VIDEO: Will regulation lead, or force, innovation in data center sustainability?

Speakers:

Full Transcript:

Alex Dickins, DatacenterDynamics:

Welcome back to the main stage for this major panel at Will Regulation Lead on Force Innovation in Sustain sustainability. I’m Alex Dickins, head of broadcasting at DCD, and I’m delighted to be introduced by four expert speakers from right to left, right to left. Yeah. I’m delighted to introduce Jim Davis, principal for sustainability and resilience strategy at Ramble Map file [00:00:30] CEO for crane data centers. Debra Bernstein, senior principal for sustainability at day and Data center group CTO Office for Intel Corp. And last but not least, Patrick Crook, CTO at Nalu Data Centers. So we want to set the scene and kind of get into it, but each of the speakers can do a far better job of introducing themselves than I can, but we also have quite a lot of cognitive diversity on this panel. Jim, perhaps by both introduction you can introduce yourself. So you work for a global A EC, which helped rebuild a lot of the infrastructure [00:01:00] in Europe after World War I and two, what’s your current take on regulation and the whole kind of picture both on a kind of global landscape but also looking at the us?

Jim Davis, Ramboll:

Thank you. Yeah, so I have the honor of living in California for better or worse is the poster child for regulation, both the economic regulation and environmental regulation. I work in the Silicon Valley Leadership group, which is a policy organization. It’s very influential on setting energy and climate policy in California. And [00:01:30] I also work for a company that’s headquartered in Europe. And as we know that there’s a lot of innovation on policy and regulation as well there. I say overall I think if regulation is done correctly, it can spur innovation, but oftentimes does not done correctly where it’s overly prescriptive in terms of picking winners and technology, the best area, best available control technology kind of approach. That model does not spur innovation. I also come from the power utility industry where I got my early career [00:02:00] and it’s the poster child for being the victim of regulation, both economic environmental regulation since an inception. And I would say that I don’t think it’s anyone in this room that would compare the tech industry to the power industry and see who’s ahead on innovation. They move at a glacial pace. They wait until the regulators tell ’em what to do. It’s not an epicenter for innovation in the power sector right now.

Alex Dickins, DatacenterDynamics:

Brilliant, thank you Jim. And Matt, you work for an organization which does hyperscale development and operations, but you’re a relatively new player. So what does the regulatory landscape [00:02:30] look like to you?

Jim Davis, Ramboll:

Yeah, I mean I think as a small player we look for environments that actually have a bit less regulation and that are actually embracing of data centers. We want to be in environments that welcome us rather than don’t see data centers as the potential force for good that they can be. So I think in the US we actually are blessed with a less regulated environment than Europe, which is probably

Matt Pfile, Crane Data Centers:

A good thing overall. [00:03:00] I do think we can think about government action as potentially having a positive impact rather than just sort of using negative regulation to sort of contain the industry.

Alex Dickins, DatacenterDynamics:

Brilliant. And Deb, you’re a technologist through and through. What’s your perspective and what’s the perspective of intel? Obviously we’re seeing leaps and bounds when it comes to innovation, when it comes to technology, but what does this speak to on the compliance side? On the regulatory side?

Debra Bernstein, Intel Corp:

So [00:03:30] I work for a large silicon manufacturer and our biggest carbon footprint is in our manufacturing. So we are very aware of our carbon footprint and very aware of managing it, but also then we have our parts and use, which is for my part of the company in the data center. So we’re also very aware of what’s happening there. I always like to think of systems and trade-offs and how we break things up into stacks [00:04:00] and how we kind of abstract how others work. And so as I moved into the space of decarbonization, I think about regulation as part of the system. I’m not really against it, I’m not really for it, it’s part of the system. I do think perhaps it can be very helpful. It’s very hard for our minds to grasp this slow moving disaster that’s happening with climate change at greenhouse gases in [00:04:30] the environment.

And so I do think regulation and also I would really like to point out the NGOs, the nonprofits that have been really big movers in this space as well and have given us kind of the foundation. We’ll probably start to talk about scope one, scope two, that was all from NGOs. Right now a lot of the reporting is managed by a nonprofit called the CDP Climate Disclosure Project. Also science-based targets, which we’ll get into. [00:05:00] These are all the NGOs. I think of that as part of the system that’s helping us. And then also regulation that’s part of the system maybe will help us, maybe will not help us, but it will be there. And I think it’s on us to be proactive and when we see regulations happening that are clearly by people that don’t understand how data centers operate, et cetera, to go lobby and educate. And with the EED through the green grid, I did get a chance to participate in that [00:05:30] and things did change when the industry went and said, look, what you’re asking for here is really not doable, et cetera.

Alex Dickins, DatacenterDynamics:

Brilliant, thank you. And last but not least, again, Patrick working full Nautilus as a provider of calling technologies, you must be feeling quite acutely the kind of pressure to take heat away from servers so much more, especially given this innovation which is happening when it comes to AI HPC. But whilst we haven’t regulated spaces like that [00:06:00] at that kind of level, do you think that we’re going to have to start putting pressure whether that coming from the regulatory bodies or internally on the cooling systems and what we’re doing there?

Patrick Quirk, Nautilus Data Technologies:

So to me that’s a great question because fundamentally as a technology provider into the data center space, obviously we focus primarily on the cooling side, but really we try to build sustainability in from the design level up. And that’s really what the entire industry needs to embrace. Because if you start at the point of saying, okay, what is sustainability [00:06:30] and how do you avoid punitive regulations and things of that nature, then your first step should be what is sustainability? Well, by definition it really is efficiency across a bunch of different ranges. So if you look at space efficiency, power efficiency, cooling efficiency, not doing anything to harm water or the air consumption of drinking water, the blow down from indirect or direct evaporative systems back into the wastewater treatment [00:07:00] plants. And so that in a regulatory and zoning environment then starts leveling up from local all the way up to regional, national, and even international goals around climate change or whatever it might happen to be.

So if you boil it down to those very simple things and start off and say if I design this to be the most efficient across space, power, water consumption, everything else, then you’re going to naturally be more [00:07:30] sustainable. Then it becomes, okay, now how do we tie that into the power grid? How do we deal with the regulatory environments? How do we deal with local zoning? And there’s a lot of differences across regions, obviously even across states within the US Jim mentioned California, which we all know is the worst. So we started there. So anyhow, I mean that’s kind of my take on it and really how the industry should really look at it going forward.

Alex Dickins, DatacenterDynamics:

Brilliant, thank you. I think just to dig a little bit deeper, I want to understand [00:08:00] what are the big problems when it comes to regulating sustainability? As you outline Patrick, there’s miriad factors. You have to encompass efficiency, space, site selection, power, but unpacking all of those different priorities from a regulator point of view, how do we make all those pieces of the puzzle work together? I dunno if you want to counter that.

Patrick Quirk, Nautilus Data Technologies:

Yeah, so one of the things that we should be advocating for as an industry is approval by default. There’s a number of [00:08:30] different ways that regulations can be structured to where these are the criteria. And if your project meets that criteria, let’s say it’s from an environmental perspective or from a carbon perspective, whatever those happen to be, if your project meets those requirements, it should have default approval. So the only time that you shouldn’t be approved is if the project does not meet the requirements that are set out in the regulation. And then that would dramatically speed up the regulatory process and allow projects then to be locally [00:09:00] controlled. So then the local entity should have the proper zoning, is the project zoned for this area? Do we want this kind of project in our locality? And then you’re kind of bringing the decision-making back down to the lowest level with a default approval scheme. And then the last piece of that would be we should be pushing for a trust but verify approach if you will. So if it’s approval by default based upon criteria, you submit your plans, it meets [00:09:30] it, you’re approved, but now you’re subject to over the lifecycle of project, not just the construction but the operational lifecycle. You’re subject to ensuring that you’re meeting those requirements.

Alex Dickins, DatacenterDynamics:

I think that’s an interesting thing you touch upon. We’ve got to make sure we delineate between the operational and the manufacturing, the build emissions and regulations and things like that. As you say, Deb, on the manufacturing side, how is regulation when it comes to [00:10:00] the construction, the development, and how does that differ when you get to point of use and that kind of those lifecycle regulations?

Debra Bernstein, Intel Corp:

Right. So on the manufacturing side, many, it’s often not a build new discussion, it’s a, although now there’s the CHIPS act in the us so there is a lot of build new that’s happening and there’s going to be carrots and sticks around sustainability associated with getting those significant [00:10:30] number of dollars. But it makes sense, the US wants to have some independence and to have silicon manufactured here in the us but a lot of it then will come down to how do you operate these facilities that are 5, 10, 15, 15 years old? And that comes down to a corporate reporting and it would be the same for an entity that has many data centers. So we all report on these scopes, which is from the World Resource [00:11:00] Institute, I think in the 2008, 2009 timeframe it was created. So just to say really quickly it would be scope two is I think the easiest one to start with.

If you get a bill from a utility that is your scope two, and so you should be collecting and digitizing all of those bills. And then for each location there’s a carbon intensity of that electricity that came to you. So you multiply that out and you know your scope [00:11:30] two and then you add it up for every location. So very simple and straightforward. Scope one would be what do you emit when you actually run your company? So for data centers it’s often the backup generators are the biggest scope one for manufacturing, we don’t yet know how to make these little miracles of silicon that we all take for granted carrying around every day in our phone without some pretty significant [00:12:00] usage of greenhouse gases. So we need to constantly measure those and then report those as a manufacturer and of course work to improve that situation as an industry. And then the last scope that we’ll talk about now is scope three and that you can think of as your supply chain. We call that upstream or your downstream your products and use. So you all data center folks are my products and use folks, and I’m your upstream, so [00:12:30] we can just all put names and faces to each other.

Patrick Quirk, Nautilus Data Technologies:

So one question I would have on that, not to deviate here please. So for a large company like Intel, it’s not easy, but it’s certainly easy for you guys to be able to comply with scope one, scope two, scope three reporting and everything like that. What about small innovative companies? How does a small company meet that compliance regime and [00:13:00] be able to do it without overburdening them such that they really can’t ever get off the ground?

Debra Bernstein, Intel Corp:

Well, I would say that it’s not easy for a large company, not by any means because you just have more So you have so much more and you have to employ so many more people and so much technology to track and the legal concerns if you make mistakes and all of that. So it is by no means [00:13:30] easy. I would say from the data center perspective, if you look at the EED, they did set a floor. If your facility is below 500 K, you not are not required.

Patrick Quirk, Nautilus Data Technologies:

But how many data centers are below that now? Well,

Debra Bernstein, Intel Corp:

So probably right. There’s also a question of what is a data center. So my organization has and is Bitcoin [00:14:00] there’s, there’s a lot of questions. So I would say Intel has many potentials that are below and others that are clearly above. So yeah, I mean the SEC just announced, I’m sure many people saw the headline that along with your financial reporting, if you are a publicly traded stock along with your dollars and cents, you’re going to be asked to report your scope on it and your scope two [00:14:30] at the corporate level. If you’re not publicly traded, then that doesn’t fall on your shoulders.

Patrick Quirk, Nautilus Data Technologies:

So we’re going to drive more companies into private markets, out of public markets

Debra Bernstein, Intel Corp:

Possible, quite possible.

Jim Davis, Ramboll:

I think you raise a good point, Deborah, with SEC regulations dropping for financial disclosure on climate related risks. We also have similar regulations in Europe, the CSRD, the Corporate Sustainability Disclosure Initiative. It’s impacting what a lot of people don’t realize about it. [00:15:00] It’s an EU regulation. It doesn’t apply to US companies. That’s not true. The way it works is if you’re doing any business above a certain threshold in the European Union, you have to report on your global operations. And we see the same thing with SEC regulations. There’s similar legislation in California that just dropped a couple months ago of rec requiring carbon related disclosures and climate risk related disclosures. So I think what we’re seeing, I think the challenge for companies right now is to, I mean let’s back off a little bit here on focus on regulation. Sustainability [00:15:30] has always been about eliminating risk waste and inefficiency from your operations.

You’re just looking at non-traditional financial lenses at data that is important to the way you operate your facilities. So if you focus on that and you’re doing a good job of managing that, all these disclosure regulations, it’s just a reporting exercise. But if you’re maintaining the data systems to track that information on all of those different sustainability metrics, many of which companies in this room have set lofty ambitious [00:16:00] goals for you should already be tracking that. So if you focus on waste risk and inefficiency and have data systems support your own operational excellence in those areas, all these regulations become secondary. And one of the things that’s been really beneficial about this industry is it’s been very innovative and proactive and being responsible on a wide variety of fronts. So if we keep that edge and we’re out in front of these issues, regulation is the worst thing right now.

Regulation and sustainability is playing catch up to where the markets are already at. [00:16:30] So your customers are driving you in this profile, your investors, the equity markets. That’s why the S SEC’s laying in because people are making all these marketing claims about how great they are in sustainability and there’s no credibility or accountability for performing and hitting those targets. So if we can maintain that as a leadership in an industry, if we can maintain that leadership position and be out front of regulation, we’ll never have to worry about it. It’s just a reporting exercise. If yet [00:17:00] we’re data companies, we can figure that out. Right? Reporting, Deborah was saying it’s not rocket science to take your energy consumption and calculate a carbon footprint. What is rocket science is having that information knowing and having that embedded in the way you run your operations so that when it comes to a regulation, it doesn’t matter.

I think regulation is helpful when it sets a societal target or goal and allows the market flexibility to meet that goal where it’s overly prescriptive, it stifles innovation, you pick [00:17:30] the winners, everyone goes to that one technology. If you set a goal and let everyone drive towards that goal using their own economic profile to make decisions, then you have success. Then that spurs innovation. I think innovation regulation also helps for innovation where it provides an incentive structure to lower the market barriers to new technology that’s coming on the market. So you can create speed and scale of deployment of good technology that might have an initial upfront cost or it’s maybe not proven [00:18:00] in the marketplace. You need a little bit of grease, grease, the skids to get those new technologies into the marketplace.

Alex Dickins, DatacenterDynamics:

Matt, just to bring you in for a sec, as a newer player in the operation, how does that ring true from a crane DC’s perspective? How hard is it for the small players and how do you get that visibility?

Matt Pfile, Crane Data Centers:

Yeah, I think the way we think about regulation is as long as there’s a level playing field and the rules are clear, [00:18:30] we all can benefit from those. There’s also, I think sometimes regulation gets a bad rap, but there are things that the government can be doing that are more proactive that we might not think about as necessarily regulation. The government could set up district heating loops that would benefit society and we could all plug into those and use our waste heat. So that’s something that government could be a bit more proactive on to not only help the industry, but help the communities that we are all building in. Another [00:19:00] thing I think a lot about is the power scheme in the us and this is maybe thought of not as much on the regulation front, but when you think about one of the biggest constraints right now for our industry is lack of power in the markets where there are clusters of data centers, we have an abundance of energy in our country, it’s getting that power to where it is consumed. And so government could be more proactive in building transmission. So I would like to see the government actually step [00:19:30] in and be more proactive on helping our industry because at the end of the day, that’s what it’s going to take to get us all to a more sustainable future.

Alex Dickins, DatacenterDynamics:

It’s interesting, the title of this discussion is Will Regulation Lead or Four Sustainability, but we maybe need to think about option three, option four, whereby governments need to partner with us to help drive it rather than being like, go that way or carrot and stick. It’s not quite that simple, is it? Let’s

Debra Bernstein, Intel Corp:

Not forget our whole industry was built because the US government invested in [00:20:00] creation of the internet.

Matt Pfile, Crane Data Centers:

That’s right.

Jim Davis, Ramboll:

Yeah, I was going to say Matt’s dead on with regard to the power system. However, it is a regulatory challenge because the reason why the power system runs so slow is so slow to innovate is because they have financial regulation. Basically the power system in the US is dominated by regulated monopolies. They came into existence under the public utility company holding act in 1932. This is a depression era regulation [00:20:30] that created our power system infrastructure. They don’t make a move without the public utility commissions authorizing them to what to do. And that’s a political process that takes three or four years for a general rate case to go through the system. And so they will not spend money, they will not change rates to pay for that infrastructure unless they have the public utility commission approval. And so it is a very much a regulatory challenge.

And so one of the things I’ll also challenge this industry with is that as digital infrastructure [00:21:00] becomes critical infrastructure for operating the economy, it’s the regulators are going to start treating it in the same way they treat the power system and the water system and everything else. So right now data centers are basically large combined heat and power plants that they don’t use the heat side of it. That’s a waste to get rid of and they’ll spend a lot of money getting rid of it. But the other thing is A-C-H-P-D-C-H-P and data. And so as that becomes part of critical infrastructure, the regulators [00:21:30] are going to start looking at that. And there’s a variety of aspects. There’s cybersecurity, there’s all kinds of other aspects. It’s not just environmental regulation. That’s why I say going back to it, if you can start thinking as critical infrastructure company and behaving responsibly and meeting that demand, then the regulators will not view you the same way they view the power system when they set it up.

Patrick Quirk, Nautilus Data Technologies:

So Jim, are you saying that data centers are industrial infrastructure?

Jim Davis, Ramboll:

Oh, for sure.

Patrick Quirk, Nautilus Data Technologies:

Okay. So then why from a siting perspective, do [00:22:00] we still put them in commercial real estate zones?

Jim Davis, Ramboll:

Well, actually that’s a really good point. They’re basically big refrigerated warehouses in California. They’re actually regulated as power plants. When you do a sighting, you have to go through the California Energy Commission approval and above a certain above a 50 kilowatt, 50 50 megawatt plant, you have to go through regulatory approval as though you’re a utility. They’re trying to get that up to 200 k. There’s a lot of things there, but even so you’re talking about one point gigawatt, 1.5 gigawatt [00:22:30] data centers going forward. These are massive power installations. It’s industrial infrastructure and it’s critical, especially as we come be more dependent on AI processes and we start outsourcing jobs to robots. I mean you bet you that this is going to face a lot of regulatory scrutiny going forward in the Silicon Valley leadership group that we’re seeing all aspects of that. The environmental regulation to some expense is the least, least concern regulation in this sector right now.

Patrick Quirk, Nautilus Data Technologies:

And [00:23:00] kind of going back to one of the things that Matt said, the concentration of data centers in some ways is part of the problem. It’s a whole lot easier to bring fiber somewhere to where the power is as opposed to bringing power to where the fiber is. So as an industry, looking at you guys, why do we always have to build an Ashburn? Why are we always building in Dublin? And we’ve seen countries and regions. I mean you look at some of the things that are going on in Arizona around water [00:23:30] use. You look at the power constraints now in the Ashburn area in northern Virginia, Ireland putting essentially a moratorium on data centers in and around the Dublin area. Singapore had a three-year moratorium on data center builds. So these are all the governments are already reacting from a regulatory perspective. And so we’ve got to figure out as an industry, do we get ahead of this? Which is kind of the question here, do we get ahead of it and lead through innovation, [00:24:00] but also through intelligent sighting. There are a lot of places, Matt and I were talking about this beforehand a couple of weeks ago. There are places in the US and really globally where there is excess wind power at times and you’re just dumping electrons. So why aren’t we putting data centers there, right? Bring the fiber to that location. We’re all smart, let’s figure this out.

Matt Pfile, Crane Data Centers:

I think you’re absolutely right. That could happen. I don’t blame the industry actually. I think this industry has been really good at listening to customers and as a former customer [00:24:30] being at Google and many of my colleagues being at the other hyperscalers, the software that drives the decisions of where to locate has certain latency parameters. And so we actually have to go farther downstream and say, okay, X, Y, Z customer, we need you to change your software. Are they, I don’t know. I don’t know if that’s going to be a priority, but you’re absolutely right. We could do this as an

Jim Davis, Ramboll:

Industry. I think the other thing about this is that with machine learning and ai, the latency requirements aren’t the same. So we have to differentiate [00:25:00] now in terms of the data centers architecture and the sighting because I think that you can do a machine learning AI process. You could actually have a set of data centers around the globe that just do a handoff and follow the sun because the machine learning loads are not requiring LA and it’s not, you don’t.

Matt Pfile, Crane Data Centers:

You’re talking about inferencing though. Sorry, training, not inferencing.

Jim Davis, Ramboll:

Yeah, exactly. Yeah. So there are certain applications that require lat, they have high latency requirements, others do not. But the energy [00:25:30] intensity of a lot of these new data centers that are going to support ai, it’s a very different latency profile than the data centers

Patrick Quirk, Nautilus Data Technologies:

Today. It’s intra compute latency. So the latency inside of the data center matters. The latency outside doesn’t from a training perspective.

Jim Davis, Ramboll:

But I think your main point of let’s, let’s not try to get power to the data centers, let’s put the data centers where the power is and then figure a way to get the data to where it needs to be. That’s an easier problem to solve from a regulatory perspective as [00:26:00] well.

Patrick Quirk, Nautilus Data Technologies:

Correct. And you start looking at data criticality, right? So there’s a couple of dimensions you can look at it, but cat videos do not need to have five nines, right?

Jim Davis, Ramboll:

Absolutely. Well, it depends on who’s watching the CAT video, right?

Debra Bernstein, Intel Corp:

Yeah. I think you guys have wandered, first of all, great piano. I’m so excited to be up here with you all. You guys have wandered into the space of software. I spend a lot of time there too. First of all, I would say for Google, Google has a really great tool when you’re first coming doing more of a greenfield [00:26:30] at Google where you can select what’s more important, the carbon, the price or the latency, and it will give you lists of where is the users, et cetera. So I think we should have more of those tools because unfortunately for software people, I think all of this has fallen way below their, they have a lot of other priorities and being good utilization or all these other things are just below [00:27:00] their radar screen when it comes to the follow the sun. My concern about that is if you don’t shut off the data center that you moved from, you haven’t made progress software, people never think about that. And they’re absolutely gobsmacked when I mention it. So we have to somehow find a way to bridge this chasm. And the last point, I would like to say, the previous panel, Sarah from Uber made the point, which made me just so happy in a bizarre [00:27:30] way that now that we have resource constraint, be that resource be the GPUs or the powers, now we’re paying attention to efficiency on the software side. So yay, let’s do more of that.

Jim Davis, Ramboll:

And I was going to say, building on that, we’re all chasing power and green power. Before we do that, we really need to focus on how much do we really need. If we were design these facilities in ways that are more efficient, power becomes less of an issue. It’s still an issue, but it’s becomes less of an issue. And [00:28:00] I heard stories that there’s like vampire loads in some data centers. I was talking with a colleague from HPE, they actually were able to eliminate an entire data center. The way they did it is they just started turning off processes that no one seemed to own. And when no one complained after a few weeks, they just shut down the next one. They just did that. They eliminated an entire data center worth a load. So coding, efficiency, vampire processes, just doing a good audit of what you’re actually using the data center for and what’s critical and what’s not and what needs the latency, what doesn’t. And really [00:28:30] in really managing load is an important part of the equation because anytime you take a look at sustainability, first saying is to be most efficient as you can limit the amount that you use and then where you do need to go use resources, find to do it in a way that’s the most sustainable possible.

Patrick Quirk, Nautilus Data Technologies:

So how do we tie that back though to the question of the panel, which is the regulatory side. We know these are the problems, we know that there are solutions to those problems. And then how do we go about [00:29:00] influencing a regulatory environment both at the national regional and in some cases local level such that we are achieving sustainability goals and still allowing innovation to occur.

Alex Dickins, DatacenterDynamics:

And actually to add to Patrick’s question, is it then the responsibility of the external regulators or your own internal auditing processes?

Debra Bernstein, Intel Corp:

So the EED did try to regulate utilization reporting of it, not, I think the next step will be improving [00:29:30] and all the lobbying it is not in the final version. So what came out is that the majority of the data centers don’t know what equipment they have in there, nevermind how well it’s utilized. And I’ve seen that much to my shock at my own company. They were able to get preparing for the EED, they were able to tell me how many [00:30:00] racks. But then when you ask the e, ED is asking what is the max capacity as measured by cert? If you guys know that benchmark for all of your compute, dunno, people don’t know what they got in there. They don’t have an inventory. So max is a problem and that’s like a static thing. Then utilization that’s crossing that chasm over into the software and IT world. They know that, but the data center operators who [00:30:30] need to report it, and even more so for the colo people, there’s no chasm. There was no way to get that information out. So regulation is not requiring that at this point.

Alex Dickins, DatacenterDynamics:

So do we have a reporting problem?

Debra Bernstein, Intel Corp:

We have not just a reporting problem but a data problem by the owners of the data centers.

Patrick Quirk, Nautilus Data Technologies:

It gets back ai

Jim Davis, Ramboll:

Back to what I was talking about earlier is that is you need the data infrastructure. If you were operating your business well, you wouldn’t [00:31:00] need the regulation to tell you to collect that data so you can report it. So I think that to answer your question,

Patrick Quirk, Nautilus Data Technologies:

Patrick, yes and no, right? Because the financial cost of collecting it might be more than the payoff. So

Jim Davis, Ramboll:

Although typically in sustainability you’ll find that these efficiency improvements, they might cost a little bit more upfront. But if you weren’t, oh,

Patrick Quirk, Nautilus Data Technologies:

I’m not arguing

Jim Davis, Ramboll:

That, but the payoff is huge downstream. I think the future of regulation in my view is if you can stay ahead of the curve, then [00:31:30] future regulation is not needed. If industries are behaving without regulation, typically regulators aren’t excited to do anything about that where they’re out making marketing claims that are unsubstantiated, they’ll get involved. But I think that going forward, I think that if the industry were to stay on top of its proactive role on environmental issues, I mean right now data centers, they basically own the market on renewable energy. And you take a look at the top 10 [00:32:00] purchasers globally over the last decade, it’s all data centers. There’s one company, one oil and gas company that does a lot of solar. Other than that it’s Google Meta, Microsoft, they’re all top 10. And there’s a few telecoms Verizon in there as well. So I think that that leadership positions maintained, I think where’s opportunity to improve regulatory reform is where your actually implementing an innovative new [00:32:30] technology that has an environmental benefit that overwhelmingly is obvious. It shouldn’t have to go through the same regulatory processes citing a diesel gen set for backup generation.

Patrick Quirk, Nautilus Data Technologies:

So that was kind of my point at the front. If we can help to lobby for regulations that are not prescriptive, but say these are the requirements, you meet these requirements, the project is default approved from an environmental perspective, then you’re just dealing with your local authorities, which [00:33:00] does whatever city it is or whatever township or whatever, do they want this project there. So I mean to me, if we can get to that kind of a framework and avoid rent seeking, I mean we all know no dish on large companies, but we all know large companies have big lobbying organizations and they effectively are rent seeking and they try and move the regulations to help their business overall, which I don’t blame ’em curious, that’s part of the equation. But as a broader community, [00:33:30] if we can start influencing regulatory policy that follows not the prescriptive here, we want the investment to go a particular way, but these are the environmental requirements that you have to meet, then if you do, you’re approved and reduce that time to approval. Because right now, I mean on the power side, because projects can take 12 to 20 years to get approval, right? On the data center side, we’re now starting to see projects that are taking three to five years to approval. Every [00:34:00] year that you delay an approval, your construction cost goes up by roughly 20% and

Jim Davis, Ramboll:

I’ll,

Patrick Quirk, Nautilus Data Technologies:

So we’ve got to get to faster regulatory approval and faster permitting because then we can start getting the innovations into the market that start making us more power efficient, making us more sustainable in some ways right now the regulatory environment’s going the wrong way and is extending that permitting process and actually inhibiting the move toward better sustainable deployable technologies.

Jim Davis, Ramboll:

[00:34:30] And I’ll actually very interested in what Matt has to say on this. I know that as a small operator, you guys are doing some really innovative things for sustainability. Are you seeing that is helping reduce some of those regulatory approval barriers for junior data center development?

Matt Pfile, Crane Data Centers:

Yeah, I think that’s a good question. I mean that’s a core value for us. Sustainability is sort of table stakes. So the projects that we take on, we want to make sure that they have a positive impact on the world. That doesn’t mean the same thing in all locations. [00:35:00] I think the way that we think about that is we believe that in the future it will be mandated. When we think about regulation, it’s because the market’s not working like it should. It’s because communities are not benefiting in the way they could. With all the investment that we’re putting into critical infrastructure, there is a possibility where data centers could become a force for good and we want to see that in the world. And so that’s a lens that we bring to it. And if all of our peers in the industry thought that same way, we wouldn’t [00:35:30] have regulation because we would actually be positively impacting the communities that we’re in. Regulation gets tailwinds because whatever industry, whether it’s data center industry or others, they’re not doing what the communities need them to do. And so there’s a public outcry and politicians pick up on that. So we want to get ahead of that, not because we’re worried about regulation, but because we think it’s the right thing to do.

Jim Davis, Ramboll:

Great. Excellent. And along the lines of collaboration, this industry, even though it’s a highly competitive industry, it is really done [00:36:00] a great job in fostering collaboration on many, many different topics. And it’s probably because most of us have worked for each other over the course of our career. And so it’s more of a club than it is who you’re working for in that moment. But actually I attended the session that imas did yesterday morning. I was going to say imas for this topic and sustainability is actually a very good collaborative space. I’m on the power working group ramble, just joined this year, heard about them last year at DCD and it’s really [00:36:30] a great environment. There’s three different working groups, one’s on power and energy, one’s on building materials and sustainability and the building material supply chain when you build data centers and then the other one’s on the equipment in the rack.

And I think we all know that when you build a data center, about a quarter of the cost goes into the building shell and the MEP that supports the HVAC systems and all that. The other three quarters of the investment goes into the technology stack that’s in the racks and that has got a three to five year lifecycle. So the sustainability [00:37:00] challenges around supply chain and circularity are huge for this sector. And that’s another area where there’s been real leadership through a variety different forms over the years and been pioneers in scope three in many respects, even though it is tough. But I think that the hyperscalers have a lot of influence on what happens in the market, but everyone can play in this collaboration space and you’re driven as much by compliance with your supply chain customers. Basically your customers are [00:37:30] driving as much, they’re really kind of a defacto regulation. They have a code of conduct and standards and requirements that they put on you and your performance and sustainability. And then likewise, your customers downstream have their own sustainability goals. And so there’s kind of almost an involuntary compliance regime run sustainability already independent. And that’s why the regulators are now coming with all these disclosure requirements. They’re playing catch up to where the market’s been already. They just want to levelize the playing field and provide a transparency and consistency across the industry

Alex Dickins, DatacenterDynamics:

As competition [00:38:00] gets fierce. Are these disclosure requirements going to become even more essential? Every organization, your customers are all asking you how green are you? Let’s talk about the kind of environmental bottom line as well. Surely it is in the interest of companies, we hear the term greenwashing a fair bit, but regulation is surely necessary to make sure that people are innovating in the right way, that they’re not using green marketing terminology and going under the guise. We have to make sure we’re being honest about what [00:38:30] we’re producing.

Debra Bernstein, Intel Corp:

Oh, you’re looking at me.

Yeah, I think the greenwashing thing, it is super important. We don’t want to mess up with it. And so let’s just step back and talk a little bit about science-based targets and really because so far we’ve been talking a lot about, I would say reporting where we are now. So science-based targets, there is a nonprofit science-based targets.org. [00:39:00] Anybody can join. And what you do is, so if you look at the science, we need to cut our greenhouse gas emissions by roughly half this decade ish. Maybe we can bleed a little bit over into the 2030s and then we take care. That’s the easy part. And then they give us another 20 years until 2050 to do the hard stuff. So

[00:39:30] We’re not going to, as an industry apply for science-based targets. But if you look at our industry overall, you can put that same criteria on us. We should be cutting our emissions by 50% and that includes our supply chain. So yes, feel free to look at me also and I need to look at you all as well. So it’s a really, really hard problem. We just had this [00:40:00] week for various reasons. Some companies were put as their commitments were removed for now because they didn’t meet the latest criteria for science-based targets. And a lot of people are saying, oh that’s good. This whole thing is falling apart. It’s a sham. But I actually went and looked at what was removed and for the three big companies I looked at, their near term targets were approved. And so they are going to hopefully keep working. [00:40:30] And the great thing about putting your company in science-based targets is that you would align what your commitments are with the science and you have another body that’s going to come back and regularly review what you have and have not accomplished. And are you sticking with what you said? And I think that will really, really help with this greenwashing question.

Alex Dickins, DatacenterDynamics:

And generally, do you find that with such science-based targeting, if you get change of ownership in [00:41:00] terms of leadership of organizations, it just helps us ring true to what is required of those regulations?

Debra Bernstein, Intel Corp:

Yes, because every CEO who makes a 2050 commitment is probably pretty sure they’ll be gone by when that is due. So it does leave some shackles on the company for the long term.

Alex Dickins, DatacenterDynamics:

We’ve got about 10 or so minutes left. So I want to spend a bit of time looking at the future and I want to come back [00:41:30] to the ED again. We’re seeing power density at the racks reaching a hundred kilowatts this year. But the ed, I believe it’s 500 kilowatts you have to report up until, for the

Patrick Quirk, Nautilus Data Technologies:

Whole facility.

Alex Dickins, DatacenterDynamics:

I’m no mathematician, but that could be five racks, right? With that in mind, how do we make sure we’re keeping up to date with what the reality is in operations, especially high density facilities? And that’s the question open to anyone [00:42:00] else

Patrick Quirk, Nautilus Data Technologies:

Wants. I mean since we designed for high density and sustainability from the ground up similar to Matt’s company, the idea really should be when you get into all the various reporting and compliance pieces, smaller is always better. So in some ways the semiconductor industry, their mantra of smaller, faster, cheaper really is a sustainability argument because the less of something that you use naturally the more sustainable [00:42:30] it’s going to be. If we can densify our data centers, there’s less copper, there’s less steel, there’s less aluminum, there’s less concrete, there’s less time on site during construction. So you’re not burning as much diesel fuel. I mean just all of these things in densification is naturally more sustainable and more profitable. Exactly, exactly

Matt Pfile, Crane Data Centers:

Right. So I think that underpins a lot of activity. Like as humans, we’ve been accustomed to [00:43:00] focus on profitability over the long term and so we’re really good for optimizing for that. So I think where regulation can come in is say, okay, that’s great focus on profitability, but here are the base set of things that you have to do, you have to hit. I think that’s what you raised earlier. And if we had that playbook and we were all following that same playbook, it’s going to evolve over time as the industry changes of course. But it would allow us to meet the profitability goals of our organizations, but also do the right thing [00:43:30] as it’s set in stone for all of us. Now my question would be will regulators keep up? And I’m a little skeptical about that just in general, but maybe,

Jim Davis, Ramboll:

And again kind of goes back to what I made, the comment I made earlier about waste inefficiency and costs. Basically it is a profitability argument. It is about running a lean operation where you’re not taking in more inputs than you need because they end up in waste and you got to deal with the waste and [00:44:00] you use example of waste heat. The biggest waste stream from a data center is heat. And yet in Europe we do, we work with data centers. We actually done some district heating from data center, waste heat in Europe where they have infrastructure to support district heating for residential homes. Here. We don’t have that in the US but there are many uses of that waste heat. And so thinking about how we can get rid of waste, how we can be less intensive on the resources we require coming in, how we can, [00:44:30] whether there’s a cost argument to be made efficient usually is cheaper and there might be a greater capital investment upfront, but it does work out on the profitability.

You take a total lifecycle cost view of your operations. Sustainability is kind of a no-brainer. I think one of the things I wanted to go back to in terms of sustainability, the green washing is one challenge. One thing that we’re seeing this year though with the blowback on woke capitalism there, an anti ESG, there [00:45:00] is actually the opposite problem happening right now in my view. And this is one that could actually impact regulation green hushing now where companies are not talking about sustainability, they don’t want to be political. And I’m really unfortunate that this efficiency profitability argument has become a political thing because it’s kind of a no brainer when you think it through, but because it’s got political stuff wrapped around it, the green hushing, and so the extent to which there’s blowback on some of these commitments [00:45:30] that actually is probably going to bring on regulation in the future because it will cause the industry to start acting less responsibly, at least overtly. Although I will say that most of it’s just what they say out in public, it’s actually still going on inside the the company. Well

Patrick Quirk, Nautilus Data Technologies:

Jim, I think you make a great point because really the key thing there is sustainability is apolitical. It’s the other aspects that are the political part. So if we can just focus on the sustainability piece, efficiency, sustainability, [00:46:00] all the things that you pointed out, waste production, all of that, those are apolitical because we all benefit from it. We benefit financially, we benefit as society, everything else. So you leave the other stuff around. The rest of the ESG protocol is really the political side of it, the sustainability piece is apolitical. And if we can focus on that, tie that into smart regulation and if we can get to where we can permit projects much faster, again, I think that [00:46:30] time to start of construction is the single biggest delay now from a data center perspective and it is delaying us from deploying more sustainable solutions, whether they’re brownfield retrofits or greenfield. It’s the same problem.

Alex Dickins, DatacenterDynamics:

So in that case, how do we educate the regulators and the governing bodies about how we need to delineate the sustainability regulations away from anything sort of associated with the bottom line? What do we need to say to them?

Jim Davis, Ramboll:

I was going to say, [00:47:00] I think that there’s going to be a regulation usually happens when there’s a crisis. And I think that we’re approaching a crisis in the infrastructure in general. The big infrastructure built great, but that didn’t do anything to really streamline any processes. Right?

Patrick Quirk, Nautilus Data Technologies:

No, it distorted capital.

Jim Davis, Ramboll:

Exactly. Exactly. So what I want to get at here is that the power system and the data center, the digital infrastructure transformation and the power system transformation around decarbonization sustainability, they’re on a collision course, [00:47:30] and I called it a slow moving train wreck. Someone pointed out to me that it’s actually one fast moving train and one really slow moving train, but the idea is that it’s going to come to a head. The infrastructure right now for power is blowing down, burning down, breaking down across the country under extreme climate events. And so the infrastructure model that we have for power system is broken and it’s going to have to be fixed because we can’t electrify the rest of the economy and meet all the increased demand [00:48:00] for digital economy and have the same power system the way it’s regulated right now. So I do think it’s coming to a head.

I don’t know what it’s going to look like, but I think in terms of where the regulation is headed, there is going to be a recognition of that and it’s going to have to happen on a federal scale in this country and an EU scale and in other regions. I think to be honest with you, it’s a lot easier to do greenfield data center development now in areas that don’t have an existing infrastructure to build it fresh than it is [00:48:30] to try to incorporate into an aging existing infrastructure in Europe or in America. So I think that we have a day of reckoning that’s coming, and I believe that there’s going to be some regulatory reform around power system integration. It’s going to be influenced by the shift in demand and everything’s electrifying and everyone wants a digital economy. So in order to have that view of the world, that future, it’s going to have to force regulatory reform.

Alex Dickins, DatacenterDynamics:

So do we need some sort of big event to get people to wake up and move from this reactive to proactive approach on [00:49:00] policy?

Patrick Quirk, Nautilus Data Technologies:

I don’t think so, because ultimately all politics are local, right? You gave some examples earlier, the Phoenix area and the pushback from the community around the consumption of water and data centers. You look at now every headline you see, I mean CNBC yesterday morning was running a thing about how AI is now going to put us on a completely different trajectory from power consumption perspective. We’ve been relatively flat globally over the last 10 years and everyone’s saying AI is going to make us [00:49:30] the hockey stick kick up on power consumption again. So really it is that local impact. The fact that when people see that a data center down the road is consuming more power than the entire residential community of the suburbs of a city, it’s that local reaction that’s going to ultimately drive some of this stuff. And we saw it, we’ve seen it in Ireland, we’ve seen it in Singapore, we’ve seen it in Phoenix.

There are a lot of other places that we’re seeing it. So that local aspect is really what’s going to drive it. And then just to put a button [00:50:00] on Jim’s point there, I think that the data center industry, we have to stop looking at ourselves as power consumers because that’s what we are. We’re now becoming the largest power consuming industry in the world. So how do we better integrate that power consumption in with the rest of the industrial infrastructure? And that’s the challenge. And how do we tie that in to make sure we get smart regulation going forward as opposed to reactive regulation that says you’re too big, you have to [00:50:30] stop consuming this much power.

Jim Davis, Ramboll:

And this is where innovation comes back in because cooling technology is developing very quickly, which uses less water and less energy. So that’s where the innovation is going to be important. But to your point, this goes back to your earlier comment, let’s cite the data centers where the power is. Let’s not focus on getting transmission lines and substations built. Let’s focus on getting fiber connected to where the data centers are rather than vice versa.

Debra Bernstein, Intel Corp:

And there’s also bring your own power, right? Exactly. So if

Patrick Quirk, Nautilus Data Technologies:

Your data [00:51:00] generation,

Debra Bernstein, Intel Corp:

Then you don’t have to get bingo

Patrick Quirk, Nautilus Data Technologies:

And then we can go support the grid so that when there is an event like an ice storm in Texas, the data centers actually are part of the solution as opposed to part of the problem.

Matt Pfile, Crane Data Centers:

I think the other element I mentioned is that a lot of times there’s misinformation in communities and they make decisions based on erroneous data. And so I think as an industry we’ve gotten a lot better, but I think we have a long way to go to engage with [00:51:30] communities and make sure that we’re talking the same language and that they understand what we’re doing and that they’re supportive of that. That’s one thing that at Crane we do, we engage with the community before we make a decision to move into that community to make sure that we have alignment of interest and they understand what a data center is. It is maybe not so mind boggling, but most people in the world don’t know what a data center is. I mean, that might be a ridiculous thing to say, but I would encourage everyone in this room to ask your family, what [00:52:00] do you think a data center is? And the answers that you’ll get are mind boggling. So I think we have a huge communication issue as well. And if people are educated, then they can make rational choices.

Debra Bernstein, Intel Corp:

People don’t see the tie between their smartphone and the data centers. They totally don’t get that. So people that say to me, I don’t want data centers, give me your smartphone because that thing’s not going to work anymore.

Jim Davis, Ramboll:

And what they do know is what they see, a big, ugly refrigerated warehouse that sucks all the power and water on C community loud. And so [00:52:30] I totally agree with you, and I think that one of the ways to solve the power challenge is to do onsite generation, bring your own power and to do it at a scale that actually is more than the needs of the data center. So you can be a resource for the local community. You link that to a heat recovery reuse in the local industry or community new residential developments. No reason why they couldn’t have district heating and new residential. So work with local land developers and work with the local community. But to your [00:53:00] point, everyone should be following the model you guys are doing, getting early and often engaged in the process, working with the local community so that long before they even see people starting to prepare the site for building that they actually know what’s coming and they can become agents of that. I think one of the things that Buddy did great in Loudoun County was focused on the tax base and all the services that are provided by the data centers, but still it’s row after row of big ugly warehouses and it’s sucking all [00:53:30] the energy and water out of the community. And that’s where densification can help. Exactly, exactly.

Alex Dickins, DatacenterDynamics:

I think that is a remarkable note to end on it and nicely tied up in a little bow. And we are out of time. To those of you joining on the live stream, we are on demand shortly so you can catch up if you missed anything. And to everyone joining in the audience in New York, thank you so much for your time. Thank you to our wonderful panel.

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