December 16, 2022
When I host sustainability roundtables, it’s not uncommon for the topic to shift suddenly to how cloud and co-location providers that use renewable energy can offer services with lower carbon emissions, relative to private locations.
At just such an event in Europe recently, for example, someone went even further by saying that their own co-location provider runs on 95% renewable energy today and that it’s aiming to reach 100% soon.
The reality of these claims, however, is that most cloud and co-location providers arrive at such high percentages through the purchase of green certificates. These certificates are a tradable commodity that indicate that the electricity is generated using renewable energy sources. In other words, it enables organizations to use black energy, but market green energy.
Perhaps it is time to take a closer look at this topic and the actual cost of green certificates.
Suppliers of green energy can feed it directly into the national electrical grid, which transports the electricity to the end consumer. For doing so, the supplier receives a certificate that it can trade on the energy trading market.
The central idea of this concept is to “virtually” separate the physical flow of black energy from green energy. Doing so creates a market through which green certificates can be traded separately from the electricity supply and demand market. This provides flexibility by allowing producers of renewable energy to easily reach green consumers.
For co-location and public cloud providers it means they can compensate for their use of coal and oil-based energy usage, as well as their daily emissions. It also means, they can charge a premium for their services, which the customer is already paying for. In other word, there’s no reason private data centers can’t be just as green, by their use of green certificates.
But the organization purchasing cloud services based on the green energy claims of the provider, would be wise to question the voracity of the claim and understand whether the green energy is from certificates, or actual renewable energy sources.
Green certificates are generated and sold anywhere in the world where there is demand through the energy trading market at today’s price.
A typical price today for a green certificate can be set at US $77.00 per ton of CO2 emissions. Now consider a large data center and how much energy it consumes, and how much CO2 it emits. This could easily be upwards of 15,000 tons of CO2 emitted annually. (Of course, the actual number would depend on which country the equipment is located – but more on that in my next blog.)
For this scenario, however, the company would have to pay $1.550.000 worth of green certificates ($77 x 15,000 tons of CO2), in order to be able to claim a 95-100% carbon emission reduction. Then, seen over a three-year period, the amount would start approaching $3.5 million.
Contrast this scenario with one that looks to innovation and best practices around things like systems energy efficiency, cooling, floor space management, etc., to drive down the amount of energy required for the systems in the data center. This will reduce energy consumption from the power plant that emits CO2 during the creation of electricity, and the immediate environmental impact can be far more significant.
Regardless of which direction is chosen, the most important thing is to work to be vigilant about looking for ways to reduce energy consumption. At Hitachi Vantara we start with eco-friendly infrastructure, systems and solutions that require less energy, thereby reducing the carbon footprint with each new model which leads to greener data centers at lower costs. With such an approach, we have repeatedly seen that infrastructure modernization projects can lead to savings of up to 96% on electricity and emissions.
The bottom line is, use caution when looking for a sustainable place to run your IT workloads or a new location for your future data center. Perhaps the answer is closer than you think and right in your own data center.