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2022.07.25 Billy Durie - Head of Global Sector Data Centres, Aggreko

Decreased margins and power outages significantly impacting UK and Irish data centres

Small data centres in the UK and Ireland have seen their margins significantly impacted as a result of the energy crisis, with some facilities seeing energy bills increase by as much as 50% over the last three years.

Detailed in our latest report The Power Struggle: Data Centres, the survey of 253 UK and Irish data centre professionals also revealed the extent to which facilities are experiencing power outages.

In addition to the impact on margins, two-thirds (65%) of UK data centres have experienced power outages in the last 18 months, with 60% of Irish facilities facing similar issues. In turn, more than two-thirds of respondents described power continuity as either ‘a concern’ or ‘major concern’ to their business.

Despite an announcement of financial support for high energy users in April, confidence in the UK government’s energy strategy remains lukewarm for operators. The survey revealed that only 29% said they were ‘very confident’ in the energy strategy, with Irish data centres having even lower confidence (6%).

It is unsurprising to see data centres are feeling the pressure. As high energy users, the price increases will no doubt make it harder for smaller facilities to remain competitive and our survey reveals just that. As government strategies mainly focus on heavy industry, such as steel and paper, data centres are taking it upon themselves to seek alternative energy sources, such as decentralised energy solutions.

Among the main drivers for decentralised energy solutions are sustainability and power security, according to our report, allowing greater independence from the grid. Being a key advantage for uptime, it is unsurprising to see operators consider such options, however, only 2% of businesses in both markets said they already had a solution in place.

Energy as a Service (EaaS) or Power Purchase agreements (PPA) models – where operators pay per kWh – are a popular means to procuring on-site power, however, the majority using a form of EaaS had either a one- or two-year fixed energy price agreement in place.

This could see energy prices significantly impact margins further. If data centres are entering one-year EaaS contracts as our data suggests, then they could be met with extortionate fixed energy prices. Those in longer-term contracts could also be at risk of penalties for high demand use during peak periods. These EaaS contracts are too rigid for the current energy climate, and data centres could be looking at even slimmer margins in the years ahead if they continue down this path.

Our report outlines alternative options to help alleviate the long-term impact of the current energy crisis. This includes Aggreko’s ‘Hired Energy as a Service’ model, which allows customers to access decentralised energy solutions without being locked into long-term contracts and fixed energy pricing.

To view the results in full and read Aggreko’s latest industry report, The Power Struggle: Data Centres, click below.

Download Power Struggle report