New Data Centre Sustainability Reporting Obligations Introduced

In one of its first concrete steps in the push towards benchmarking the sustainability of data centres, the European Commission has adopted a new regulation establishing an EU-wide scheme for rating the sustainability of data centres. Our Planning & Environment team examines the implications for the industry in Ireland.

The European Commission has adopted and published a new delegated regulation (the Regulation) establishing an EU-wide reporting scheme to rate the sustainability of data centres. The Regulation places significant obligations on data centre operators to report on certain sustainability criteria. We consider the implications of the Regulation for data centres in Ireland and outline the key compliance obligations.

According to the European Commission, data centres are estimated to account for almost 3% of EU electricity demand. In Ireland, EirGrid previously estimated that by 2031, 28% of all electricity demand is expected to come from data centres and other new large energy users.

In the context of Ireland’s national emissions targets and climate obligations, these statistics have given rise to public debate on the energy demands of data centre development. There have been several recent refusals by local authorities to grant planning permission for data centres, as well as numerous challenges to grants of permission.

The new recast Energy Efficiency Directive[1] was adopted in 2023 as part of the EU’s plan to reduce its net greenhouse gas emissions by at least 55% by 2030. The Directive contains some reporting obligations for data centre operators under Article 12. However, at the time of writing these are not yet effective in Ireland as the Directive has not yet been transposed. Under Article 12 of the Directive, Member States must require data centre operators to make the information set out in Annex VII of the Directive publicly available (subject to limited exceptions). The information required includes details such as the:

• Location
• Floorspace
• Power demand, and
• Performance of the data centre against sustainability key performance indicators (KPIs)

The deadline under Article 12 is 15 May 2024 and every year thereafter, although this is subject to the Directive being transposed by Ireland. The Directive was not transposed in time for the first deadline under Article 12 to have effect in Ireland.

The Regulation is the first of a series of delegated regulations that the Commission may adopt to supplement the Energy Efficiency Directive. The Commission has adopted the Regulation in order to:

“increase transparency and potentially to promote new designs and efficiency developments in data centres that can not only reduce energy and water consumption, but also promote the use of renewable energy, increased grid efficiency, or the reuse of waste heat in nearby facilities and heat networks.”

Who does the Regulation apply to?

The reporting obligations established by the Regulation apply to the operators of data centres with an installed information technology power demand of at least 500kW.

What does the reporting scheme require?

By 15 September 2024, then by 15 May 2025 and every year thereafter, data centre operators must monitor, gather and report prescribed information and KPIs set out in the Regulation directly to the European database established by the Commission, or via the Member State reporting scheme, if established.

The information that must be communicated to the European database is laid out in the annexes to the Regulation. Annex I information includes basic details about the data centre, such as ownership, location and type of data centre. Annex II outlines the KPIs to be reported on and includes items such as installed information technology power demand, floor area, energy consumption and renewable energy consumption, battery capacity, water usage and waste heat re-use. The Regulation allows a data centre operator to avail of a “comply or explain” approach in its first reporting period for certain KPIs if it cannot gather the necessary data for technical reasons.

Certain information identified in Annex IV will be made public on an aggregated basis at Member State and Union level. The information and KPIs for individual data centres will be kept confidential.

The Regulation also sets out the data centre sustainability indicators and calculation methodologies to be used in rating data centre sustainability. These indicators measure power usage effectiveness, water usage effectiveness, energy reuse factor and renewable energy factor. Data centre operators will be required to publish this information under Article 12 of the Directive by 15 May 2024 and every year thereafter, although as noted above the Directive has not yet been transposed.

The Regulation was adopted on 14 March 2024. Unlike the Directive, which requires Member State transposition, the Regulation is directly effective in Ireland from 20 days of its publication in the Official Journal of the European Union. The Regulation was published in the OJEU on 17 May 2024.

Conclusion

The immediate next step for data centre operators is to gather the relevant data in order to comply with the upcoming reporting obligations. The first reporting deadline under the recast Energy Efficiency Directive is:

• 15 September 2024 under the Regulation, and
• 15 May 2025, if Article 12 is transposed in Ireland by that date.

More generally, this Regulation is one of the first concrete steps in the push towards greater transparency of the sustainability credentials of data centres. As electricity demand increases and ‘net zero’ deadlines approach, increasing volumes of regulation and policy are expected, both at a national and EU level. Data centre operators will need to be able to navigate this complex regulatory environment. With that in mind, preparation should commence as soon as possible in order to ensure compliance with reporting obligations under the Regulation.

For more information and expert guidance on environmental, social and governance requirements, contact a member of our Planning & Environment or Corporate Governance & Compliance teams.

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The content of this article is provided for information purposes only and does not constitute legal or other advice.

[1] (EU) 2023/1791