A data centre with 1000 servers running at 13% utilization with a Power Usage Effectiveness (PUE) of 2 and an energy rate of 0.12p per kWh will pay £18k in CCL taxes per annum.
The following is a summary of UK Government legislation for energy and climate change.
Climate Change Levy (CCL)
Introduced on 1st April 2001 the CCL is a tax on the use of energy in industry, commerce and the public sector. The levy applies to industrial and commercial energy supplies in the following sectors: industry, commerce, agriculture; and public and service sectors.
Taxable commodities and rates:
| Taxable commodity | Rate |
| Electricity | £0.00456 per kWh |
| Gas supplied by a gas utility | £0.00159 per kWh |
| Any petroleum gas, or other gaseous hydrocarbon, supplied in a liquid state | £0.01018 per kilogram |
| Any other taxable commodity | £0.01242 per kilogram |
Source: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_InfoGuides&propertyType=document&id=HMCE_PROD1_027235
The DECC was created to bring together energy policy with climate change mitigation policy. Climate change and energy policies are inextricably linked – two thirds of our emissions come from the energy we use. Decisions in one field cannot be made without considering the impacts in the other.
Carbon Reduction Commitment (CRC)
Starting in 2010 CRC is for all businesses not covered by a climate change agreement (see below) and the EU Emissions Trading System (See below). The policy has been developed with DECC, Energy Act 2008 and the Climate Change Act 2008. An estimated 20,000 organizations will be affected by the scheme and failure to comply will result in penalties.
How does it work? (Proposed)
- CRC will cover organizations with an annual energy bill of > £500k
- All energy other than transport fuels is included in the figure
- Carbon allowances will be allocated by auction
- Annual allowances will reduce over time
- Participants may be able to buy EU ETS credits to comply with emissions cap (see below)
- League tables published outlining best and worst performers in terms of carbon emission and reductions
- Self certification of monitoring, reporting and verification of emission
- Backed by independent risk based audit regime
European Union Emissions Trading System (EU ETS)
The rationale behind emission trading is to ensure that the emission reductions take place where the cost of the reduction is lowest thus lowering the overall costs of combating climate change.
How does it work?
- Government allocates (free) emissions allowances to participating companies·
- If the company goes over their allowance they can purchase additional allowances from the market·
- The additional allowances are sold by companies who have emitted less than their original allocation of allowances
Emissions trading gives companies the flexibility to meet emission reduction targets according to their own strategy; for example by reducing emissions on site or by buying allowances from other companies who have excess allowances. The environmental outcome is not affected because the total amount of allowances allocated is fixed.
Energy intensive sectors
Energy intensive sectors are a wide range of industrial sectors, from major energy intensive processes such as steel, chemicals and cement, to agricultural sectors, such as intensive pig and poultry rearing.
Climate Change Agreements (CCA)
Climate Change Agreements (CCAs) allow eligible energy intensive business users to receive up to an 80% discount from the CCL in return for meeting energy efficiency or carbon saving targets set by the Government.
CCAs have a two-tier structure:
- A sector-level agreement between Defra and the sector or trade association (known as an umbrella agreement)
- Individual agreements between Defra and the operator of the facility (known as underlying agreements).
Targets are set on a company by company basis and must be met in order to receive the discount.
Recommendations for Reducing Energy and Taxes:
Employ the use of a reporting tool for measuring and monitoring energy use and sever efficiency. This will aid decisions such as decommissioning underutilized servers and the reallocation of workloads to use servers more efficiently, all of which will reduce overall energy consumption including cooling costs.
Lower overall energy consumption = Lower taxes
Please contact me back at bhawthorne@maacenter.org--I have a question about your site!
ReplyDeleteJust a few comments
ReplyDelete1) CCL is a flat rate tax at the rate you specify in the table based on number of KWh used and is not connected to the rate at which you purtchase energy. Anyone currently purchasing at 12p per KWh for a data center with high constant baseload should go to the market for a new supplier.
2) Interestingly the CRC does not cater for outsourcing or hosted environments. This means that the most successful outsoucing and hosting companies will perform worst in the league table as emissions are only transfered when a company is bought or sold and not when a function is outsourced. In the early years this will not worry them too much as they only risk losing 10% of their payments but as this rises to 50% they will have to cater for this in their bid planning.
3)If you can sign up to a CCA through a trade association only 25% of a sites energy usage has to be covered by this CCA to exempt the site from the CRC. Unfortunately there doesn't appear to be a trade association for data center operators to help them.