Green Data Centers: Pioneering Energy Efficiency and Sustainability in the EU
Growing Demand for Data Centers: Environmental Challenge
In recent years, the demand for data centers has increased dramatically, driven by the growth of digital data and the increasing reliance on cloud computing.
In Europe, while the General Data Protection Regulation does not explicitly mandate local data storage within the European Union ("EU"), several of its provisions effectively encourage or necessitate it. As a result, companies are investing heavily in building and upgrading data centers in Europe to meet the surging demand.
However, data centers pose significant environmental challenges primarily due to their substantial energy consumption and the resultant carbon footprint. According to the International Energy Agency ("IEA") Report 2024, in large economies like the United States, China, and the EU, data centers account for around 2-4% of total electricity consumption today. But because they tend to be spatially concentrated, their local impact can be pronounced.
The EU Push for Sustainability
The EU has introduced the Code of Conduct for Data Centre Energy Efficiency, offering guidelines to improve energy efficiency. Furthermore, the EU Taxonomy Regulation classifies data centers as sustainable investments if they meet specific energy efficiency criteria, promoting green technologies. The updated Energy Efficiency Directive and the Delegated Act on a common rating scheme for data centers ("Delegated Act") include specific requirements and performance indicators for data centers. Key energy-savings measures to enhance efficiency and reduce environmental impact include:
- Mandatory reporting before national authorities
- Energy management systems and energy audits
- Waste heat recovery
- Implementation of best practices and technologies to optimize energy consumption
- Renewable energy integration
Use of Renewable Energy Sources: Challenges and Opportunities
The surge in data center construction to meet artificial intelligence ("AI") demand is creating a shortage of necessary land and power. In addition, with a focus on sourcing renewable energy to meet goals related to carbon neutrality, these energy costs are rising. In addition, constraints on renewable electricity availability threaten AI expansion.
Energy availability and electrical connection challenges are delaying new projects. While some companies have secured corporate power purchase agreements (long-term contracts) with nearby renewable and/or nuclear plants, virtual power purchase agreements could also help alleviate grid bottleneck.
Future Outlook
Looking ahead, the EU is expected to continue tightening regulations to ensure that data centers contribute to climate goals. Future regulations may include stricter energy efficiency targets, mandatory use of renewable energy, and enhanced reporting requirements.
Tomorrow's data centers in Europe will have no choice but to be "sustainable by nature," i.e., throughout their entire lifecycle and by adapting their value chain to the specific characteristics of the territories in which they are integrated.
