The looming threat of regulation

Change or be changed is the warning from the latest BCS data centre industry report.

According to the findings of the latest BCS Summer Report 2022, there is a firm commitment amongst respondents to move towards a renewable-sourced future. However, there are also strong concerns that regulation could be placed on the industry to push initiatives for the greater use of renewable sources of power at a more rapid rate, with around 90% of the 3,000 of those surveyed believing that this could be introduced to ensure greater compliance.

James Hart, CEO at BCS, comments: “With ambitious targets to be achieved by 2025 and 2030 under the green deal, it begs the question that if our sector doesn’t get ahead of these targets, will the self-regulatory initiative become legislative and regulated? We believe our sector is at a crossroads with one route being proactive, investing in new technologies, self-generation and looking at innovative storage solutions to reach climate neutral targets. The other route is having legislation and regulation imposed on us and having to react to the imposition of energy, water and emission targets that we have no influence over.”

However, confidence in the sector continues with a 5% increase in respondents seeing a rising demand against a falling supply (up to 90%) which was further reinforced by a near 100% response that demand will either rise or remain the same over the next 12 months. This is despite the concerns voiced by our respondents around energy supply, skills shortages and sharply increasing costs across the board.

Disruptions to global supply chains continue to plague the data centre industry and 87% of our respondents stated that they had experienced such an eventuality in the past year, a marginal decline on the 91% recorded in our preceding survey. There are also some indications of an easing in the challenge of sourcing of construction raw materials. In 2021 just over half of respondents experienced sourcing difficulties for concrete/cement, steel, cladding materials, and dry lining materials – this has fallen to around 32% in 2022 for the concrete /cement and two-fifths for the other materials.

“The long-term effects of the global pandemic, coupled with new geopolitical issues mean that the world now faces some robust challenges. Whilst an economic slowdown across Europe may have its own consequences for growth in our industry, perhaps the most immediate and stark issue is the inflationary pressures on energy pricing that has already hit consumers and business. With the backdrop of economic indicators that suggest that stagnation and recession are at the foremost in the thoughts of the markets, the optimism shown by our respondents on the current state and future growth prospects of our sector even more remarkable.

“At BCS we are continuing to help clients navigate these global challenges and undertake the transformation that is necessary to prosper in the Green Deal environment. Our current services include informing clients of Green Deal levies, the financial modelling of impacts and supply-chain transformation that will form the map to reach our green destination,” concludes James.

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