News Hub

Data centre net zero goals derailed by energy crisis

Written by Mon 11 Sep 2023

The energy crisis is proving to be a formidable obstacle for the data centre industry. A recent study by Schneider Electric revealed that 81% of business leaders are apprehensive about achieving their emissions reduction targets.

The research named ‘Missing the Target’ surveyed more than 1,500 large organisations. It underscored the potential setbacks in the global battle against climate change.

The Sustainability Challenge

When business leaders were asked about the challenges that impacted their organisations over the past year, economic pressures topped the list at 52%. Cybersecurity was a close second at 46%, while the energy crisis itself ranked below skills shortages and innovation.

A significant 49% of organisations said they are deferring their investments in sustainability and net zero strategies. Instead, 40% of these organisations shifted their focus to other immediate challenges. Meanwhile, 43% felt that emission reduction is no longer a pivotal concern for their stakeholders.

“Business leaders tell us that the energy crisis should be seen alongside the many other challenges they have faced over the last twelve months, including economic pressures, cybersecurity and skills shortages,” said Mark Yeeles, Vice President for the Secure Power Division at Schneider Electric UK and Ireland.

Unfortunately, the repercussions of these challenges are felt by consumers. Just less than half of businesses (42%) have had to transfer increased costs to their customers, and 37% postponed investment plans.

Tackling the Energy Crisis: Hope for the Data Centre Industry

Despite the hurdles, 32% of data centre leaders still perceived climate change and net zero objectives as escalating priorities in the coming three years. A mere 11% foresee a dilution in national net zero commitments during the same timeframe.

“Our research suggests that some of the UK and Ireland’s data centres are ‘kicking the carbon emissions can down the road’, as a result of the energy crisis,” added Yeeles.

He stressed the critical role of data centres in realising the net zero and emissions reduction targets of the UK and Ireland, especially in the context of global pledges like the Paris Agreement.

The survey also shed light on the tangible challenges businesses face. Decarbonisation, while beneficial in reducing energy use and mitigating volatile energy costs, is not straightforward. Over one in five firms (22%) admit that implementing practical measures to meet targets is a daunting task.

Opinions on future energy prices were also divided. While 32% of data centre managers anticipated a drop in energy prices over the next three years, a substantial majority (71%) predicted they will still be contending with the energy crisis 12 months from now.

Yeeles remained hopeful, encouraging businesses to recommit to their emissions reduction aspirations.

“It’s not all doom and gloom: as our research shows, business leaders still believe in their climate change ambitions – they simply need to push the subject back up the corporate agenda,” said Yeeles.

He highlighted that the technology for decarbonisation is readily available and offers enticing returns on investment within months rather than years.

“Organisations still have ample opportunity to meet their net zero commitments by comprehending and addressing energy consumption, channeling investments into renewable energy and energy-saving technology, and firmly integrating sustainability and carbon reduction objectives into their business strategies,” added Yeeles.

Emphasising the enduring advantages of green investments, Yeeles said that investing in green skills and jobs will yield the dividends of a diverse workforce for years to come.

The Big Picture

The energy crisis, which began in 2021, has had profound implications for businesses and the data centre industry in the UK and Ireland. The surge in wholesale prices of electricity and gas, which increased as much as 15-fold, is just the tip of the iceberg.

The crisis, exacerbated by the post-pandemic economic rebound and the conflict in Ukraine, has forced many businesses to reevaluate their priorities and strategies.

In a foreword by Kelly Becker, President UK & Ireland at Schneider Electric, she emphasised that by 2030, the world will have a clear picture of its stance in the fight against climate change. To meet the ambitious goal of limiting temperature rises to 1.5°C by 2050, global emissions must be halved in a mere seven years.

However, the energy crisis has diverted the attention of business leaders and data centre operators from their net zero goals to more immediate challenges, such as economic pressures, supply chain delays, and skills shortages.

The recent research by Schneider Electric painted a concerning picture that 82% of UK and Irish business leaders believe the energy crisis will impede their decarbonisation efforts.

Becker stressed the importance of refocusing on net zero. She warned that, as energy market volatility becomes the norm, businesses that delay decarbonisation will face new risks. On the flip side, businesses that remain committed to carbon reduction will enjoy benefits like lower costs, greater efficiency, and progress towards sustainability goals.

Dr Fatih Birol, Executive Director at the International Energy Agency, highlighted Europe’s dependency on Russia for a significant portion of its pipeline gas supplies. With rising demand from growing powers like China, the situation appears fragile. However, Birol noted a silver lining, suggesting that crises offer opportunities for businesses to reassess and emerge more efficient and sustainable.

Actions to Achieve Net Zero Goals

While the challenges are many, businesses can take proactive steps to navigate these turbulent times and make meaningful progress towards a sustainable future.

Start with a Strategy

Kristin Hanley, Vice President Customer Operations UK and Ireland at Schneider Electric, emphasised the importance of long-term planning. She warned against letting short-term survival actions jeopardise future growth.

Net zero strategies should be intertwined with overall business plans. Clear accountability, ownership, and regular reporting should be ensured to gauge the success of initiatives. Businesses must consider the entire lifecycle of power generation, not just direct emissions.

David Hall, Vice President Power Systems UK & Ireland at Schneider Electric, suggested that businesses should focus on understanding their energy usage and optimising it through technology.

Seek Expertise

It is essential to understand your current energy use and sustainability performance. Seeking expert advice to pinpoint areas of improvement can help craft a comprehensive plan that aligns with business goals and operational efficiency.

Chris Collins, Country President Ireland and Major Pursuits Leader for UK & Ireland at Schneider Electric, highlighted the skills gap in the UK workforce. He pointed out that many workers lack the skills needed for the green economy and the digital age.

A remote energy assessment can provide invaluable insights into current energy consumption. Engaging external consultants to review your plans and results can set you on the right path towards achieving your net zero goals.

David Pownall, Vice President Services UK and Ireland at Schneider Electric, pointed out the knowledge gap many business leaders face. He stressed the importance of seeking expert advice to navigate the complexities of the energy crisis.

Collaborate Across the Company

Net zero should not be the responsibility of just one team. It should be a cross-functional initiative, involving various departments to identify areas for energy savings. A holistic approach not only aids in achieving net zero but also boosts operational efficiency, reduces energy consumption, and builds resilience.

No Time Like The Present

David Williams, Vice President Transactional Business UK & Ireland at Schneider Electric, issued a stark warning. Time is running out for businesses to act on their net zero intentions. He urged businesses to prepare for the challenges ahead by investing in digitisation, automation, and meeting net zero targets.

Do not wait for the perfect moment. Begin with low-cost measures to demonstrate the viability of your net zero initiatives. By taking the first step today, you can mitigate risks and pave the way for a sustainable future.

Hungry for more tech news?

Sign up for your weekly tech briefings!

Written by Mon 11 Sep 2023

Send us a correction Send us a news tip