End of October 2022, the German Federal Ministry of Economics and Climate Protection (BMWK) presented a draft bill for a law to increase energy efficiency and amend the Energy Services Act (EnEfG), (See our initial insight) which envisaged considerable efficiency requirements for data centers and has since been the subject of controversial debate in the industry and in politics.

On April 3, 2023, the German government published the eagerly awaited revision of the draft bill. Despite some relief for data center operators, the new draft also contains a significant set of additional obligations compared to the current situation and legal framework. This applies in particular to data centers that start operations from January 01, 2025. On 19th of April 2023, The Federal Cabinet approved the approved the revised draft bill (link) without further significant changes. The draft law will now be forwarded to the parliamentary procedure.

Requirements for data centers

Below you will find a synopsis to illustrate the main changes of the Federal government’s draft bill (RefE) compared to the initial BMWK’s draft of October 2022.

RefE1 §23 (6) RefE-EnEfG of October 18, 2022

Data centers are to replace their electricity consumption

• from January 1, 2024, 50 percent with unsubsidized electricity from renewable sources and 
• from January 1, 2025, 100 percent by unsubsidized electricity from renewable sources. 

RefE2 § 11 (8) RefE-EnEfG of April 19, 2023

On the balance sheet, data center operators are to cover their energy consumption 

• from January 1, 2024, with 50 percent of unsubsidized electricity from renewable sources and
• from January 1, 2027, with 100 percent of unsubsidized electricity from renewable sources.

RefE1 §23 (1) RefE-EnEfG of October 18, 2022

Data centers that begin operations on or after January 1, 2025, must maintain a planned power consumption effectiveness of ≤ 1.3 for the first two years of operations.

RefE2 § 11 (1) and (2) RefE-EnEfG of April 19, 2023

Data centers that commence operations before July 1, 2026, shall be constructed and operated in such a way that they  

•  achieve an energy consumption effectiveness of ≤ 1.5 as of July 1, 2027, and 
• achieve an energy use effectiveness ≤ 1.3 as of July 1, 2030.

Data centers commencing operations on or after July 1, 2026 shall be constructed and operated to achieve an energy use effectiveness of ≤ 1.3.

RefE1 §23 (1) RefE-EnEfG of October 18, 2022

• Data centers that begin operations on or after January 1, 2025, must achieve a planned share of reused energy of at least 30 percent for the first two years of operation; 
• Data centers that begin operations on or after January 1, 2027, must achieve a planned share of reused energy of at least 40 percent.

RefE2 § 11 (2) RefE-EnEfG of April 19, 2022

• Data centers that begin operations on or after July 1, 2026, must be constructed and operated in such a way that they have a minimum of 10 percent reused energy;
• Data centers that begin operations on or after July 1, 2027, must have a planned share of reused energy of at least 15 percent;
• Data centers that begin operations on or after July 1, 2028, must have a planned share of reused energy of at least 20 percent.
  

RefE1 §23 (3) und (4) RefE-EnEfG of October 18, 2022

• For data centers that begin operation on or after January 1, 2024, the minimum inlet temperature for air cooling of information technology is 27 degrees Celsius.
• For data centers that begin operation before January 1, 2024, the following applies to the air cooling of information technology    
  • minimum inlet temperature of 24 degrees Celsius and 
  • from January 1, 2028, a minimum inlet temperature of 27 degrees Celsius; 
• a lower inlet temperature is only permissible if it can be achieved without the use of a refrigeration system.

RefE2 § 11 (2) RefE-EnEfG of April 19, 2023

• Data centers that begin operations before January 1, 2024, shall be constructed and operated in such a way that the air cooling of information technology 
  • complies with the minimum inlet temperature of 24 degrees Celsius, and
  • from January 1, 2028, complies with the minimum inlet temperature of 27 degrees Celsius.
• A lower inlet temperature is only permitted if it is achieved without the use of a refrigeration system. 
• Data centers that begin operations on or after January 1, 2024, shall be constructed and operated so that air cooling of information technology does not fall below the minimum inlet temperature of 27 degrees Celsius. A lower inlet temperature is only permissible if this is achieved without the use of a refrigeration system.

RefE1 §24 (1) und (3) RefE-EnEfG of October 18, 2022

• Data center operators shall operate an energy or environmental management system. Data centers for which no energy or environmental management system is operated shall establish one by January 1, 2025.
• For data centers with a nominal connected load of 1 megawatt or more and for data centers owned by or operated for public bodies with a nominal connected load of 100 kilowatts or more, there is an obligation to validate or certify the energy or environmental management system from January 1, 2025.

RefE2 § 12 (1) und (3) RefE-EnEfG of April 19, 2023

• Data center operators must establish an energy or environmental management system by July 1, 2025.
• For data centers with a nominal connected load of 1 megawatt or more and for data centers owned by or operated for public bodies with a nominal connected load of 200 kilowatts or more, there is an obligation to validate or certify the energy or environmental management system from January 1, 2025.

Assessment

Compared to the October 2022 draft, the requirements for the energy efficiency of data centers have been reduced. This relates in particular to the Energy Reuse Factor (ERF). For example, according to the current draft, data centers must have a planned share of reused energy of at least 20 percent when they commence operations on or after July 1, 2028. According to the October 2022 draft, this value was to be at least 40 percent for start of operations from January 1, 2027. The requirements were also reduced with regard to the use of renewable energies and the PUE ratio.
However, the German government's draft bill still sets high requirements for the operation of data centers, which will require considerable investment by operators. In the highly internationalized data center market, this can have a significant impact on operators' location decisions.

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