives coming out of Brussels only relate to countries within the EU? How does this affect UK businesses and trade in the UK?

These are areas worth considering and yes, the EU legislation does only apply to the EU.

The Retained EU Law (Revocation and Reform) Bill 2022 could render all aspects and updates to existing EU laws (also applies to secondary legislation) in the UK to expire automatically on December 31 unless preserved. This piece of legislation has greater impacts on UK society i.e. employment law.

The UK Government will review all EU laws and maintain or enshrine in domestic law those that it wishes to keep. For BEIS, there are 318 pieces of EU Law, so far 256 are unchanged, 24 amended, 23 repealed and 15 replaced.

We can expect that UK commitments to climate change and net zero laws applying to energy efficiency will be maintained in some capacity or new laws introduced. Global operators will want consistency in reporting regimes across jurisdictions so they will all be asking for similar information.

Whatever the government decides, some operators may conclude that their reporting strategy applies to all EMEA operations and they will lobby the government via the trade associations to not stray too far from the EU legislation.


I’ve long argued that the data centre or IT systems have become the 4th Utility – we are as important as the other utilities, perhaps more so, as ironically none of these existing utility sectors would be able to function without the data centre and IT sector. If they are heavily regulated and we are to become the 4th Utility, then we should not be surprised if we too end up being regulated.

The reality is, we are now past sweeping this under the carpet. It is no longer a case of if we will be regulated but rather when and it is likely to be sooner rather than later, so prepare for change.

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