Germany is set to pass the Energy Efficiency Act today, which will impose certain requirements on data centers regarding heat reuse. However, the German Data Center Association (GDA) still has reservations about the potential impact on data center operations in the country.

The new law will mandate data centers to meet targets for power usage effectiveness (PUE) and establish a quota for the utilization of waste heat from their facilities. Although the Act has undergone amendments and changes since its initial draft in November 2022, which the GDA criticized as a “data center prevention act,” the GDA maintains that it will still impede data centers.

The chairwoman of the GDA, Anna Klaft, expressed concern that Germany may become less attractive as a data center location due to the forthcoming legislation. The Energy Efficiency Act aims to reduce Germany’s energy consumption by 26.5 percent by 2030 compared to 2008 levels, in response to the European Energy Efficiency Directive. The directive calls for a one-third reduction in the bloc’s energy use by 2030 compared to 2007 levels, with individual countries expected to take measures to achieve this. Germany’s Energy Efficiency Act is its major response to this directive.

The final version of the law is expected to be passed today after a debate in the Bundestag. Failure to pass the Energy Efficiency Act today would mean the discussion would resume in September, as it is the last day of business before the Bundestag’s summer recess.

Uncertainties Remain Over Climate Neutral Data Centers 

Although there have been amendments to alleviate the Act’s explicit requirements for climate-neutral data centers, the GDA spokesperson mentioned that uncertainty remains until after the debate. The GDA hopes that these amendments will be approved and included in the Act.

If all the amendments are accepted, the Act will still include a blanket obligation for waste heat reuse, which the GDA argues will create uncertainty and potentially restrict necessary data center developments. The Association also highlights the challenges faced by colocation providers in meeting targets for PUE efficiency and renewable energy.

In the initial draft from 2022, all new data centers were required to utilize 30 percent of their waste heat by other organizations from 2024, increasing to 40 percent by 2027. However, the GDA contended that this was unfeasible due to the financial demands and the need for an available district heating network. In a subsequent draft from May 2023, the heat reuse demands were reduced to 10 percent from 2026, rising to 20 percent in 2028. Nevertheless, the GDA maintains that further changes are necessary since the demand for waste heat is inconsistent, and data centers often cannot be located near heating networks.

Following negotiations with data center representatives, the Act retains the general requirement for waste heat reuse, with unchanged percentage quotas but with the possibility of exemptions.

The Act is expected to remove the mandate for all data centers to be located within five kilometers of a heating network. Instead, data centers can fulfill this requirement by having a heat transfer station on-site and offering their waste heat to the heating network, giving it six months to respond.

Klaft acknowledges the cancellation of the five-kilometer requirement as a positive aspect. However, she emphasizes that the general obligation to release waste heat introduces uncertainty in planning. Klaft argues that substantial investments are necessary to expand the digital infrastructure in line with the gigabit strategy.

The Act will also tighten PUE requirements, stipulating that facilities opening in July 2026 should achieve a PUE of 1.2. The GDA appreciates this ambition but notes potential practical issues for facilities already in the planning process. They assert that data centers scheduled to operate in 2026 have already undergone planning, approval, or construction phases.

Final Thoughts

The low PUE values could pose challenges for colocation providers, as they require full utilization of IT systems. Colocation facilities may struggle to achieve a low PUE if they are not fully occupied when they begin operations, or if their clients take actions that the providers cannot control.

Lastly, the Act maintains the requirement for facilities to use 50 percent renewable energy by 2024, increasing to 100 percent by 2027. An amendment is expected to clarify that the demand can be met by purchasing certificates from Nordic suppliers instead of relying solely on German green power.

The GDA reiterates its preference for incentive systems rather than strict regulatory requirements. They stress the importance of high-performance data centers in supporting the expansion of digital infrastructure and maintaining the country’s digital sovereignty.