We have published regular guides to help business energy buyers, and in this supplemental guide, we are highlighting eight suggestions for datacentres to ensure you have an energy supply that is fairly priced and doesn’t come with unpleasant surprises.
1. Use an energy consultant with a good reputation for industry knowledge, integrity and taking care of their clients
A small datacentre might use 5 million kWh per year and a hyper-scaler might use 200 million kWh per year. This translates into energy spends of £1 to 40 million per annum so the datacentre should select a consultant who will work in partnership with their client, actively reduce their energy costs and solve problems with the energy suppliers that inevitably will occur. For high spending datacentre clients, the savings opportunities are greater and the costs of problems are also material.
At Noveus Energy we see ourselves as a trusted part of your team providing strategic energy advice and support, leaving you to grow your business.
2. Get connected
Access to power is the number 1 challenge for datacentres. Noveus have a team of specialists who help datacentre developers secure grid connections and grid upgrades for their projects and minimise the connections cost and lead time.
We also look at the datacentre’s on-going operating costs – our latest project has reduced the client’s network charges by 24% by picking the best design for their connection.
3. Check the consultant’s commission
Large numbers of energy brokers employ sales teams with the sole incentive to sell energy contracts with high commissions hidden in the energy price.
Recently we have won two datacentre clients and discovered that each was paying a six-figure hidden commission to their previous energy broker without their knowledge.
Since 1 October 2024 suppliers have been obliged to clearly state the amount of any commission that is contained in their contract prices. This makes it easier for the datacentre to spot rogue brokers who are padding their energy costs as long as they are vigilant. We talk more about where to look for commission in the suppliers’ contracts in our article here.
4. Pick a contract that is right for you and your stakeholders
Smaller datacentres spending £1m to £4m a year on power can choose between the traditional “Fixed Price” price contracts or a “Flexible” contract and electricity suppliers will quote both options.
We see the larger datacentres choosing “Flexible” contracts and buying their energy in the wholesale market. This lowers the cost and also makes it simpler to adjust the contract volume when the datacentre is commissioning and when the datacentre grows. However, it’s important that the energy consultant ensures that datacentre owner understands how the electricity contract works, how they are managing their risk if wholesale prices rise and explains the benefits of the power strategy to the datacentre’s clients.
Warning: some energy brokers put their clients into “baskets” or “frameworks” where the customer gives up control to the organiser of the basket. You need to really understand the rules and mechanics of the basket and be very wary before joining such an arrangement.
5. Be prepared to navigate the energy suppliers’ credit checks
In the last few years, energy suppliers have become stricter about credit checks and may reject companies with “poor” accounts. UK datacentres often find it difficult to pass credit checks because legally they are small UK companies, even though they are backed by billion-dollar funds or corporations.
You need to work with an energy consultant who understands your business, presents it to the energy suppliers and thinks creatively to maximise the number of competing offers you receive whilst minimising the risk premium and requests for security deposits. Credit will also need to be revisited as your datacentres grow and you add new sites to your portfolio.
6. Think green
Most datacentres buy “green” renewable electricity and pay an additional premium for it.
Noveus can explain the different “green” options and source new products such as “natural green” and “24 x 7 matching”. We help you to decide how “green” you want your contract to be and at the cost you are comfortable with.
Furthermore, Noveus are working with our datacentre clients who want to go further than buying “green” electricity and generate their own. For example, roof-top solar and private-wire solar allow datacentres to reduce their power cost and their carbon footprints. Power Purchase Agreements (“PPAs”) allow the datacentre to support a new wind farm or solar farm, directly purchase the “green” electricity and allow the project to be financed and built.
We talk in more details about your green choices in our blog.
7. Read the small print
Recently a Noveus datacentre client avoided a £155,000 extra charge because we had negotiated away a contract clause before it was signed two years earlier.
“Flexible” contracts need to be reviewed with experienced eyes. There are several traps: some contracts are better than others, suppliers write contracts which are ambiguous and contain errors, suppliers’ contracts are silent in key areas and some suppliers add extra costs that aren’t obvious from their contract wording.
If you just want a Fixed Price contract, then you need to know if the contract price is really fixed. I.e. when can the price be varied? What happens if I consume more or less than predicted? Are there any unusual and unfair clauses?
8. Check the bills
With datacentres spending £1m to £40m per year on power and many datacentres having complex “pass-through” bills, it’s inevitable that suppliers will make mistakes and over/under charge. We see incorrect meter readings, suppliers making manual calculations or changing their billing systems mid-contract. Noveus have a system designed specifically to collect wholesale costs, meter data, network charges and taxes and calculate a simulated bill to compare with the supplier’s calculation. Our consultants then make the final decision to send the bills for payment or back to the supplier to be corrected. It’s not uncommon for our clients to receive six figure credits after we challenge their bills.
Noveus Energy are boutique consultancy only working for a limited number of clients thereby ensuring consistent high-quality delivery. We are 100% committed to fair and transparent fees. Our reward comes from professional satisfaction and an exceptional high client retention rate. If you’d like us to review your current energy contract and discuss how we can help your business, please click here.
