Future Enterprise

Datacenter Dilemma: Balancing Capacity Demand With Environmental Responsibility 

New research from IDC projects datacenter energy consumption and carbon emissions to assess the industry's progress toward net-zero goals
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It’s no secret that datacenters – the digital heartbeats powering our interconnected world – are voracious consumers of energy resources. Their energy consumption and corresponding carbon emissions are pressing concerns to those within and outside the datacenter industry.  

The importance of reducing carbon emissions as a crucial strategy to tackle climate change cannot be overstated. From the potential consequences of rising sea levels to the unpredictability of extreme weather events and disruptive impacts on ecosystems, the stakes are high. Pressure is mounting on industries worldwide to curtail their carbon footprints and contribute to global environmental efforts. 

Understanding this, the datacenter industry is far from indifferent. Almost every datacenter provider now advocates for net-zero operations. Leaders are targeting a specific date to achieve this lofty ambition. Simultaneously, IT vendors tout their innovative solutions, purporting to aid their customers in shrinking their carbon footprint. But amidst these eco-conscious promises, a troubling void becomes evident – the lack of quantitative data. 

Ironically, for an industry that thrives on data, the datacenter sector lacks comprehensive, credible data. There is a data deficit regarding power capacity, energy consumption, and carbon emissions resulting from a datacenter’s operations. We don’t have an accurate measure of the industry’s environmental impact. As a result, we don’t have a clear pathway to meeting stated net-zero goals. 

Recognizing this, IDC created new research aiming to estimate the energy consumption and carbon emissions of the datacenter market. This endeavor promises to shed new light on the datacenter industry’s environmental footprint. IDC’s research offers a quantitative lens through which to assess and compare the impact of different datacenter types and geographies. 

This dataset quantifies key parameters such as energy consumed, carbon emitted, and carbon avoided through the use of carbon-neutral energy sources. It also details power capacity, square footage, and expenditure by datacenter type, including Internet Giants, Colocation, Internal, Edge, and Telco datacenters. 

Datacenter Carbon Emissions – A Key Business Issue 

As digital transformation continues to redefine the operational landscape of organizations, another influential paradigm has become increasingly prominent – sustainability.   

IDC estimates that worldwide digital transformation investments will reach $3.4 trillion in 2026, all of which drives demand for datacenter capacity. 

“The demand for datacenter capacity is outpacing sustainability advancements” 

As part of digital transformation efforts, organizations will invest in Generative AI technologies.  These revolutionary technologies are particularly energy-hungry. Using them places an unprecedented demand on datacenter resources compared to traditional loads. For example, the energy consumption to train GPT-3 (a precursor to Chat GPT 3.5) is estimated to be 1.287 gigawatt hours. This does not include end user consumption while interacting with the model. 

It is also clear that sustainability is no longer an optional add-on or a public relations talking point. ESG (Environmental, Social, and Governance) practices create business value by fostering long-term sustainability, mitigating risks, attracting socially conscious investors, enhancing brand reputation, and driving innovation. 

These two seemingly opposing goals are creating the pre-eminent challenge for the datacenter industry. How can we meet the rapidly growing capacity demands while ensuring our operations are sustainable? 

Progress toward Net-Zero Goals 

In recent years, the datacenter industry has seen a remarkable increase in sustainability-oriented claims. In an effort to stay competitive almost all datacenter vendors are asserting their sustainability credentials. Cloud Service Providers (CSPs) and Colocation Providers are pledging to reach net-zero carbon emissions by specific target dates.

In addition, IT vendors boast about the enhanced energy efficiency of their latest chips and equipment compared to older models. While these claims are often valid and reflect a promising shift towards more sustainable practices, they can inadvertently give the impression that the datacenter industry is rapidly becoming more sustainable.  

However, this might not be the full picture. Individual components are becoming more efficient and companies are setting emission reduction goals but the overall environmental impact of the industry may not necessarily be decreasing at the same pace. Especially considering its continuous and rapid expansion. Therefore, there’s a pressing need for reliable data.

Accurate figures on energy consumption and carbon emissions of the entire datacenter industry would provide a more objective assessment of its sustainability progress. This data will help identify gaps and develop strategies to mitigate the environmental impact effectively.

So, while we must applaud the efforts and strides taken so far, it’s equally important to validate them with robust, industry-wide data to ensure a truly sustainable future for the datacenter industry. 

IDC estimates the global energy consumption of datacenters in 2022 at 382 Terawatt Hours (TWh). With a compound annual growth rate (CAGR) of 16.0%, leading to 803TWh by the year 2027. 

For more insight and information on the trends in datacenter energy growth and sustainability, please see the IDC Datacenter Deployment Model

Sean Graham is a Research Director, Cloud to Edge Datacenter Trends at IDC. He focuses on providing insights and analysis to the IT infrastructure vendors, datacenter and colocation providers, cloud service providers, and data center services firms.