NGD Update Highlights – Q3 2010
- Has signed a deal with SmartestEnergy to purchase 100% renewable energy at its data centre in Wales
- Has BT and Logica as anchor clients
- Its customers now enjoy Green electricity, even though the UK government’s CRC legislation doesn’t yet give credit
- I’m looking forward to visiting the sight in the next couple of weeks
I recently had a chat with Nick Razey – CEO of Next Generation Data, who own and manage a great new data centre in Wales. He filled me in on the latest news about customers and the company’s Green initiatives. In particular:
- We talked about BT and Logica, NGD’s anchor clients up and running systems in two of the location’s data halls
- NGD has signed a contract to take all of its electricity from SmartestEnergy – a specialist in the area of aggregation of independent renewable generation in the UK; this means that any tenants of NGD will use 100% alternative energy
SmartestEnergy Provides Access To Renewable Energy Output In The UK
I followed up by calling Daniel Smith of SmartestEnergy who filled me in on how his company works. In particular:
- SmartestEnergy is wholly owned by the Japanese Marubeni Corporation, entering the market in 2001 to provide a route to market for independent generators
- It provides a transfer process to companies like NGD who sign a Supply Agreement to buy up energy with associated Levy Exemption Certificates (LECs) and Renewable Guarantee of Origin certificates (REGOs) provided by OFGEM – the UK’s regulator for the utilities sector. SmartestEnergy will provide retrospective reporting to NGD on the number of REGOs provided throughout the contract so there will be no doubt about the green nature of this supply via this auditable process.
- It trades between 40-45% of the independent generators’ electricity of which currently makes up between 12-13% of the UK’s total renewable electricity market
- It claims that renewable energy now represents around 3.1% of electricity output in the UK
- Has all forms of generation in its portfolio including wind power, biomass, anaerobic digestion but mostly made up of land-fill generation
- Confirmed that NGD is currently the only data centre company on their supply
- Claims that electricity from renewable energy is now no more expensive than regular forms – you just need to find the right contractual terms
Of course there is no means to provide renewable energy directly to companies such as NGD – this is a horizontal system based on contracts and certification. There are also many issues to do with risk, banking, subsidisation and government support that need to be sorted out in order to secure the growth of renewable energy. Talking to Daniel I was impressed with the fact that the UK is actually ahead of other countries, probably due to the greater deregulation here. I certainly intend to investigate the company in more detail at a future date.
NGD’s Deal With SmartestEnergy Gives It Electricity From 100% Renewable Sources
While Green initiatives have become less vital during the recession, the UK government’s CRC legislation has come into force, making it compulsory for the country’s 5k largest organisations to audit, measure and reduce their carbon footprints. NGD’s actions are far sighted in view of the fact that many large companies have scaled back their Green CSR activities during the current recession.
Unfortunately NGD and its customers will currently get no benefit from the use of 100% renewable energy, as the legislation only looks at electricity usage – not its source. Similarly none no data centre using EDF nuclear-generated electricity get any recognition. Of course there’s a whole debate about whether or not nuclear generation is ‘Green’ – Nick colourfully noted that it was considered ‘Satan’s spawn’ in the 1970s. However I think its crazy for the UK government to push through the legislation when other countries have suspended Green legislation and even worse for it not to recognise.
Nick noted that the legislation doesn’t work well with his new data centre in any case. In particular:
- All data centres use increasing amounts of power
- If you reduce your electricity usage by – say – replacing a thousand physical PCs with data centre based virtualised clients, you get no credit
- Since the legislation is based on reduction of emissions it would be better to start with an energy inefficient data centre rather than the state of the art facilities such as NGD’s
This reminds me of the situation within many companies who decide to merge facilities management and IT budgets. Many decide to implement artificially incremental efficiency savings each year, as showing annual improvement is sometimes better than immediate cost savings.
Green Energy Will Help NGD Sign Up New Customers
Despite the failure of the UK government to recognise initiatives such as the use of SmartestEnergy’s electricity, Nick claims a number of advantages:
- His is the first data centre to go 100% Green in this way
- His customers are very pleased and, although it was not a major deal-maker in either company’s decision to use NGD, they are both using it in their sustainability and CSR stories
A number of prospects – especially American companies – are specifically interested in this feature
Going forward the company is focused on selling out the ground floor data halls. There is also the possibility of renting out the very large top floor data hall, which would be most appropriate for a large international supplier. It can take double-stacked containers. I notice that very large Cloud suppliers such as Google and Microsoft use containers in their data centres. If either decides that it needs a large UK based facility – a must given the differences in data protection and the countries ‘trusted status’ in Europe -, I would certainly suggest they go and look at NGD’s site.
I don’t want to write much more for now, as I’m planning a visit to NGD in the next couple of weeks and will report back. Please let me know if you have anything in particular you’d like to know and I’ll see if I can cover it here.
Some Conclusions – Take NGD’s Lead And Push The Government To Recognise Alternative Power In Carbon Emission Assessments
NGD is not the only company interested in using renewable energy, but its move to buy its power exclusively through SmartestEnergy is an interesting one. I believe that CSR activities have become more important to pursue despite the failure of world governments to agree emissions targets at the Copenhagen meeting back last December.
SmartestEnergy itself is a pioneer – trading the aggregated output of numerous alternative renewable power generators and making it available through contracts to companies such as NGD.
I believe other ITC companies should think more deeply about the environmental advantages of renewable energy. I also think the UK government must take into account the kinds of electricity being used under CRC legislation, giving users a break over those that stick with normal supply. Of course it should also be investing in future power generation – personally because I’m fed up with my power station in Didcot pumping Co2 on me to fuel ‘zero emission’ electric cars in London, but also because the failure of investment is pushing fuel and electricity prices up more steeply here than in any other country I can mention.
Let me know what you think. Maybe we could start a petition to change things.