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3 Reasons Why the Public Cloud Reduces Energy Costs

When trying to tackle the challenge of electricity costs, switching your own IT infrastructure to the public cloud can bring enormous benefits. Companies can reduce energy consumption for IT and infrastructure by up to 80% if they run their applications in the cloud instead of in traditional data centres.

This is shown in the study "Saving Energy in Europe by Using Amazon Web ServicesExternal Link" by 451 Research, in which 300 companies from various industries in France, Germany, Ireland, Spain and Sweden were surveyed about their energy efficiency. In this article, we explain why cloud providers are pros at saving energy and how you can benefit.

1. Computing capacity utilisation

According to 451 Research, the average server utilisation in the data centres of the surveyed companies hovers at just over 15%. Such low utilisation translates to higher energy consumption per unit of work. In contrast, cloud providers make far more efficient use of their server capacity, finding the sweet spot between efficiency, cost-effectiveness, and performance. Thanks to virtualisation, these providers possess the flexibility to run multiple different applications on a single server, effectively allocating their resources across various customers' applications and processes.

This results in reduced energy consumption for the same workload, eliminating the need to maintain excess computing capacity. Furthermore, load balancing ensures that less critical computing processes run when more critical ones are on pause or require less capacity. The same computing resources can also be repurposed throughout the day to support different processes and applications. 451 Research anticipates that cloud providers will achieve server utilisation rates exceeding 80% in the future, with contributions from modular software structures like Microservices and Serverless Computing.

2. Cooling systems and infrastructure

Data centre cooling systems are significant consumers of electricity, contributing greatly to energy costs. Many companies have concerns that higher temperatures could potentially harm their hardware, leading them to intensify cooling efforts and consume more energy. However, the temperate European climate lends itself to the use of energy-efficient cooling methods, which many data centres have yet to adopt.

Cloud providers, on the other hand, have already embraced these practices. They tolerate greater temperature variations, resulting in substantial savings in electricity and water consumption. In places like Ireland and Sweden, AWS data centres can operate without water-based cooling for up to 95% of the year. Another critical aspect is the design of the buildings housing the servers, which AWS and similar providers have optimised for energy efficiency.

3. Custom Hardware Development

Another reason for the notably reduced energy consumption by cloud providers is their ongoing investment in cutting-edge technologies. AWS, for instance, has developed its own hardware, including Graviton processors. This strategy not only reduces their dependence on external manufacturers but also enables them to quickly tailor their hardware to their specific requirements.

Saving energy with the cloud: they know what they are doing.

Public cloud providers can keep their customers' electricity costs relatively low due to their expertise and unwavering focus on energy efficiency.

Many companies, which still operate in smaller data centres or entirely in-house, tend to compartmentalise their IT infrastructure into separate, isolated segments. Any attempts to optimise energy efficiency in these segments may only work within one of them and not holistically across the entire infrastructure.


Cloud providers make their money by providing IT services, so they have a strong incentive to keep their costs as low as possible and ensure that processes run smoothly. Infrastructure is at the core of their business. Unlike companies that solely use infrastructure without selling it, the efficiency of their own infrastructure is a top priority for cloud providers. As a result, initiatives to improve efficiency are carefully targeted and interconnected across all levels of infrastructure, whether it's optimising resource utilisation, facility management, or hardware procurement.

What does it all look like in practice? Our 7 expert tips on cloud migration show you how the leap in the cloud can succeed.

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