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How to prove energy savings for the Electricity Demand Reduction scheme


The Government and the Department of Energy and Climate Change (DECC) are now proposing a number of schemes that incentivise industry to reduce energy use and carbon emissions.

These schemes or proposals include the following:

  1. Climate Change Agreements (CCAs), which reduce liabilities under the Climate Change Levy (CCL) or Carbon Reduction Commitment (CRC),
  2. Enhanced Capital Allowances (ECA), a tax rebate for capital purchases of classes of equipment that lead to reductions in energy consumption,
  3. Electricity Demand Reduction (EDR), which targets just that.

Other schemes, as well as many more acronyms, exist.  

The ECA scheme is as readily accessible to the data centre industry as it is to any other industry, whereas other schemes are less so. In a previous blog, Colocation providers find unexpected repercussions from government incentives, we discussed the Climate Change Agreement that has been agreed for medium to large scale colocation providers. We also discussed the unexpected consequences that arise from this well-meant, but arguably over-simplistic, incentive.

A closer look at the Electricity Demand Reduction (EDR) scheme

Perhaps some of the more interesting ideas that DECC have considered relate to Electricity Demand Reduction (EDR). The original EDR consultation has now resulted in specific provisions within the 2013 Energy Act.

These provisions allow for financial incentives to be used as ‘carrots’ alongside the CCL and CRC ‘sticks’. EDR aims to tackle climate change, as well as the UK’s impending ‘energy gap’, by encouraging industry to consume less – or at least consume less during periods when others might want to consume and presumably pay more.

At its most basic, EDR calls for government incentives to be made available for substantial and demonstrative improvements in energy efficiency. The caveat is that the incentives should only apply if the improvements stand up to an ‘additionality’ test. This means incentives cannot be claimed where savings in energy would have come about naturally, for example, if a colocation company simply had fewer customers, or if an obsolescent data centre was being wound down over time due.

Proof of ‘additional’ savings

Unfortunately for the data centre industry, most data centres cannot actually prove that they are efficient. Nor can they prove that any potential savings are ‘additional’. 

The issue is that the required proof would ultimately involve knowledge of the ‘useful output’ of the data centre, which has to be a function of the computation being performed in the data centre. This is not the case for many other industries, where ‘useful output’ might be tonnes of sheet metal, litres of chemical compounds, or the number of car engines produced. In these examples, efficiency is then simply defined as ‘useful output’ divided by the total power consumed.

So what would the data centre industry need to do in order to persuade the Government that these financial incentives should apply to it?

It all comes down to measuring IT utilisation and those efficiency metrics again. The industry needs to come up with a pragmatic and simple measure of end-to-end IT utilisation.

We have seen from our discussion of the CCA agreement for data centres that the measure itself does not need to be perfect (nor even particularly good!) to be accepted by the powers that be. So why not choose some approximations of MIPs/kW, IOPs/kW and/or Mbytes/W, or a combination of these. It’s not rocket science to measure these metrics. All you need is good infrastructure and a DCIM tool that integrates data from IT systems and Facilities…

Next: Demand side response and all that…

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