In the final blog of my series on Iceland’s status as a hosting location of choice, I look at Iceland’s unrivalled 100% green energy profile, the regulatory demand for greater corporate social responsibility and how even environmental factors can help reduce costs for firms.
When evaluating a location’s key benefits as a strategic data center, its green profile may not seem to be the most obvious point of consideration. However, not only is an ability to demonstrate corporate social responsibility in terms of energy usage now firmly on the regulatory radar, but the business benefits of opting for renewable energy sources are also manifold. Because Iceland generates 100% of its energy from renewable sources, for example, large firms are able to make significant cuts to their greenhouse gas emissions. In addition, the country’s naturally low ambient temperatures enable companies to reduce their operational costs as well as achieving market-leading levels of energy efficiency.
CLEAN AND COOL
It is then little surprise that in Citihub Consulting's report on Iceland’s suitability as a hosting location, the country ranked as ‘outstanding’ in this area. It is also unique in the developed world in generating 100% of its electricity from renewable sources. And as I covered in my earlier post on total cost of ownership, Iceland offers significant savings due to its geothermal and hydro-electric energy resources. As well as being pollution and emissions free, the future for these energy sources is far more certain than for countries which are heavily reliant on fossil fuels.
Furthermore, I think firms should pay serious attention to Iceland’s year-round ambient air temperatures, which offer substantial benefits in terms of free cooling. Not only does this greatly improve energy efficiency, but it also reduces cost and emissions – and means that building costs (capex) can in turn be substantially reduced.
Mandatory emissions reporting programmes are also firmly established globally, with more than 40 countries having such requirements in place. Government efforts are currently focused on requiring the largest emitters and enterprises to report on, and then improve, their emissions footprint under the Greenhouse Gas Protocol (GHGP). ISO 14064 is employed as a measurement standard across the supply and value chains to achieve this.
In addition, demands for greater transparency are pushing financial institutions to undertake unprecedented improvement programmes. These include reducing and offsetting their emissions, as well as investment mandates that preclude participation in large emission producing investments. With this in mind, Citihub analysis suggests that the data center operations of large financial services firms account for some 25-35% of their total greenhouse gas emissions.
Financial service firms would do well to note the direct correlation between location strategies and greenhouse gas emissions. These significant variances between locations are the result of two factors:
- The primary source of energy used to generate electricity has a considerable bearing on the ‘conversion factor’ or the amount of CO2 emitted to produce a kWh of electricity; and
- The ability of the climate to deliver free cooling and consistently low ambient temperatures impacts power usage effectiveness (PUE).
According to Citihub’s findings, Iceland combines sustainable electricity with excellent climate conditions to deliver excellent cost results and low emissions. In comparison, Chicago has a high conversion factor as the state generates 43% of its electricity from coal - as well as hot average summer temperatures. In addition, the Netherlands lags behind the rest of Europe in terms of renewable electricity generation, while France’s low conversion factors are achieved by nuclear generation, which of course carries its own risks and pollution challenges.
EXPLORING THE ALTERNATIVES
In reality, there are in fact only a limited number of options available to financial institutions in order to reduce emissions when considering the impact of their data center operations. These include:
- Efficiency gains in the power consumption
- Effective utilisation of IT equipment (ie servers and storage)
- Efficiency gains in PUE of their existing data center portfolio
- Purchasing - or onsite generation - of renewable energy in existing locations; and
- A location strategy that aligns with wider corporate objectives (e.g. cost reduction) and delivers optimum emissions efficiency.
Yet ultimately, IT optimisation initiatives and a change in hosting location may well prove to be complementary in terms of execution and provide the ability to reduce costs and have the largest impact on greenhouse gas emissions. In this respect, Iceland’s unique green profile proves to be more than just a peripheral consideration. And when looked at in combination with the wealth of other exceptional benefits explored in my blog series, it is plain to see why Iceland is considered a world class global data center location for financial service firms.