Impact of the Energy Efficiency Directive and the Energy Efficiency Act on companies, especially data centre operators

The Energy Efficiency Directive (EED) and the Energy Efficiency Act introduce increasing obligations for companies, especially for data centre operators, in terms of energy saving and energy efficiency. As the first deadline for reporting certain energy-relevant data from data centres in Germany ended on 15 August 2024, we are taking this opportunity to provide more detailed information on the impact of the EED and the Energy Efficiency Act.

1. Energy Efficiency Directive (EED)

The purpose of the revised EED (Directive (EU) 2023/1791 of 13 September 2023) is to increase energy efficiency, as energy efficiency is regarded as one the elements to achieve a reduction of greenhouses gases by 55% until 2030 and a climate-neutral European Union by 2050.  For such purposes the revised EED provides that Member States of the European Union shall collectively ensure a reduction of energy consumption across the EU by 11.7% by 2030 compared to the projections of 2020 through a series of measures.

With regard to the private sector, companies, regardless of the sector and including small and medium sized enterprises, with an average annual energy consumption of more than 85 TJ are obliged to introduce an energy management system (e.g. EMAS). Companies with an average annual energy consumption of more than 10TJ, but less than 85 TJ are obliged to implement an energy audit.

Already in 2016, the EU-Commission published a working paper “Best practice on energy efficiency" which addressed the data centre industry directly. The working paper indicated the EU-Commission's intention to introduce specific regulations for the sector. This was implemented in the revised EED that expressly addresses operators and owners of data centres and imposes certain obligations on them.

Amongst others, operators of data centres with a non-redundant rated electrical load of at least 500 kW are obliged to publish certain information for the first time by 15 September 2024 and annually thereafter by 15 May. A delegated regulation ((EU) 2024/1364 of 14 March 2024) regulates which data is to be published in detail. 

2. Energy Efficiency Act 

Germany has implemented the EED through the Energy Efficiency Act.

For companies with an annual final energy consumption of more than 2.5 GWh, regardless of the sector, the newly established obligation in the Energy Efficiency Act to avoid or reuse waste heat should be emphasised.

In addition, energy or environmental management systems must be set up by all companies with an average annual total final energy consumption of more than 7.5 GWh.

Data centres with a non-redundant rated electrical load of at least 300 kW are subject to more specific requirements that go beyond the obligations of the EED:

• A power usage effectiveness (PUE) value of 1.2 is to be achieved for newly constructed data centres.
• For waste heat recovery, an energy recovery facility (ERF) of up to 20% is required, which shall be achieved by connecting the data centres to the district heating network.  You can find more details of the legal requirements for waste heat utilisation here.
• Data centres must obtain all of their energy from renewables - physically or virtually from 2026.
• Data centre operators must publish energy consumption data annually in a public register.

The first reporting deadline for data centre operators in Germany ended by 15 August 2024 and annually thereafter by 31 March.

Breaches of the obligations cause offenses that can result in substantial fines. 

3. Comment

It becomes very clear that the data centre industry is explicitly being addressed with concrete obligations both at European and German level.

As the case may be, other EU Member States may consider the Energy Efficiency Act with its strict requirements for data centre operators as a model for their national implementation of the EED.

The rapidly changing and growing European and national regulatory environments for the development and operation of data centres therefore requires thorough and constant monitoring. 

For more information, please contact Dr. Dirk Barcaba and Elie Kaufman, LL.M.