Cost of energy and environmental legislation remain the biggest threats to IT industry

Jan 12, 2015 | UPS & Standby Power

Regular increases in the price of energy and the demands placed on businesses through environmental legislation continue to be considered amongst the biggest threats to the UK IT industry. This is according to the results of Uninterruptible Power Supplies’s (UPS) latest industry survey.

The 2014 edition of UPS annual opinion poll, which questioned 2000 IT and data centre professionals across the UK, revealed that 77.51% believe that rising power costs are still a ‘major concern to their business’, with over 60% also conceding that increasing environmental legislation represents a ‘significant risk’ to their long-term prosperity.

However, when comparing the latest results to those from 2013, it would appear that the situation has begun to improve, with those responding negatively to both questions falling slightly from 12 months ago. The number of those claiming that the cost of energy is a major issue fell by over seven to eight per cent since last year. Likewise, those concerned with environmental legislation fell by almost five per cent in the same period.

“When we look at these results, it’s clear that there is still a strong pressure to control energy costs and to be more environmentally efficient but the survey does demonstrate that, at least for some, things are looking brighter. With the price of oil decreasing significantly and forecasters expecting further downward pressure, there is a realistic belief that energy prices are set to stabilise and, according to the ratings agency Moody’s, UK energy prices will remain close to current levels until 2020. This isn’t a view shared by everyone but is still in stark contrast to far more negative forecasts from a couple of years ago,” remarked David Renton, managing director for UPS.

Spare capacity within the UK electricity network was another topic those questioned felt strongly about, with 74.64% of respondents claiming that the reliability of power in the UK is going to be come a major concern within the next ten years. This is a slight increase from the previous survey, where 71.93% chose ‘strongly agree’ or ‘agree’ to the same question. This reflects the latest Winter Outlook report published by the National Grid which reported that the capacity margin for UK electricity has fallen to 4.1%. In 2010 the figure was closer to 15%. Despite the drop, the Department of Energy and Climate Change (DECC) has moved to dispel fears of winter blackouts.

Regardless of how energy costs and capacity develops, the survey’s findings underscore how those working in IT and data centre-related industries are vulnerable to rising power costs and increasing environmental legislation, with electricity costs in particular making up a notable proportion of IT businesses opex.

The survey also revealed the ways IT businesses are making pragmatic decisions to offset external pressures, confirming that product efficiency is now a key consideration when purchasing capital equipment for over 85 per cent of respondents. Moreover, two thirds (66.51%) claimed ‘reducing operating costs’ was their primary driver for change, with 22.01% citing ‘reducing their carbon footprint’ and 10.53% opting for ‘a desire to be more socially responsible’ as their biggest motivating factor.