Data centre shutdown fear over Labour's price-freeze promise

Data centre operators speak out over fears of imminent price hikes and rolling brownouts

The UK's fast-growing data centre industries could be crippled due to a combination of price rises and a looming energy crunch. Indeed, fears over the UK's energy security and stability are already affecting investment decisions.

That is the warning of bosses at data centre companies Onyx and Memset following Labour leader Ed Miliband's promise to freeze residential power prices, made at his party's annual conference last week, should his party win the 2015 general election.

Coal-fired power stations are being forced to close due to a combination of old age and the Climate Change Act of 2008, which Ed Miliband was responsible for as energy minister in the last Labour government. With little new generating capacity on the way the UK's "safety margin of spare capacity" will be cut from 15 per cent to four per cent as 12 gigawatts of capacity is closed.

As a result, the UK risks a high chance of brownouts, potentially closing data centres altogether.

"Our energy bills are already expensive and they are only going one way, and that's up," said Neil Stephenson, CEO of Onyx, an operator of five data centres in the north of England and Scotland, whose Newcastle data centre is ten years' old this month.

As a result of the uncertainty, data centre operator Memset is already looking to invest overseas, says managing director Kate Craig-Wood. "We are a small company, but have already got an infrastructure stack deployed in the US. We are talking to some people in Norway, where they have very low power costs. For UK plc, it's potentially quite bad," she warned.

At the same time, she added, overseas data centre operators are also being put off from investing in the UK market for the same power-related reasons.

Stephenson fears that Miliband's intervention - with promises today of further action if he deems it necessary - will make a bad situation worse, giving power companies little incentive to invest in new generating capacity if the government just caps what they charge and try to force them to produce power at a loss. "You are not going to invest in a market if the prices are not allowed to go up," he said.

Computing contacted both Conservative and Labour parties for comment, but both declined to respond.