Mark Bramfitt - Utilities & IT

There's Still a Market for Utility-Scale DCs in High Power Cost Regions

Two reports out this week show that there is a market for large data centers even in areas with high power rates.

The first covers the new Vantage data center in Santa Clara - a 9 MW wholesale colo featuring outside air economizers and a reported PUE of 1.12. It's the second of three data centers that Vantage is building, and can be scaled up to an 18 MW load.

The GigaOm article also reports that Vantage has their own substation, so is able to purchase power on the wholesale market, which presumably means they can best Silicon Valley Power's retail rate for large customers of about eight cents per kWh. 

That's not really competitive though when some utility-scale data centers are getting power for under four cents a kWh in some markets. 

But it does show that there is still a big market for data center space in Silicon Valley despite the costs, and I'd point out that Vantage's center was built in just eight months - incredibly fast. Kudos to Silicon Valley Power for being able to serve a load that quickly.

The other report from the New York Times describes the conversion of a former telco high rise in Manhattan into a data center - something we've watched companies like Verizon and AT&T do in-house.

The project developers claim to have 40 MW of power availability at the site, and no knock against Consolidated Edison, but they'll be getting perhaps the most expensive juice in the country.

There's a good discussion of other data center properties in New York in the article, along with a description on how rental rates are structured. As expected, rent isn't based on floor area but power capability: $300 or so per kW of capacity per month, and then you pay for the power.

My quick back-of the envelope calculations tell me that to house one typical server in a colo in Manhattan would cost about $3000 per year. We used to say we'd passed the point where the power costs for a server over it's useful life exceeded it's purchase price; in this case you surpass it in just twelve months!

Government Giveaways To DC Developers - Why On Earth?

Datacenter Dynamics reported last week that two states - Nebraska and Iowa - are evidently in a shoot out to attract a $1.2B data center development project, and at least Nebraska is falling all over itself to offer attractive tax treatment. (I make that a 60 to 80 MW project.)

Maybe "attractive" isn't the word - Nebraska is willing to extend an existing program for large developments to data centers, absolving them of property taxes and providing refunds for local property taxes, and exemptions from sales taxes on equipment purchases and state use taxes.  To which I ask, what taxes does Nebraska plan to levy on the project?

They're even considering legislation allowing public power districts to sell so-called "excess power" to large projects at lower rates. I wonder what that means...

As always, the stated rationale is to attract high-paying tech sector jobs, but if you've been to utility-scale data centers in the past, you know that there is plenty of room in the parking lot. There just aren't that many employees, certainly after the site is up and running and close to fully utilized. I've been to 40 MW data centers that have no more than twenty employees on site.

Industry colleagues have noted that it isn't their fault that cities, counties, and states bend over backwards to attract major data center developments, but that is as much a cop out as saying the industry shouldn't be held responsible for the carbon content of the power it buys. 

If a company wants to build a data center in a community, they should pay their fair share of taxes to support that community and to mitigate any impacts of the project. Sure, seek out low power prices, but build to the highest efficiency standards and stand ready to implement carbon mitigation strategies. 

Just ask Facebook how it feels to be held accountable for these standards by their customers. That treatment will be extended to everyone building these large data centers eventually, so it would seem prudent to me to carefully consider whether loopholes are your best strategy today.