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Draft German Energy Efficiency Act would impact the operation of data centers in Germany

Germany has recently proposed a draft bill for an Act on energy efficiency in order to increase energy efficiency, improve climate protection and implement EU law which will, in particular, have an impact on data center operators.

The German draft bill is being proposed despite a current draft for a new EU Energy Efficiency Directive to implement the decision of the EU member states to raise the EU climate target.

Initially, the ambitious plan was to have this enacted by the end of the year 2022. However, following first feedback from various organisations such as Bitkom, the German Association for digital industry enterprises [click here for German language PDF file], the draft is now being reconsidered. Hence, while the expectation is that there will be (possibly significant amendments), currently the scope is defined by the proposed draft bill.    
Regulations affecting data centers
Quite a few of the regulations proposed by the draft bill would affect data centers and their operators, in particular:
A. Regulations on energy efficiency and waste heat requirements (Section 23 of the draft bill)

1. Requirements for new data centers as of 2025 

  1. Data centers that commence operations from January, 2025 onwards shall, in the first two years from the commencement of operations, achieve a planned power usage effectiveness (PUE) of less than or equal to 1.3. Since the PUE to a large extent depends on a certain minimum utilization load of a data center, colocation providers face particular challenges in this respect, according to Bitkom's statement. In particular, they are often unable to determine the utilization of their customers' installed IT components.
  2. In addition, data centers that go into operation as of January 1, 2025, must have a planned energy reuse factor (ERF in accordance with DIN EN 50600-4-6) of at least 30 percent, and data centers that go into operation on or after January 1, 2027, must have a planned proportion of reused energy of at least 40 percent. As Bitkom states, these requirements can neither be met now nor in the foreseeable future, since the necessary infrastructures are subject to a planning and implementation period of up to 10 years.

2. Requirements for inlet temperature 

  1. For data centers that begin operations from January 1, 2024 onwards, a minimum inlet temperature of 27 °C applies to the air cooling of information technology. A lower inlet temperature is only permissible if this is achieved without the use of a refrigeration system.
  2. For data centers that begin operation before January 1, 2024, the following shall apply to the air cooling of information technology

1. minimum inlet temperature of 24 °C; and

2. from January 1, 2028 onwards, minimum inlet temperature of 27 °C. 

Lower inlet temperature levels are permissible if this is achieved without the use of a cooling system. 
3. Data center operators shall not enter into, or renew, contracts that are inconsistent with these requirements.
4. Utilization specification of unsubsidized electricity from renewable energies

Data centers shall cover their electricity requirements as follows: 

  1. as of January 1, 2024, 50 percent of electricity required must be unsubsidized electricity from renewable energy sources; and 
  2. as of January 1, 2025, 100 percent of electricity required must be unsubsidized electricity from renewable energy sources.

From Bitkom's point of view, it is highly questionable whether sufficient unsubsidized electricity from German renewable sources will be available to meet the envisaged targets. Furthermore, given the timeframes in which data centers as well as new renewable energy (RE) projects are planned and built, it is highly unlikely that data center operators could purchase additional renewables through power purchasing agreements (PPAs) – which would, however, be necessary to meet electricity demands.

B. Energy and environmental management systems in data centers (Section 24 of the draft bill)

Data center operators shall operate an existing energy or environmental management system, or shall establish (and operate) one by January 1, 2025.
Inter alia, such energy or environmental management system shall perform continuous measurements of the electrical power and energy requirements of the essential components of the data center; and measures shall be taken to continuously improve the energy efficiency of the data center. 
For data centers with a rated connected load of 1 megawatt or more, and for data centers owned by or operated for public entities with a rated connected load of 100 kilowatts or more, there shall be an obligation to validate or certify the energy or environmental management system as of January 1, 2025.
C. Obligation to inform (Section 25, 26 of the draft bill)

The aim of the draft is to increase the transparency of energy consumption by data centers by introducing sustainability indicators. Reporting on the CEN-CENELC indicators is required; reporting metrics are proposed, which focus on the number of central processing units (CPUs)  and the number of racks. Bitkom says that collection of these data will be difficult - and in some cases impossible.
It is proposed to have an energy efficiency register for data centers in which the information submitted by data centers shall be stored. Part of this information will be available to the public via a digital platform.
D. Information on heat extraction (Section 27 of the draft bill)

Operators of data centers shall provide the following information regarding the direct waste heat generated in the data center on their company's website as well as to the responsible municipality and the operator of the nearest heat network: 
1. the amount of heat, 
2. the temperature level in degrees Celsius, and
3. the prices for the provision of the waste heat.

Upon request of potential heat consumers, the operators of data centers shall be obliged to also indicate prices for the requested temperature and availability levels.
Bitkom criticizes the obligation to indicate prices for the provision of waste heat, since these are always subject to negotiation and the individual cost-benefit ratio must be taken into account. 
E. Information and advice in customer relations (Section 28 of the draft bill)

As of March 1, 2023, data center operators shall be required to transparently present the following to customers: 
1. the energy consumption per year directly attributable to customers, and 
2. the energy consumption of the technical infrastructure of the data center to be allocated in accordance with the consumption shares. 
As of January 1, 2023, the operators of a data center offering co-location shall ensure that 

  1. when offering co-location, the contracts and pricing vis-à-vis the customers provide an incentive to save energy and use information technology in an energy-efficient manner by separately indicating the share of energy costs in the total costs,
  2. co-location customers are supported in recording and reducing the energy consumption of the information technology provided; for this purpose, suitable monitoring information must be made available to the customers, and
  3. co-location customers receive the registration number of their data center in the energy efficiency register.