Why the Energy Efficiency Act Significantly Improves the Eco-Balance of Digitalisation

In the context of the energy efficiency act planned by the German government, politicians and the Internet industry have recently engaged in extensive discussions on how providers of the digital infrastructure ecosystem can further improve their energy efficiency in Germany. The focus has been particularly on the data centre industry and the regulations surrounding the utilisation of waste heat.

The potential is evident: by consistently using the waste heat from data centres, it is conceivable that all residential and office space in Frankfurt – home to more than 60 data centres and the largest Internet exchange hub – could be heated in a carbon-neutral manner by 2030, for example.

Waste heat from data centres must not be allowed to dissipate unused

The Alliance for the Strengthening of Digital Infrastructures in Germany, founded under the umbrella of the eco Association, has been pointing out this potential since its inception in 2018: Waste heat from data centres must not be allowed to dissipate unused and there is a need for both political and technical framework conditions to improve the utilisation of waste heat from data centres. specifically, this entails expanding local and district heating networks, enhancing technical systems for waste heat utilisation, establishing purchase obligations for heat network operators, and exploring utilisation options in urban as well as rural areas.

However, the draft of an energy efficiency act by the German Federal Ministry of Economics and Technology, which became known in November 2022, obliged data centres to release their waste heat to an unrealistic extent. Sufficient heat networks or a market of customers? No such thing. This is particularly regrettable, given that the Climate Neutral Data Centre Pact has long been an international declaration of industry’s commitment to achieve climate-neutral data centres by 2030. This is embedded in the Energy Efficiency Directive for Europe, which is currently being voted on.

Nevertheless, the German federal government and the data centre industry pursued the same goal from the very beginning: in order to maximise the energy efficiency of new data centres and make optimal utilisation of waste heat.
While there was a significant disparity between theory and practicein the first drafts of the Energy Efficiency Act, ultimately the members of the German Bundestag did a great job. They addressed the concerns of the industry and presented a more practical solution for the final vote that not only strengthens the sustainability goals, but also positions Germany as a pioneer in data centre energy efficiency. Simultaneously, they aimed to ensure that the location of data centres remains attractive by adopting a more balanced regulatory approach.

Therefore, if the act is swiftly passed in September after the overturned vote in the Bundestag in the last session before the parliamentary summer break, the act that was initially poorly drafted has the potential to ultimately become an effective regulation prompting sustainable digitalisation in Germany,

Energy Efficiency Act strengthens eco-balance of digitalisation

As of today, the Energy Efficiency Act can be deemed a success for climate protection.
Firstly, this is primarily due to the Power Usage Effectiveness (PUE) stipulated in it. PUE indicates how effectively the energy supplied to a data centre is utilised. The closer the PUE value approaches the theoretical value of 1.0 for commercial data centres, the greater the energy-efficiency of the data centre and the better its energy balance.

With a PUE value of 1.2, the ambitious target of the Energy Efficiency Act is now significantly below the European requirements (1.3). Germany is thus taking on a pioneering role in sustainability and energy efficiency, which the data centre industry is now supporting in the best possible way.

Secondly, the mandatory waste heat levy on newly commissioned data centres, starting from July 2026, remains in effect. The staggered flat rates of 10, 15 and eventually 20 percent until 2028 have not changed recently.

By implementing stricter exemption regulations, data centres should now also be planned with the possibility of waste heat disposal from the outset. Through the so-called readiness approach, operators are then in a position, if required, to surrender their waste heat with an acceptable amount of time, technical and commercial effort.

Thirdly, there is still the obligation to utilise renewable energies for the data centre operations. The only problem in Germany is that the amounts of electricity provided from renewable energies are not yet sufficient to support round-the-clock operation nationwide.

In addition, the documentation obligations for data centre operators also remain, for example in terms of energy consumption, efficiency of the cooling system, volume of waste heat or water use in data centres. However, these obligations now align more closely European Energy Efficiency Directive (EED).

Also, operators are now no longer obligated to disclose their trade secrets; instead, they are required to concretely share them with their customers.

With this comprehensive set of specifications and regulatory approaches, data centres in Germany will significantly improve the eco-balance of digitalisation and are thus far above the specifications that are currently being prepared for the industry in Europe.

However, challenges remain: Without sufficient renewable energies, a nationwide fibre-optic network and extensive 5G coverage for mobile Internet in Germany, it will not be possible to fully extract the potential sustainability at the infrastructural level.

Therefore, we will continue to work towards this goal in the collaboration with the Alliance for the Strengthening of Digital Infrastructures in Germany.

Data Centres as Energy Pioneers: Using Synergies for a Carbon-Neutral Future