Equinix (NASDAQ: EQIX) today announced that it priced $1.2bn principal amount of 3.90% senior green notes in its fourth green bond offering. This latest debt raise brings Equinix’s total to ~$4.9bn of green bonds issued since September 2020, making the company the fourth largest global issuer in the investment grade green bond market. Specifically, Equinix’s four green bond issuances to-date are as follows:

  • September 2020: Equinix’s inaugural green bond offerings totaling $1.35bn
  • February 2021: Equinix’s second green bond offerings totaling €1.1bn
  • May 2021: Equinix’s third green bond offering totaling $1bn
  • April 2022: Equinix’s fourth green bond offering totaling $1.2bn

Equinix estimates that the net proceeds from the sale of its fourth green bond offering will total $1.18bn, after deducting underwriting discounts and offering expenses. In turn, Equinix intends to allocate these green bond net proceeds to finance or refinance recently completed or future Eligible Green Projects as defined in the company’s Green Finance Framework.

Presently, there is no legal or regulatory definition of, nor market consensus as to what constitutes, a green, environmental, social, or sustainable project for data centers. As such, Dgtl Infra reviews Equinix’s Green Finance Framework and its criteria for Eligible Green Projects, as well as examples of the company’s recent allocation of its green bond net proceeds to specific data center projects.

Green Finance Framework – Equinix

Equinix’s Green Finance Framework heightens the company’s focus on protecting the environment and addressing global climate change through greenhouse gas emissions reductions and increasing resource efficiency. Indeed, green finance is one of the main strategies that Equinix is employing to meet its commitment to reaching climate-neutrality by 2030.

Eligible Green Projects

Equinix’s Eligible Green Projects and potential use of proceeds are split into six categories: green buildings, renewable energy, energy efficiency, water & wastewater management, waste management, and clean transportation. Below are further details on Equinix’s eligibility criteria within each of these six categories:

Green Buildings

Green buildings are expenditures related to the design, construction, and maintenance of sustainable buildings, including both data centers and offices. Projects under the green buildings category have recently or are expected to achieve the following certification thresholds:

  • LEED V4.0 or V4.1 (Gold, Platinum)
  • Green Globes (three or four Globes)
  • BREEAM (Very Good, Excellent, or Outstanding)
  • SS 564 Singapore Green Data Center Standard
  • BCA Green Mark GoldPlus or better
  • NABERS 4.5 stars or better

Alternatively, projects can be data centers that are expected to achieve / have a design average annual power usage effectiveness (PUE) of 1.45 or less.

Renewable Energy

Renewable energy expenditures relate to renewable energy generation and procurement projects at Equinix data centers and offices. Specifically, these projects take the form of:

  • Direct (physical) and virtual (financial) power purchase agreements (PPAs)
  • On-site renewable energy generation (e.g., installed solar capacity, biogas, or hydrogen fuel cells)
  • Converting on-site backup generators to run solely on carbon neutral and non-fossil fuels such as biodiesel or hydrotreated vegetable oil (HVO)

Within renewable energy, Equinix has a particular focus on deploying fuel cells at its facilities given a sustainability push for operators to utilize generator-less data centers. Fuel cells place electricity generation next to energy consumption, improving efficiency, removing transmission losses, and increasing resiliency by taking load off the grid. Ultimately, power from fuel cells is 20% to 45% cleaner than the equivalent natural gas-powered generation from a utility.

By the end of 2022, Equinix expects to have a total of 46+ megawatts of fuel cells installed across 15+ locations, including Boston, New York, and Silicon Valley.

Energy Efficiency

Energy efficiency expenditures and investments target an increase to the energy performance of new or existing Equinix sites. Particularly, these projects include:

  • Upgrades, retrofits, or improvements that result in either a 2% improvement in annual energy performance or position the data center with a top 15% score according to ENERGY STAR benchmarks
  • Installing innovative cooling systems such as aquifer thermal energy storage (ATES). Specifically, ATES uses cold groundwater to cool equipment during winter months, eliminating the need for traditional mechanical cooling within the data center and reducing water usage
  • Deploying sensors, controls, and artificial intelligence for energy optimization, management, and plant efficiency
  • Community heating and cooling schemes such as the reuse and recycling of waste heat, which can be shared with local communities (e.g., offices and schools)

Notably, waste heat from data center IT equipment and cooling systems being released back into the environment is a major environmental concern surrounding CloudHQ’s hyperscale data center development project in Offenbach (Frankfurt), Germany.

Water and Wastewater Management

Water-related expenditures and investments at data centers involve the implementation of:

  • Water-efficient cooling solutions. For example, StatePoint Liquid Cooling (SPLC) is a new evaporative cooling system that uses water instead of air to cool data halls, resulting in improved water efficiency
  • Water infrastructure upgrades, including metering and reporting
  • Shared cooling systems (e.g., river water cooling loops)
  • Reductions in chemical use in the treatment of water
  • Installation of green or living roofs, resulting in the reduction of stormwater runoff
  • Rainwater capture systems
Waste Management

Waste management expenditures and investments focus on pollution prevention and control, including waste reduction and recycling. These initiatives involve equipment takeback programs, which can be measured by the waste, in tons, that is recycled and diverted from landfills.

Clean Transportation

Clean transportation expenditures and investments are intended to positively impact employees and communities who use or are located near Equinix’s data centers. For example, the installation of electric vehicle charging stations can promote the use of electric vehicles.

Green Bonds – Allocation of Net Proceeds – Equinix

Equinix reports on the allocation of the net proceeds from its green bonds issued between September 2020 and May 2021. Excluding today’s $1.2bn green bond, Equinix has issued five green bonds through three separate offerings. Specifically, the aggregate principal amount and allocated net proceeds of these bond offerings is as follows:

  • September 2020: $650m aggregate principal amount, $644m in allocated net proceeds
  • September 2020: $700m aggregate principal amount, $694m in allocated net proceeds
  • February 2021: €600m aggregate principal amount, $700m in allocated net proceeds
  • February 2021: €500m aggregate principal amount, $588m in allocated net proceeds
  • May 2021: $1bn aggregate principal amount, $279m in allocated net proceeds

Overall, Equinix’s net proceeds from these five issued green bonds totaled $3.6bn, of which $2.9bn was allocated. As shown below, the net proceeds were allocated to green buildings ($2.85bn), renewable energy ($55m), and energy efficiency ($3.8m) projects.

Bond OfferingsGreen BuildingsRenewable EnergyEnergy EfficiencyTotal
Sept 2020 – 1.550%$589m$55m$644m
Sept 2020 – 1.000%$694m$694m
Feb 2021 – 1.000%$700m$700m
Feb 2021 – 0.250%$588m$588m
May 2021 – 2.500%$275m$3.8m$279m
Allocated Net Proceeds$2.85bn$55m$3.8m$2.9bn

Geographically, net proceeds were allocated to projects in the Americas (29.4%), EMEA (41.8%), and Asia-Pacific (28.8%) regions.

Environmental Impacts from Net Proceeds

Equinix reports on the expected environmental impacts based on the use of the net proceeds from its five green bonds issued between September 2020 to May 2021. The annual total energy savings and carbon emissions avoided were 1,493,147 MWh and 588,161 mtCO2e, respectively. Below is a further breakdown by category:

  • Green Buildings: 525,486 MWh of annual energy savings due to improved PUEs. Additionally, 177,102 mtCO2e of annual greenhouse gas emissions avoided due to improved PUEs
  • Renewable Energy: 936,679 MWh of annual renewable energy added to the grid, on average, under full operation for 1 year. Also, 400,686 mtCO2e of annual greenhouse gas emissions avoided from renewable energy generation, on average, under full operation for 1 year
  • Energy Efficiency: 30,983 MWh of annual energy savings from demand reduction. Additionally, 10,372 mtCO2e of annual greenhouse gas emissions avoided from demand savings

Data Centers – Green Certifications – Equinix

Equinix’s data centers receiving green building ratings in 2020 and 2021 totaled 1.1 million gross sqft. Specifically, the following new sites received ratings in 2020 or 2021:

Data CenterMetro AreaRating SchemeLevel Achieved
DA11Dallas, TexasLEEDSilver
DC15Ashburn, VirginiaGreen Globes3 Globes
SV11Silicon Valley, CaliforniaLEEDSilver
SG4SingaporeBCA Green MarkGoldPlus
SG5SingaporeLEEDPending
ML5Milan, ItalyLEEDPending

As of Q4 2021, Equinix operates a global footprint of 240 data centers, representing 340k cabinets of power capacity across 28.1 million sqft. Based on an analysis of the majority of these data centers, 69% of Equinix’s portfolio has a green building rating. To this end, below is a further decomposition of Equinix’s green building rating by region:

RegionGross sqftGreen Building sqft% Green
Americas12.55.342%
EMEA7.47.499%
Asia-Pacific5.85.087%
Total25.717.769%

Green Bond Report – Project Highlights – Equinix

As part of its 2021 Green Bond Report, Equinix highlights three data center projects which showcase the company’s sustainability initiatives. Specifically, these data centers are SV11 Phase 1, SG5 Phases 1-3, and LD6.

SV11 Phase 1 – San Jose, California

Equinix’s SV11 Phase 1 is an IBX (retail) data center with 1,450 cabinets which opened in Q2 2021. The facility has a design average annual PUE of 1.17 and has achieved LEED Silver certification. Due to SV11’s low design annual average PUE alone, the data center’s operations avoid 1,756 mtCO2e of annual greenhouse gas emissions, when compared to industry averages.

Equinix SV11 Phase 1 San Jose, California

In-partnership with Bloom Energy, Equinix is utilizing 4 megawatts of fuel cells for primary power generation on-site. Further, as part of Equinix’s strategy to deliver resilient and clean on-site power, it has the ability to scale-up to 20 megawatts of fuel cells.

Finally, SV11 plans to have 100% renewable energy coverage through the purchase of wind power in the United States.

SG5 Phases 1-3 – Jurong Lake District, Singapore

Equinix’s SG5 Phases 1-3 comprise an IBX data center with 3,150 cabinets which is coming on-line in phases between Q3 2021 and Q1 2022. The facility has a design average annual PUE of 1.32 and targets LEED Silver certification, as well as BCA-IMDA Green Mark Platinum. Due to SG5’s low design annual average PUE alone, the data center’s operations will avoid 7,121 mtCO2e of annual greenhouse gas emissions, when compared to industry averages.

Equinix SG5 Phases 1-3 Singapore

Additionally, SG5 utilizes Singapore’s National Water Agency NEWater ultra-clean high-grade reclaimed water for sustainable cooling.

LD6 – Slough (London), UK

Equinix’s LD6 is an existing IBX data center where the company implemented discrete energy efficiency projects including:

  • Retrofit of full cold aisle containment across the facility
  • Installation of blanking panels to optimize airflow management
  • Controls upgrade to the data hall cooling units
  • Continuous air balancing and optimizing air temperature setpoints
Equinix LD6 Slough London UK

Overall, the project resulted in a 10% planned PUE reduction and an avoidance of 543 mtCO2e of annual greenhouse gas emissions due to demand reduction.

Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne, CoreSite Realty, QTS Realty, Switch Inc, Iron Mountain (NYSE: IRM), Cyxtera (NASDAQ: CYXT), and many more. Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing.

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