We need to talk about data centres’ dark side

These increasingly popular assets’ environmental impact and vulnerability to climate change merit closer attention.

Over the past two years or so, energy transition and digital infrastructure have emerged as the hottest subsectors within infrastructure and are now a fixture of most managers’ portfolios.

In fact, within digital infrastructure, data centres continue to attract capital not only from infrastructure investors, but also private equity and real estate. But while capital continues to flow into these assets, their environmental impact and vulnerability to climate change are arguably not getting the necessary attention.

Two recent examples drove that point home. With drought blighting the UK, the Financial Times reported in late August that Thames Water had launched a probe into data centres’ water usage for cooling servers. The utility also admitted that a proposed site for a new data centre in Slough applied for permission to use 25 litres of drinking water per second, or 2.1 million litres a day. The request wasn’t granted, with the FT reporting Thames Water negotiated a lower volume of water – though a specific figure was not disclosed.

Using drinking water to cool servers is not uncommon, confirmed Jay Dietrich, research director, sustainability, at IT service management company Uptime Institute. However, there are methods that are less damaging than others. For example, a cooling tower system consumes more water since it involves evaporation, while in a closed-loop cooling system there is no water loss since the water is recycled.

Three days later, the FT reported that Equinix and Digital Realty Trust were stockpiling diesel for their back-up generators in case of power outages in Europe this winter. “We don’t ever expect to have to run for more than a few hours, or at worst case a day, on diesel but we’re prepared to run for up to a week,” Gary Aitkenhead, Equinix senior vice-president for EMEA, said.

Again, Dietrich confirmed that diesel generators are not the exception. Until now, the use of a dirty fuel might not have been particularly concerning given that the back-up generators are meant to operate rarely and for very short periods. However, when even major banks such as JPMorgan are running power outage simulations to prepare for potential blackouts in Europe, data centres may have to rely more frequently and for longer stretches on their diesel generators.

What does that mean in terms of emissions? According to Dietrich, based on Uptime Institute’s modelling, emissions from diesel generators operating two hours a month at a 10MW data centre located in Virginia will account for 0.8 percent of the facility’s Scope 1 & 2 emissions. That figure jumps to 8 percent if the generators are used at the same facility 365 hours per year.

Asked whether batteries are an option instead, an infrastructure GP we spoke to explained that the technology just isn’t there yet. That was part of the only set of responses we obtained when we reached out to a number of infrastructure GPs invested in data centres – some of which were listed as being 10 of the most sustainable – to find out whether the practices referred to in the above reports were the exception or the rule. The others either declined to comment, didn’t respond in time for publication or simply didn’t respond.

The Uptime Institute’s latest global data centre survey offers some answers, though: while large operators keep a close eye on their power consumption, many smaller, privately owned enterprise data centres “still do not track server utilisation, arguably the most important factor in overall digital infrastructure efficiency”. When it came to monitoring water consumption, only about half the owners and operators surveyed track water use and 63 percent of those who don’t cited a lack of “business justification” for doing so.

Given our increasingly hostile and resource-constrained world, that is extremely short-sighted. As Dietrich commented, “there is no free lunch [and] no way to have zero impact”.

We agree, but the point is to have an impact we can live with.

Following the passing of Queen Elizabeth II, PEI in the UK will be observing the National Day of Mourning on Monday 19 September 2022. As such, we will be publishing The Pipeline, our start-the-week newsletter, on Tuesday, 20th, instead.