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A recent development in Virginia could significantly impact the way data centers operate and the decisions made there. Delegate Rip Sullivan of Fairfax County, recently proposed a new bill, HB 116, in the Virginia House of Delegates.

The new bill aims to significantly impact an reshape the state’s data center industry by introducing stricter energy efficiency standards.

Key Provisions of HB 116

PUE Threshold for Tax Breaks:
Data center operators seeking sales and use tax exemptions on data center purchases must achieve a Power Usage Effectiveness (PUE) score of 1.2 or lower. This aligns with the industry’s best practices and incentivizes efficient operations.

Top 15% Benchmark for Mixed-Use Facilities:
Data centers within buildings with mixed commercial uses (over 20% non-data center space) must achieve an energy efficiency level ranking within the top 15% of similar buildings built in the past five years. This ensures comparable efficiency even in non-dedicated data center structures.

Renewable Energy Mandate:
By 2027, data centers must source 90% of their electricity from carbon-free renewable sources or through associated renewable energy certificates. This ambitious goal promotes sustainability and aligns with Virginia’s clean energy aspirations.

Diesel Ban for Backup Power:
The bill prohibits qualifying data centers from using diesel fuel for on-site backup power generation. This encourages adoption of cleaner alternatives like hydrotreated vegetable oil (HVO) or fuel cells.

Implications for Data Center Owners and Operators

Compliance Requirements:
DIAL recommends a proactive approach to assess current PUE scores and identify potential efficiency improvements to meet the 1.2 threshold. Additionally, mixed-use data centers should evaluate their energy performance against the top 15% benchmark.

Renewable Energy Procurement:
Develop strategies to procure carbon-free renewable energy or invest in renewable energy certificates to comply with the 2027 mandate. Explore options like power purchase agreements (PPAs) or on-site renewable generation.

Backup Power Alternatives:
If currently using diesel for backup power, consider transitioning to HVO or alternative technologies like fuel cells before the ban takes effect. Evaluate cost-effectiveness and feasibility of each option.

Stay Informed, Stay Proactive:

DIAL is committed to keeping our clients informed about evolving regulations and trends. This new bill signifies Virginia’s commitment to a greener data center industry, and early preparation will be key for Data Center Owners and Operators to adapt and thrive in this changing landscape. We encourage you to reach out to your DIAL representative to discuss your specific situation and develop a tailored compliance plan.

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Digital Infrastructure Advisors Ltd (DIAL), a leading provider of specialist data center advisory services, and part of the Keysource Group is pleased to announce its involvement in Morgan Stanley Infrastructure Management’s acquisition of a majority stake in UltraEdge, a prominent data center company.

DIAL played a key role in the transaction, providing comprehensive data center commercial, technical, development, and operational due diligence advisory services to Morgan Stanley Infrastructure Partners. The firm’s expertise helped Morgan Stanley Infrastructure Partners make an informed decision about the acquisition, ensuring that it aligned with their investment strategy and objectives.

UltraEdge, the newly established data center company, will manage a portfolio of 257 interconnected data centers, leveraging Altice’s mobile operator subsidiary SFR’s expansive fiber network. This strategic move involves the demerger of SFR’s data center operations, subject to regulatory approvals and customary conditions.

The transaction, valuing UltraEdge at €764 million, marks a significant step in establishing the first nationwide independent distributed data center operator in France. UltraEdge’s offerings will include essential data storage and connectivity services, boasting an installed capacity of over 45MW and 33,047 square meters of owned office space, interconnected via SFR’s nationwide fiber network.

Stephen Lorimer, Director at DIAL, said, “We are delighted to have been part of this landmark transaction. Our team’s deep understanding of the data center industry and our ability to provide independent, objective advice were instrumental in the success of the deal.” He added “UltraEdge is a strategically important asset in the French data center market, and we are confident that Morgan Stanley Infrastructure Partners will be able to capitalize on its full potential. We look forward to continuing to support them in their future endeavours.”

The acquisition of UltraEdge marks a significant step forward for Morgan Stanley Infrastructure Partners data center investment strategy. The company plans to leverage UltraEdge’s strong portfolio of data centers and its strategic partnership with Altice France to expand its presence in the French market.

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