As the Europe energy price rises, it will impact the data center cost. Relocation is the most strategic solution.
Europe’s energy price is rising, and it’s affecting the continent in many ways. This is an excellent time to look at how energy prices affect the lives of Europeans and the countries they live in. On this side of the ocean, we tend to think that energy is just one more thing we can do without, but as it turns out, our lifestyles are very much shaped by what we pay for energy—the less we produce, the more money we have to spend on other things. The same goes for Europeans.
Why Europe Energy Price Rises?
Russia supplies natural gas to Europe. Gazprom is a giant Russian state-owned energy company controlling Russian gas distribution to Europe and is primarily influenced by the Kremlin. The natural gas supply to Ukraine was cut off because Russia wanted to punish Ukraine for a lucrative trade agreement with the EU. This has caused an energy crisis in Ukraine and parts of Southeastern Europe.
The conflict between Ukraine and Russia has affected the gas supply in Europe. On January 1, Gazprom increased gas prices by 80% to Naftogaz Ukrainy and by 40% to the rest of Europe. This is because transit through Ukraine of Russian gas to Europe was halted due to a refusal of the Ukrainian company to pay $1 billion of debt.
Since December 8, Gazprom has been unable to ship gas through Ukraine, so it sent gas directly through Slovakia, Poland, Hungary, and Romania. This led to an increase in prices in these countries too. According to official data from Gazprom, if Naftogaz Ukraine pays its debt, it will be possible to renew transit through its territory. However, there is no guarantee that this will happen.
An energy crisis is a global problem.
The European Union is currently working on eliminating its dependence on natural gas by developing renewable energy sources that can effectively replace this source.
This transition will take several years and will likely create problems concerning supplying energy during peak usage times. Data centers may need to look elsewhere as they search for cheaper options and save money while keeping their servers running efficiently.
Data center managers should create an action plan for rising energy prices.
The recent rise in European electricity prices has impacted the operations of data centers and cloud computing providers. Since most data centers are self-contained facilities that rely on their resources for power supply, the price spikes have increased costs for many companies.
The main reason for the price boosts lies in the growing demand from a recovering Europe and decreased supply from traditional power sources.
With a new study by The Climate Group, it is projected that the electricity price rises will continue to impact many industries, including the data center industry. This is because the current pricing structure incentivizes companies to increase their energy use during low-demand periods to save money on their monthly bills.
With the average cost per kWh rising to over $0,36, combined with increased use of cheap coal power, fewer savings will be available and more costly peak periods when electricity prices spike due to high demand.
With this in mind, it becomes clear that companies still looking to operate within a budget need the plan to handle these rising energy costs. Many different strategies can be taken, from implementing energy management systems and solar panels to building new data centers closer to their customers.
As one of the fastest strategies that can be available is to relocate part of the need for data centers to countries where energy prices are still low, such as Indonesia. For example, it is relocating the need for a Disaster Recovery Center or Backup Data Center to Indonesia. This method can save the company’s data center costs by at least 30%.
Rising prices in Europe are affecting data center investors.
The price of electricity in Europe has risen to the point where it is no longer a realistic option for hosting data centers. For years, many data center companies have been moving their operations to the continent to take advantage of cheaper electricity costs. However, due to the high dependence on natural gas, the energy cost has risen dramatically over the past year.
As companies decide to place their data centers in Eastern Europe, Poland, the UK, and Germany are losing ground as attractive locations for potential investors. Though this move could have long-term benefits for Indonesia and its economy, some short-term problems need to be addressed before any new data center expansions can start.
The European Commission’s release of its “Energy Prices and Taxes” report provides some clues about why data center investors should be paying attention to Indonesia.
Indonesia plays a vital role in balancing the energy crisis by providing cheap and reliable electricity to western Europe. Many data center in western Europe has been using data center in Indonesia.
Many factors contribute to this; firstly, electricity costs are relatively cheap compared to other countries where most data centers are located. This is because power plants in Indonesia are fueled by natural gas produced locally.
Many data center in west Europe has been using data center in Indonesia lately. They move their data center to Indonesia due to the lower price.
Conclusion
The recent rise in European electricity prices has impacted the operations of data centers and cloud computing providers. Since most data centers are self-contained facilities that rely on their resources for power supply, the price spikes have increased costs for many companies.
European data center providers need help expanding their operations in the face of rising prices and the cost of electricity.
As data center companies are expanding their infrastructure to help service the needs of international businesses, they’re finding that the European countries they’re trying to expand into have some of the highest costs in the world.
Rather than developing their data centers in Europe, many choose to expand elsewhere, including India, Malaysia, and Indonesia. Indonesia’s relatively inexpensive power is an attractive draw for many companies and is likely to draw more data center companies as time progresses.
Read also: Can Amazon Data Center in Singapore Be Greener at Large Scale?