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Data centers can often reduce operating costs and environmental impact together by eliminating wasted IT, power, and cooling energy. The practical sequence is to measure energy and water use, improve existing systems, reuse heat where feasible, reject remaining heat efficiently, and then increase renewable electricity. The right choices depend on workload, facility design, climate, water availability, utility rates, and retrofit economics; published savings are not guarantees for an individual site.

How should a data center start?

Start with a baseline rather than a major equipment purchase. Track facility and IT energy, water use, operating conditions, and relevant costs, then identify avoidable waste and opportunities that can be verified. The U.S. Department of Energy’s Federal Energy Management Program (FEMP) and the National Renewable Energy Laboratory’s 2024 data-center design guide frame the broader sequence as improving efficiency, reusing heat, managing heat rejection with water use in mind, and increasing renewable energy from onsite systems or the grid region.

For existing facilities, prioritize operational improvements and lower-cost changes before assuming a capital-intensive retrofit will pay off. ENERGY STAR groups efficiency measures across IT, power infrastructure, airflow, HVAC, and other areas, and recommends benchmarking performance. Use total cost of ownership alongside energy, water, and carbon measures: a project that lowers electricity use may have different water or capital tradeoffs.

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Use PUE and WUE for different questions

FEMP defines power usage effectiveness (PUE) as annual total facility energy divided by annual IT equipment energy. Water usage effectiveness (WUE) is annual site water use in liters divided by IT equipment energy in kWh. PUE helps show how much facility energy supports IT; WUE tracks site water use relative to IT energy. Neither metric alone captures every sustainability outcome, so interpret them with workload, local water conditions, and the facility’s operating profile. Cooling-tower water consumption is influenced by IT and facility heat loads and by the efficiency of each heat-removal step.

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Where can operators reduce wasted energy first?

Improve IT and power-system efficiency

Review server utilization and identify lightly used equipment that can be consolidated or retired without compromising capacity, resilience, or operational requirements. Also examine storage and power-distribution efficiency. Reducing unnecessary IT load can lower both electricity use and the heat that cooling equipment must remove, but the result depends on the workload and the electrical and cooling configuration. ENERGY STAR’s efficiency categories provide a useful structure for this review: IT, power infrastructure, airflow, HVAC, and other measures.

Manage airflow before lowering temperature

Prevent cold supply air from mixing with hot exhaust before trying to cool the whole room more aggressively. Check for unused rack openings and cable penetrations, and use compatible rack blanking panels, grommets, and diffusers where appropriate. Pair these fixes with a deliberate hot-aisle/cold-aisle layout and, where the facility supports it, aisle containment. A blanking panel is one part of an airflow plan—not a standalone guarantee of savings. Check rack size and compatibility before purchasing data center rack blanking panels.

ENERGY STAR’s airflow guidance reports a U.S. Department of Energy estimate that combining hot/cold aisle layout with containment can reduce fan energy use by 20% to 25%. It also says containment can reduce energy expense by 5% to 10% in data centers with hot/cold aisle arrangements. These are source-reported estimates; actual results vary with the facility and installation.

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ENERGY STAR guidance states: “Optimizing the airflow and HVAC in your datacenter is one of the best ways to save energy.”

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When can cooling changes lower energy and water costs?

Cooling choices affect both electricity and water. Evaluate climate, water constraints, cooling load, system configuration, reliability needs, and retrofit disruption together. Consider in-rack or in-row cooling, humidification controls, and economizers where they fit the site; no single architecture is best for every facility. FEMP’s cooling-water guidance also identifies temperature and humidity control reviews and water-side economizing as potential operational opportunities. Thermal storage can shift cooling demand, but it does not eliminate mechanical cooling and can still involve evaporation.

Assess water-side economizers against local conditions

A water-side economizer can use cooling-tower water and a heat exchanger to supply chilled water while bypassing the mechanical chiller when outdoor conditions permit. ENERGY STAR says chilled-water production costs can be reduced by up to 70% during economizer operation; that figure applies to economizer operation, not necessarily to total facility energy or cost.

Economics vary. ENERGY STAR reports that a 2014 DOE study of three federal data centers found a 2.3-year payback for a proposed retrofit, while two ENERGY STAR-certified facilities examined economizers and found unfavorable paybacks. Its guidance identifies wet-bulb temperatures below 55°F for 3,000 hours or more as a favorable condition for water-side economizers. These historical and site-specific findings are context, not a universal payback or a current promise. Model the facility’s actual climate, size, load, water conditions, and operating costs before making a decision.

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How can renewable electricity support sustainability goals?

ENERGY STAR lists utility tariffs, power purchase agreements (PPAs), financial contracts, retail renewable energy certificates (RECs), and green pricing programs as offsite renewable-energy options. These arrangements can provide RECs to substantiate green-power use, but ENERGY STAR says only direct project engagement options such as PPAs can provide electricity cost savings. A renewable claim and a lower electricity bill are therefore separate outcomes to verify.

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For a colocation or multiuse facility, establish in the contract who buys electricity, which resources supply it, who owns or receives the RECs, and who is responsible for substantiating the renewable-energy claim. Compare contract term and structure as well as the power source. DOE identifies solar, land-based wind, battery storage, and energy efficiency among rapidly scalable and cost-competitive ways to meet increased data-center electricity demand, but project economics and availability depend on location, timing, and contracting.

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How should operators compare projects?

Compare proposals using the same site-specific assumptions and an evidence plan for checking results. Useful decision factors include:

  • Upfront cost and lifecycle cost, including maintenance and expected operating conditions.
  • Facility scale, IT workload, cooling load, and compatibility with existing systems.
  • Local climate, water availability, utility prices, and applicable incentives.
  • Expected energy, water, and carbon effects, measured separately where relevant.
  • Reliability, redundancy, and any operational or retrofit disruption.
  • How the project’s measured result will be verified against a baseline.

For renewable procurement, add contract structure, term, power source, REC ownership, and responsibility for purchasing electricity. A sound comparison distinguishes modeled or source-reported estimates from results measured at the facility.

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