Data Centres - Balancing Growth and Sustainability

If “data is the new oil”, then data centres are the new “heavy industry”, and it looks like they are on track to join their predecessors as a major contributor to climate change.

With billions of dollars being invested into data centre growth globally, data centre operators are already responsible for an estimated 200+ terrawatt-hours annually, equivalent to 2 percent of global electricity use. This is expected to rise to a staggering 20% of global energy consumption by the middle of the next decade.

With Sydney and Singapore (3rd and 5th respectively) both featuring in Cushman and Wakefield’s top 10 DC markets globally, the pressure is on for regional CIOs to keep an eye on sustainability as these new giants of the digital industry emerge. 

Data drives the global economy

A data centre, which is both the backbone of cloud services, as well as co-location of a client’s off-premise servers, will only increase in importance as meaningful applications of artificial intelligence and quantum computing are developed in the coming years, and blockchain continues to gain prominence and acceptance across business streams. 

Overall, the Asia-Pacific region provides many attractive locations for data centres, including Seoul, Hong Kong, and Melbourne, due to strong regional fibre connectivity, the availability of government incentives for investors, and reliable energy infrastructure. Billions of dollars are being invested in data centre growth right across the globe with substantial amounts flowing from both Australian and Singaporean sources. Whilst it’s clear we’ve seen an acceleration since the start of the pandemic, the underlying growth is organic due to the digital ‘on-demand’ economy.

As data management norms shift, we’ve seen a surge of DC operators enter the APAC region, supporting the needs of hyperscale clients, as well as enterprise and SME colocation services and cloud-based SaaS services. With 24/7 connectivity now the norm, production processes, supply chains and customers need to be switched on around the clock. 

The environmental costs of data

Each kilowatt hour of electricity produces an average 400 grams of carbon emissions; a quick back-of-the-envelope calculation tells us the data centre industry produces approximately 88 million tonnes of greenhouse gases per year, or just under 2 percent of the estimated total emissions. As pressure grows on businesses across all sectors to mitigate global warming, corporate executives need to take the lead in balancing their data needs against the United Nations-mandated Sustainable Development Goals, as well as their organisation’s own Environmental, Social and Governance (ESG) sustainability goals.

How can data centres contribute to carbon-neutrality goals?

Data centre infrastructure is made up of the servers, networking equipment, power grids, back-up generators and batteries, lighting, fire suppression systems, cooling, and the bricks, mortar, steel, fabrics, timber, plastics, and glass in the building itself. The technologies exist to make cloud computing energy-efficient, but they must be incorporated from the beginning of the design and construction process to provide maximum efficiency and benefit. The use of passive solar in design, environmental air circulation, recycled construction materials, and incorporating low-energy air-conditioning technologies can assist in making data storage facilities more energy efficient.

Emphasis is now being placed on whole-of-cycle responsibility which rests with the end-user, the data storage and cloud computing vendors and their clients. Managing carbon emissions, and planning for offsets via accredited and audited schemes, has now become a vital part of production and many reputable data centre operators have responded by offering bundled services to clients that include regulated and audited emissions offsets.

The true measurement of environmental costs associated with cloud computing and data handling must also include metrics for water and land use, as well as life-cycle analysis for the built environment. The need to gather and act on these ESG metrics has created a new line of work for key corporate executives, particularly for CIOs who are charged with managing digital supply chains and infrastructure.

ESG targets must be tailored to each individual enterprise, but they must be holistic at the same time. Best practice research suggests that having realistic target dates for shifting to 100 percent renewable energy, recycling of all packaging, diverting solid waste from landfill, and achieving a zero-waste equilibrium across the enterprise matrix are now part of a complete digital strategy. This is particularly relevant for data centres keen to maintain an optimum built environment and high-performing electronic networks that have traditionally been reliant on fossil fuels, excessive water for cooling, and high-level of disposable componentry.

Innovation to increase productivity and reduce CO2 emissions

On the upside, the pressure to switch to more sustainable technologies and processes in the digital economy is creating space for new and innovative solutions such as hydrogen fuel cell configurations to power digital infrastructure, environmental air circulation for cooling, and high-capacity battery storage coupled to on-site solar and wind-generated power. There is growing evidence that attending to ESG principles and implementation can improve the financial bottom line too. For example, by facilitating top-line growth, tracking cost recovery, increasing productivity, and optimising capital expenditure.

The business world has come to realise it has responsibilities beyond simply increasing shareholder value, and this includes sharing the burden of lowering carbon emissions to reduce the impacts of global warming. For energy-hungry data centres this means a laser-like focus on digital sustainability. The path towards realising this goal begins with three simple steps:

  1. A thorough diagnostic review that identifies roadblocks and ways forward to aligning IT and data processing strategies with a whole-of-enterprise strategy for sustainability;

  2. Committed and intelligent leadership that supports a robust approach to governance and enabling the CIO to action a plan for digital sustainability;

  3. An operational plan for information infrastructure and data management that makes sustainability and zero waste targets a key aspect of software and network architecture.

Data drives the global economy and our reliance on networked digital infrastructure is increasing as production and distribution of both physical and immaterial goods becomes more complex and data reliant. This means that total energy consumption in the end-to-end lifecycle of data centres will also increase, even as the Power Usage Effectiveness (PUE) ratio comes down. More efficient servers, and higher utilisation rates all contribute to reducing energy costs and emissions. Further innovation in the design, construction and management of these important facilities will also bring down the energy-per-unit cost over time, but it must remain focused on driving improvements in sustainability to meet expanded ESG targets.