Power Market, Power Pricing and

Data Centres in Europe

Published: June 2012. 91 pages. 56 Figures

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The quality and availability of the datacentre stands or falls with the quality and availability of the power supply to the datacentre.

Summarizing the dilemma for datacentres, this new report, the first to assess the relationship between the power markets and pricing with datacentres in Europe finds a market with no equal distribution of price and where electricity prices have increased by an average of 5.1% during the period 2008 - 2011.

In 2011, Malta, Cyprus and Italy where the most expensive countries for industrial user electricity prices. Bulgaria, Estonia and Finland were among the cheapest. Among the four countries with Tier 1 markets in Europe, France had the cheapest price despite increases over the previous four years.

The report describes the complex relationship between market drivers, the pressure to reduce carbon emissions and the EU 20-20-20 policy framework, within the context of an ageing power grid and power plant infrastructure. Weather also plays a role in influencing the availability of power. The need is urgent to upgrade to smart power grids across the region. Inevitably the investment requirement will put further pressure on prices.

A detailed explanation of the energy supply chain model for datacentres is provided and the difference between energy technologies and their impact on datacentres. Not all electricity-generating technologies have the same flexibility when it comes to balancing demand fluctuations or providing back-up capacity for variable renewables.

Importantly the report provides 28 individual country analyses of carbon and non-carbon sources of energy used, pricing and regulatory regime. Austria for example is dominated by hydro power and by 2015 utilities will be banned from purchasing electricity with nuclear certificates.

The report uses empirical data to project energy consumption by datacentres in EU countries by 2015.

EU Datacentres in 2012 find themselves in an uncomfortable position. Datacentres are critical to the competitive cloud economy that the EU 20-20-20 vision very much desires. Carbon emissions remain a top challenge. Innovation must therefore come from the use of new technologies to reduce energy consumption continuously within and between the datacentre. As the report points out, making servers, storage and the network in datacentres energy-proportional will help to achieve this objective.

At the same time, power grids in Europe are ageing, and 19 of the 28 EU countries covered in the report have more than a 50% dependency on carbon based fuels. The investment required to upgrade and replace European grid infrastructure is estimated at 1900bill euros. In Europe's current economic climate policymakers will need to decide on the strategic imperative for a competitive cloud economy and how it will foot the massive bill to power it.

LIST OF FIGURES
LIST OF TABLES
EXECUTIVE SUMMARY

1 INTRODUCTION
The growing demand for Energy and Electricity
Data Centers and the Electricity Supply Chain

2 ELECTRICITY PRICE OVERVIEW
European Benchmark of Electricity Prices
European Electricity Prices
State of the Union - review of 28 countries

3 ELECTRICITY: THE SUPPLY SIDE
The European Electricity Market
Carbon, Nuclear and Renewable Energy
Carbon Regulation in the EU
Current Developments in Electricity Infrastructure

4 ELECTRICITY: THE DATA CENTER DEMAND SIDE
Data Center Energy Demand and Usage
Carbon and Data Centers
Current Data Center Developments

5 ELECTRICITY: SUPPLY, DEMAND AND VULNERABILITIES

6 CONCLUSIONS

APPENDIX

Figure 1. Primary energy supply mix 1973, 2009. Source IEA
Figure 2. Electricity generation mix 1973, 2009. Source IEA
Figure 3. EU total energy consumption (TWh) 2000-2010, source Eurostat
Figure 4. EU Electricity production and consumption (TWh) 2000 - 2010, source Eurostat
Figure 5. The data center as an energy conversion machine
Figure 6. The electricity supply chain and the data center
Figure 7. Components electricity retail price
Figure 8. EU electricity price benchmark 2011, VAT excluded source Eurostat
Figure 9. Share of taxes (%) in total electricity price 2008-2011, source Eurostat
Figure 10. Change of taxes share (%) in total electricity price 2008-2011, source Eurostat
Figure 11. Share of network costs (%) in total electricity price for 2008 and 2009, source Eurostat
Figure 12. Change of share of network costs (%) during 2008 and 2009, source Eurostat
Figure 13. Electricity prices for industrial consumers (€/kWh), 2011, source Eurostat
Figure 14. Price development electricity (%), 2008 - 2011, source Eurostat
Figure 15. EU Electricity prices for industrial consumers (€/kWh), 2008 - 2011, source Eurostat
Figure 16. Long term development gross electricity generation (TWh), source Eurostat
Figure 17. Gross electricity generation (TWh), 2007 - 2010, source Eurostat
Figure 18. Final electricity consumption (TWh), 2007 - 2010, source Eurostat
Figure 19. EU shifting power capacity mix, source EWEA
Figure 20. EU Electricity production mix shares 2010, source Eurostat
Figure 21. Electricity production mix (Gwh) of the top producers in the EU 2010, source Eurostat
Figure 22. Electricity production mix (Gwh) of the smaller producers in the EU 2010, source Eurostat
Figure 23. EU renewable energy targets 2020 and the 2010 status, source Eurostat, EuroObserver
Figure 24. Number of nuclear power plants EOL with a forty-year life expectation scenario, source IAEA
Figure 25. Diminishing nuclear power (Mw) with a forty-year life expectation scenario, source IAEA
Figure 26. Carbon price trend EEX market, source EEX
Figure 27. Legislative framework of EU energy policy
Figure 28. Merit order shift
Figure 29. Smart Grid deployment priorities
Figure 30. Yearly Carbon costs scenarios for a 5 MW data center
Figure 31. Electricity price driver