Fears for data centre sector over Climate Change Agreement ban
Mon 23 Apr 2018
Industry body TechUK has questioned the UK government’s decision to ban data centre operators from joining the Climate Change Agreement (CCA) programme after October.
The Department for Business, Energy and Industrial Strategy (BEIS) will not allow new operators or new sites from existing companies to join the programme after 31 October 2018, in order to provide ‘long-term certainty.’
The scheme, which started in 2013, will finish in 2023, and though those at TechUK accept that it needs to end, they have argued that stopping new entrants from joining the scheme will stifle competition and reduce growth in the sector.
In an advisory note, the organisation said: ‘In a highly commoditised market where energy is the highest operating cost this will place new entrants at a disadvantage compared to incumbents and discourage growth.’
Emma Fryer, associate director at TechUK, questioned the decision to close entrance to the scheme so soon: “The scheme closes in 2023, and everyone knows that, because you don’t run these schemes forever. But closing this scheme to new entrants so early will pose problems for our industry.”
Fryer also raised the issue of how data centre operators would interpret these changes in a practical sense. “How do you bill your customers in that scenario? Do you bill them on an average between the two? Or do you bill the customers in the older site, covered by the CCA, less or the ones in the new site more to cover their higher running costs?
“There is also a sense new sites, which should generally be better performing [from an energy efficiency perspective] are going to be penalised compared to the old sites, so operators are almost discouraged from closing down older sites in preference to new sites.”
BEIS, the government department responsible for the decision, told ComputerWeekly: ‘The rules for the Climate Change Agreements scheme have been in place since 2013 and clearly state that no new facilities may enter the scheme after October 2018 to make sure the scheme remains stable in its last five years.
‘This position was reaffirmed in 2016. We’ve talked to participants and believe these rules work in everyone’s best interests to provide long-term certainty.’
Introduced in 2013, the CCA was designed to encourage the data centre industry to reduce carbon emissions and increase energy efficiency, in exchange for a number of tax breaks.