Data centres become carbon tax scare-story

Given that the IT business swallows nearly three percent of Australia’s power output, it’s hardly surprising that the industry is viewing the country’s coming carbon tax with some trepidation.

All IT users should at very least count up their kilowatt-hours and look at actually using the power-saving technologies that come free with most hardware, since Connection Research says the aggregate power demand of Australia’s computers is as much as seven percent of total electricity consumption.

With almost dead-boring predictability, the advent of the carbon tax has even led to the nearly-xenophobic prediction that our data will move offshore en masse (Australians keep pretending we’re internationalized and cosmopolitan, an image we drop like a live grenade the instant someone says “business will move offshore”).

It’s true that electricity is the main input to the data centre business, and at more than 18 percent of ICT emissions, (Connection Research) of the country’s power, it’s a power hog. Its consumption is outsized compared to the economic scale of the industry.

Back in February, Pacnet predicted that the combined data centre markets of Australia and New Zealand would reach $AU1.1 billion by 2016. When it reaches that point, it will be around 0.1 percent of Australia’s trillion-dollar GDP: we could shift the entire data centre business offshore next week and barely notice.

But that’s not going to happen: some data will remain here because it will be illegal to shift it offshore, and some data centres will adjust, because good design and intelligent management can slash the data centre power bill.

So why aren’t we already there? Again calling on data from Connection Research, we devote 2.7 percent of total power generation to ICT, compared to an international norm of around 2 percent, and a fair slice of that relative inefficiency is probably attributable to data centres.

One reason is a simple lack of incentive: until recently, electricity was relatively cheap, and that influenced data centre design. It was cheaper to use more power than to buy better technology.

Power prices were already rising

It’s worth noting that electricity prices have already been rising sharply, particularly in NSW. Those rises (as much as 18.1 percent in 2011 alone), attributed to transmission infrastructure upgrades rather than environmental policy, far outrun the ten percent price rise predicted when the carbon tax comes into effect.

On that score, the idea that the carbon tax is going to force data offshore is already debunked: the price rise for commercial customers (who have negotiating power) is unlikely to match the household ten percent price rise, and much larger rises in recent years haven’t sent our data to Singapore. There has, in fact, been a continuing data centre boom in the face of those price increases.

Something that hides underneath the shiny public image of the data centre industry is that most data centres are fairly old (and therefore inefficient), and a great many of them aren’t purpose-built wonders of civil engineering, but are small rack-rooms in cheap real estate.

That probably hints at where the hammer will fall: if a small data centre combines inefficiency today with a lack of capital for upgrades, it will suffer more than a newer facility that’s backed by sufficient capital to pursue energy efficiency.