Thursday, 26 August 2010

UK energy price hike could send data center offshore

A number of companies operating data centers in the UK could end up moving
abroad if the UK Government's proposal to increase
business electricity charges for
businesses by up to 43 percent by 2020 end up being approved.

Both data center operators and the Confederation of British Industry (CBI),
which represents the private sector in Britain, have said they are concerned
the proposal could end up costing not only jobs but competitiveness in a
number of industries that rely on fast and reliant low-latency data center

But it may not be as bad as it seems, according to London City data center
operator City Lifeline managing director Roger Keenan.

"Not all data centers are the same, and they don't exist for the same
reason," Keenan said.

"Some data centers need a lot of computation power (and therefore electrical
power) but have little need to communicate with the outside world. This
might be geological computation, with lots of number crunching, little
communications and few staff. These kinds of data centers may leave the UK."

Keenan said he believes data centers that are communications heavy or
latency critical such as 'algo traders' or telephone calling-card companies
that need myriad diverse connections at low cost to all parts of the world
will remain in the UK, and close to London.

CBI senior policy advisor for energy Murray Birt said the CBI has asked the
British Government to work fast on finalising its plans for energy price
hikes so that businesses, especially those that are more energy intensive,
such as data centers, can finalise goals to become more energy efficient and
reach key government carbon reduction commitments.

According to the Environmental Agency, less than half the number of
companies required to register for the new Carbon Reduction Scheme in the UK
have, and the deadline is close -30 September this year. "We want the government to try and simplify its energy policy," Birt said.
"The price hikes are likely to be here to stay due to the world commodity
price for natural gas, oil and coal, but we do anticipate that these price
will actually end up being slightly less than what is forecast for now."

Birt said the CBI's main concern is those industries where energy is a key
component of their cost, such as the commercial data center. He said
businesses operating data centers will not realise much change in pricing,
due to the small percentage of cost it already equates to for an enterprise
such as large banks, and other entepriees running their own data centers.


No comments:

Post a Comment