Germany / Deutschland: Germany's Energy Efficiency Act and what it could mean for the data center industry

The German Federal Ministry for the Economy recently presented a draft for an "Act to Enhance Energy Efficiency, Improve Climate Protection and Implement EU Legislation," named the Energy Efficiency Act (ENEfG). This bill has been proposed with the aim of saving 500 Terawatt hours (TWh) of energy by 2030, equating to a 9% energy-saving goal, which is important considering that according to reports, Germany is at risk of falling short of the EU targets currently being negotiated in Brussels. If the bill is implemented, it will have wide-reaching effects on the industry, introducing a flat rate for PUE and mandatory heat reuse; specifically, it outlines the following: 

Data centers that start operations on 1 January 2025 or later must have the following:

For data centers starting operations on 1 January 2027 or thereafter, however, this Energy Reuse Factor will increase to 40%. The legislation would also obligate data centers to operate with 50% green electricity from 2024 and 100% from 2025.

This proposed legislation has been met with backlash from those within the industry, including the German Datacenter Association (GDA), which says that if passed in its current form would make the construction of new data centers "impossible." Commenting on the proposals around the implementation of waste heat reuse, the GDA said the draft bill sets "unrealistic expectations." Further to this, it argued that the federal government should require district heating providers to take on responsibility: "The obligations should be aimed less at the data center industry, but focus on energy suppliers, e.g. with a purchase obligation, in order to achieve the desired effects."

Elsewhere, digital association Bitkom said that the requirements are "not feasible for many data centers." Bitkom head Achim Berg said: "By (2025), the energy transition in Germany will not have been implemented, and there is simply not enough electricity available from renewable sources." Berg went on to say that this legislation would mean prices would be hiked if data centres had to buy large shares of green electricity, "which would then not be available to other customers." Adding: "If electricity costs in Germany are now driven up further by unrealistic requirements, German data centres will be massively burdened in competition and the business location as a whole will be weakened."

Anna Klaft, chairwoman of the GDA also argued that this legislation has come five years too late: "If you want to decide on conditions for the data centers that go into operation in 2024 at the end of 2022, then that is five years too late. These data centers are already planned, approved, and under construction."

Equally, there has never been a greater need for bold environmental protection legislation, and recent scathing reports from the likes of Greenpeace, Uptime and others show that the data center industry and the wider tech industry are not decarbonizing quickly enough, or adequately recording its sustainability practices. Many operators, despite bold green claims and pledge signing, are failing to make good on their promises.