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Power Market, Power Pricing

Published: June 2012
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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.