In the run-up to Brexit, Tech UK has warned the UK’s position as a major player in the global datacentre market could be jeopardised without access to energy cost compensation schemes.

This warning is part of the ongoing discussion between TechUK and the UK government about safeguarding the UK’s technology industry as a whole, as the country plans it’s departure from the European Union.

TechUK’s fear is that the UK’s datacentre market may struggle to achieve the same growth and prosperity in the years to come unless the government is prepared to subsidise the sector in a similar way to other energy intensive industries (EII), such as the cement, chemical, glass and steel sectors.

Energy Intensive Industries

According to Emma Fryer, the associate director for climate change at Tech UK, the problem is due to the classification used by the Department for Business, Energy and Industrial Strategy (BEIS).

“The datacentre sector is more energy-intensive than quite a few of the sectors that qualify officially [as EII], and that is partly historical, because when that list was drawn up, datacentres weren’t the sector they are now and they weren’t really on people’s radar,” said Fryer.

The cost for power calculations used by BEIS to define an EII, means only a small proportion of UK datacentres met the criteria for subsidy.

“This is not because the datacentre sector consumes too little power,” says Fryer. “But because the calculations are based on assumptions made about the price operators pay for the energy they use, rather than real-world figures. They set a price for energy that is way lower than what our users actually pay – around £60 MWh and only a few operators passed the criteria, which doesn’t give us a sector agreement or classification.”

Thanks to this, the sector as a whole is not eligible to receive the financial support or compensation offered to organisations which do qualify as EII.

Global Competition

Danny Quinn, the managing director at DataVita, told DIGIT: “Unsurprisingly, power is the number one cost when operating a datacentre. The UK and Scotland are now competing in a global marketplace to attract datacentre providers.

“Decisions on where datacentres get built is becoming less about the ideal physical location and more about the most attractive region based on operating costs (including power), connectivity and tax.

“Countries within our region have recognised this and the UK and Scottish governments need to act to ensure that we are able to compete in the global marketplace.  Other industries who are heavy users of power receive support, the red tape needs to be removed ASAP so our datacentre providers can remain competitive.”

Fryer agrees: “I would like to see the sector getting equitable treatment in terms of the compensation measures it’s eligible [compared to] other energy intensive businesses. We’re seeing other countries bending over backwards to attract datacentres to their regions, and I think the UK government maybe missing a trick,”

“Why aren’t we making a similar effort? We might be the dominant market in Europe and globally market leader in datacentres now, but we do need to protect that, as it will underpin our future growth.”