In May 2010, the Energy Bill was presented to Parliament by Energy secretary, Chris Huhne. The Bill contains the Government’s proposals to reduce the UK’s dependence on imported fossil fuels, to combat energy waste and encourage the migration to clean and renewable energy sources.
The government wants to improve energy efficiency in UK businesses and homes and will introduce smart metering to encourage consumers to be more economical in their use of energy. Huhne’s proposals include the introduction of new legislation to promote low-carbon energy production.
The move to reduce carbon emissions by migrating to low-carbon energy sources is laudable. However, the capital investment required to harvest renewable energy sources, by building wind farms, solar farms and hydroelectricity generators, is expected to increase energy costs over the next decade.
If implemented, Huhne’s plans would see business energy bills rise by 26 per cent by 20203. By comparison, domestic energy bills would rise by 1 per cent in the same period.
Energy Efficient Advice
Organisations such as BusinessLink and the Federation of Small Business offer advice on how to reduce business costs and energy consumption. Their websites offer common sense tips such as encouraging staff to turn off equipment and lights overnight; allowing employees to work from home and ensuring that office heating is switched off and windows remain closed while the air conditioning is working.
These are all good common sense ideas, but they are not far removed from the same sensible advice we get for reducing energy wastage in the home. However, the workplace can be very different from our domestic dwellings, and so too is the way businesses tend to consume technology. For instance, one of the areas overlooked by the advice is the potential beneficial impact of shifting more of the IT infrastructure and operations to a managed services environment, in order to help accelerate the reduction in business energy costs.
More Computing for Less Cost
Soaring business energy prices will be a major reason for company bosses to consider accessing computing and infrastructure services from third party providers. In fact, we are likely to see more and more business applications being accessed through via Cloud Computing services. We are seeing this now with services for email and messaging, application hosting, data storage, IP telephony and security, because the can all be run far more efficiently, and therefore economically, from a purpose built data centre facility.
I believe that the impending energy price rises are an opportunity for cloud computing service providers to differentiate themselves through their use of clean technology in their data centres. Managed service providers are able to invest in state of the art equipment and infrastructure to support their many customers because of the economies of scale that can be achieved by building a platform from which to serve many customers. This makes the latest and most efficient computing technology available to the UK’s small and medium enterprises. An example of this is the deployment of efficient power and cooling systems and environments that can be monitored around the clock for power usage effectiveness (PUE).
PUE is calculated by dividing the power going into a data centre by the amount of power consumed by the servers and computing infrastructure. For example if 1000 KiloWatts are supplied and only 500 KiloWatts are used for powering the servers, the PUE would be 2. If 1000KW are supplied to the data centre and 800KW are used, then the PUE would be 1.25. The closer the PUE figure is to 1, the more efficient the data centre is. PUE was devised by the Green Grid group as a way of providing a common metric for calculating energy efficiencies in data centre.7
We have seen an increased focus on the use of clean technologies to reduce the environmental impact and energy consumption associated with powering and cooling computing equipment. Therefore, companies accessing cloud services from the Internet, will reap the benefits of reduced energy consumption and significant cost savings over the longer term.
Industry analyst, Clive Longbottom, echoes these benefits in his whitepaper, “Cloud Computing: Taking IT to task” in which he argues, “few organisations can afford to build and maintain in-house data centres to the standards demanded by tier 1 hosting companies and service providers”.
In addition to the power efficiencies that can be gained in the cloud, because data centre operators ensure that computing equipment is always operating in its most optimum environment, it tends to run to its full potential and as a result lasts longer than systems that are run on-premise. This means fewer hardware failures, more resilient processes, with failover and business continuity measures all working to keep the business running. Ultimately, this minimises the risks of downtime and any associated loss of business and is why Finance Directors and IT Directors alike are looking at what cloud computing can do for them.
In parallel to Huhne’s Energy Bill, from September 2010, it is mandatory for 5,000 of the UK’s largest companies to register themselves with the Carbon Reduction Commitment scheme. The government scheme will encourage supermarkets, banks, government departments and any other organisation that used more than 6,000 MegaWatt/hrs of electricity, or paid more than £500k in annual electricity bills during 2008, to become more energy efficient and cut their carbon emissions.
Emissions will be capped, forcing companies to either buy allowances, or find ways of lowering their energy consumption. An annual league table will also be introduced, comparing the energy efficiency of the UK’s largest organisations.
An additional 15,000 companies will have to informally disclose their energy consumption through the use of smart meters.
Make no mistake about it, the low carbon economy is coming. The UK’s largest businesses are already committed to carbon reduction. Smaller businesses that plan for it ahead of legislation are more likely to reap cost benefits over the longer term.
There is no where to bury your head in the sand, because utility bills will catch us all out. What this calls for is business leaders to work together to challenge convention and consider new ways of delivering their computing, operations and infrastructure processes. The conventional methods of trying to do everything in-house simply don’t stack up already in our challenging climate but in the future this will be even more pronounced.