From winter, all around Since the beginning of the war in Ukraine, the cost of energy has increased significantly – especially in parts of Europe historically dependent on Russian fuel. That has implications for data centers, which don’t rely directly on sources like natural gas but often draw on power grids and backup generators that generate part of their electricity using fossil fuels.
According to a July report from energy supplier Aggreko, data center operators in the UK and Ireland have seen their electricity bills rise by 50% over the past three years, with the highest increase occurring last year. Fifty-eight percent of those in the UK say electricity bills have had a “big impact” on their company’s margins.
It seems inevitable that the power premium data center operators are forced to pay will be passed on to consumers. Indeed, it is already happening.
Back in November 2021, Manchester-based cloud services provider M247 raised prices by 161%, blaming “unprecedented times on European energy markets.” Cloud providers OVHcloud, based in France, and Hetzner, based in Germany, both recently announced that they will raise prices by 10% in the coming months to combat rising energy costs and inflation. In an earnings report, OVHcloud told investors it expects “electricity costs in 2023 to account for about one percent to up one percent of revenue, from single digits in 2022,” Reuters reported.
In a conversation with TechCrunch, Gartner analyst senior director René Buest noted that the era of low cloud prices has ended for some time. (Google Cloud, for example, raised the prices of its core services in March independent of rising energy costs.) But he acknowledged that rising costs — and corresponding price increases — have accelerated cloud price increases.