Europe’s Growing Energy Crisis and the Impact to Your Cloud Capacity & Pricing

There is a growing energy crisis in Europe that may have a significant impact on availability and pricing soon for consumers of cloud providers like AWS, Microsoft and Google. With an ongoing war in Ukraine and green energy policies taking effect all over Europe, the pressure on energy has never been greater. And with a supply that could be constricted coupled with growing demand, may equal a business risk for you. The big three customers may take all that on-demand capacity for granted, but those days may be numbered.  As French President Macron recently underscored, “We are no longer living in a world of abundance.” Supplies for every commodity are tight these days – and that includes data center capacity.

Ireland’s Data Center Moratorium

EirGrid which is Irelands power grid management organization has re-affirmed a hold on any and all new data center builds. This has led to both AWS and Microsoft putting projects on hold in Ireland and or relocating the projects elsewhere. With energy already a premium, these data centers in Ireland already account for a huge percentage of overall use per CNN – up to 17% in 2021 with a growing share of that expected. Google officially warned regulators in Ireland back in April not to restrict new data center builds outlining how it will negatively impact Irelands economic growth. In addition to shelving huge projects for AWS and Microsoft, there have been over 30 data center projects now put on hold or cancelled.

Experts have held that Ireland if left unchecked would be Europe’s fastest growing data center market, but as regulators face the reality of less available and more expensive supply, growing demand, and government ‘green’ policies that seek to hit substantially lower carbon emission targets in the coming decades, these have all come together as a perfect storm. Given most power still comes from fossil fuel, these issues are difficult to reconcile to put it mildly.

Global Considerations

Not waiting for Ireland however, projects are being moved and or reconsidered elsewhere like London for example. However, the major cities of Europe are all facing similar issues. As Bloomberg points out in their article titled, “Across Europe, Gas-Strapped Cities Prepare to Power Down”. In that kind of environment, there is enormous pressure on regulators and politicians to ease the pain of consumers first, while data centers and other projects come further down the list of priorities.

Meta was set to build the Netherlands largest data center in Zeewolde after receiving initial approval from the town itself. But not soon after, the Dutch government imposed their own limits on new data center builds, and the Senate there voted to limit the sales of needed new land so Meta could have all it needed. After all the back and forth, Meta pulled the plug altogether on the project and is looking elsewhere.

Smaller countries like Singapore also had a moratorium on new builds which was only lifted in January of 2022. With lifting of the ban however, came strict new rules for builds that come with limitations on size and energy consumption.

What Does it Mean for You

What is really means for you is asking more questions in the near term. We have all become used to an unending supply of cloud capacity and availability as long as we want to pay for it. The days of taking that for granted however, should be coming to an end. To assume that availability and pricing in this industry will be immune to the same market pressures that impact all others would not be prudent. We have the four big issues all in play right now:

  • More government regulation
  • Decreasing supply
  • Increasing demand
  • Ongoing military conflict

So, unless and until one or more of these pressures ease with governments slowing down timetable for clean energy goals, or increases supply of fossil fuels by more traditional methods, or for some reason demand goes down (unlikely) we need to be prepared.

Prepared for higher prices from suppliers and restricted availability in some regions. Questions we’ve never had to ask in terms of being able to quadruple cloud capacity in mere minutes, are now questions we need to start asking – especially in parts of the world like Europe where there is no excess energy capacity.

Questions for your system integrators and technology partners

  • Which of your European locations may experience capacity issues?
  • What is the potential price impact if we have to build our solutions by selectively using specific regions to avoid risk?

Questions for your team:

  • How well are we managing our cloud cost today ?
  • How could you mitigate increased pricing from providers with right governance and optimization?

If you don’t like any of the answers above that you are hearing, or dislike other things about your cloud consumption and spend, please give us a call to chat about your unique operating environment. We can always help you get the solution you need, and the right price and in the right amount.

About NET(net)

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