After months of speculation, details of the Federal Government’s carbon tax have finally emerged and now industry, consumers, politicians and lobby groups are in the thick of debating its costs and consequences.
While the Federal Opposition and business groups, such as the NSW Business Chamber, are doing their level best to paint the tax as an existential crisis for the Australian economy, the local IT industry far less pessimistic.
To be fair, data centre owners, Cloud services providers, and those with their own in-house server rooms aren’t dancing in the street. But nor are they paralysed by the prospect of serious increases in the cost of power, and its flow on to the cost of keeping the IT lights on.
That’s due, in large part, to the major efficiency and cost-reduction imperatives IT departments — the ‘do more with less’ mantra — have been working under for at least the last two years.
At the same time, the data centre transformation and recycle phase that has gripped public and private sector organisations — partly driven by cost, partly by the move toward virtualisation and the cloud — has also witnessed a push to more energy efficient gear and cooling techniques.
As NextDC chief, Bevan Slattery, puts it, Green IT initiatives have been on the table for sone time already, so a carbon tax will simply provide further impetus for companies to prioritise energy saving measures.
“What [the carbon tax] has done is not just focus people's attention on reducing electricity consumption, but reducing your carbon footprint,” he says. While data centre operators are doing their best to build and upgrade data centres to be as energy efficient as possible, the reality is that electricity prices will increase under a carbon tax and, inevitably, there will be real increases in data centre costs.
Measuring the tax’s effect
Understandably, data centre providers are coy on just how large that increase will be but major players agree customers should be in no doubt they will be noticeable.
One of the few providers to hazard a guess at just how much, NextDC’s Slattery says the carbon tax will likely create an increase of almost 3c/Kwh in its Melbourne facility: Something Slattery sums up as a “substantial increase to pricing.”
Equinix’s managing director, Darren Mann, who wouldn’t be drawn on an exact number, estimated a cross-market increase of at least 10 per cent in prices.
“Given the impact on business and customers I think it will become a user-pays scenario whether they are in-house or outsourced with their data centres,” he says. “IT will only heighten with the rise of electricity prices. The industry will have no choice but to pass on some of the costs.”
Similarly, Vocus has also heavily hinted it will pass on carbon tax-related cost increases, with the data centre operator’s general manager of operations, Adam Gardner, saying in July that it would be “unrealistic to suggest that there will be zero effect to customer pricing”.
In addition to price increases, the carbon tax has had the effect of prompting data centre providers to look at value-added services that can be offered to customers to help manage carbon tax-related reporting issues.
According to ASG Group's Perth-based strategic business services general manager, Gerald Strautins, the data centre provider is now focusing on the “onerous reporting and compliance requirements” arising for customers out of the tax.
“The size of this exercise should not be underestimated and we will utilise our business intelligence [BI] and business consulting capabilities to work with customers to design and implement new systems or extend current systems to deal with this new challenge,” he says.
NextDC’s Slattery also predicts increased business out of the carbon tax as the company seeks to assert its Green and cost-saving credentials via a suite of purpose-built Green data centres.
“Building a Green data centre with lower carbon emissions assists us in demonstrating one of the key values a purpose built Green facility is able to provide,” he says.
“An example of this is in Melbourne we have designed our facility to reduce our energy consumption compared to traditional data centres, but we have also designed the later inclusion of generating our own low-carbon energy through tri-generation plants on site.
“These plants are expected to go live later next year and are able to take 100 per cent of the electrical load for the air cooling system. At these levels we calculate we will reduce our carbon emissions by approximately 30,000 tonnes of carbon each year.”
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