Mark Bramfitt - Utilities & IT

Better Than Free Power - No Kidding!

My colleagues in the high tech world may not quite believe this, but electric power on the open market is occassionally priced at less than free - producers will actually pay you to take it.

Here's what happens: utilities or customers enter into power supply contracts including ones that feature "take or pay" clauses for base load capacity. Hydroelectric plants fall in this category because there is a minimum amount of flow through the dam to preserve habitat downstream.

So how do we get to negative pricing? Let's say a utility has 1000 megawatts of take-or-pay base load resources, but in certain times of the year customer load drops below that. Now the utility is faced with paying the generator for power that can't be used. (Easy enough for a hydro operator to back off on production by altering the pelton wheel profile or bypassing the turbines completely.)

Now the utility would be happy to pay a customer to take the power as long as the price was less than what he had to pay the generator (better to pay you a penny a kilowatt-hour than the generators two cents).

In my experience, this is a rare occurence, maybe happening on winter nights when loads are lowest.

But that situation is changing in interesting ways. In the Pacific Northwest, wind producers have contracts that feature take-or-pay clauses, and the operators receive favorable tax treatment based on the actual power delivered to the grid. Bonneville now has something like 30% of their portfolio coming from wind, with much of the rest hydro.

So now, even on some summer nights, customer load isn't enough for the power generated by the hydro and wind plants, and there are significant costs and impacts involved in curtailing the power production. The wind operators in particular don't want to be curtailed because of those tax breaks.

The four state region is grappling with this issue in a positive way - seeking opportunities to engage customers who could use power during these surplus events. They're looking at traditional load shifting strategies like precooling office buildings and refrigerated warehouses, and time shifting electric water heating loads.

And...we're trying to think about how data centers could participate. I personally don't see a pre-cooling strategy being viable, but I keep coming back to thermal energy storage as an exciting solution for data centers. You get load shifting capability (and might even get paid for taking off-peak power sometimes!) along with redundancy in your cooling infrastructure.

I know of only one data center that has implemented a thermal storage system, but I can't help but think this is a larger market opportunity.

Demand Response in DCs Discussed at Connectivity Week

I was asked by David Shroyer at NetApp to moderate a panel on demand response opportunities in data centers at the Connectivity Week conference in Silicon Valley Monday.

We had a great group of panelists, but unfortunately attendees outnumbered us by only a very small margin.

Mary Ann Piette from the Lawrence Berkeley National Laboratory brought the academic perspective, along with the results of an initial opportunity study and the promise of future research into actual demand response participation in data centers.

KC Mares of Megawatt Consulting represented the utility scale data center operator perspective, drawing on his long history of working in this field.

We were also joined by my former colleague Albert Chiu, who works in Pacific Gas and Electric Company's demand response group.

Because we only had a dozen people in the room, the discussion was lively and interactive. I noted a dichotomy of thought: it was postulated that data center operators would participate in demand response programs if they saw a more active, real-time pricing signal from utilities, but at the same time they desire some assurance that their participation would pay off in a predictable fashion so that they could justify implementation costs.

David further muddied the waters by describing how NetApp purchases power on the open market (made possible by a recent easing of direct access rules in California). As expected, NetApp is interested in low cost power, but also price assurance, so they seek long term contracts and have a hedging strategy. In simple terms, they are trying to reduce price sensitivity.

Not to throw cold water on the prospect of data center participation in DR, but a pure market pricing system runs contrary to the desire for pricing predictability. This means that participating in DR may be lucrative one year, and worthless the next, depending on market conditions. That precludes making investments in enabling technology because the business case is unpredictable.

Further, with their very high load factors, data centers are sitting pretty when it comes to real time electricity pricing. Any hit from peak conditions is more than ameliorated by extensive off peak energy use. Other end use customers are more likely to see an overall increase in costs, and will find DR participation more urgent.

We did come to the conclusion that some utility scale data center operators, especially those competing in the cloud service space, are likely to be the early adopters of any demand-side management opportunity, including DR, load shifting, and self-generation.

 

Appeared At: Uptime Forum 2011

Bit of a conference whirlwind in the past few weeks - this is the first of a series recalling memorable themes form the events.

I attended all three days of the 2011 Uptime Forum in Santa Clara two weeks ago (and that's a long slog!), with the added bonus of sheparding two of my utility clients around the conference as they attended for the first time.

The 451 Group and their varied consulting groups (including Uptime) established a broad conference theme around the industry disruption that is or will occur as users move IT activities to cloud providers. I was most interested in the program on day three, which explored the energy and environmental impacts of this trend.

My "star turn" was to act as the moderator at an executive lunch session sponsored by Panduit and Power Analytics (formerly EDSA). They were joined by Byron Washom from the University of California San Diego, who is running what is essentially a highly integrated utility on campus featuring self generation of a variety of types, along with demand control and extensive metering and monitoring.

That setup lead us to our primary discussion, which centered on why data center operators are loathe to consider self generation, demand response, and load shifting opportunities. I had to get things rolling by calling on some participants (it's a good thing I knew at least half of the folks in the room!).

Many commenters posited that critical facility operators are too concerned about reliability to be open to supply and demand management. Byron truly put that in perspective by pointing out that his campus supports data center infrastructure, but that isn't even his critical load - he has medical facilities including a hospital with critical care units, and a storage facility for ice core samples dating back a century.

My ultimate assessment is that data center operators should be thinking about supply and demand management, and that there are good tools (including gear from Panduit and Power Analytics) that can get them there.  The industry is no better or no worse than other sectors when it comes to engaging more fully in these areas. Ultimately, some leaders will break out front, and they're likely to leverage the benefits by being a more competitive cloud service provider, search provider, or e-tailer.

GSMI Presentation Deck

Delivered a presentation yesterday in San Diego on how data center and IT managers should work with their local utility on energy efficiency, demand response, load shifting, and siting and capacity planning issues.

Here's the presentation deck: Download GSMI 6 16 10

Presentation Report: GSMI "The Green Data Center Conference"

Flew down to San Diego yesterday to speak about the opportunities for partnering engagements between utilities and their data center and IT customers on energy efficiency, demand response, load shifting, and siting guidance.

Good crowd of primarily operators, though I must say that all of the speakers had a difficult time getting any crowd response going. For myself, I thought I did pretty well for my first speaking engagement as a consultant, and only caught myself referring to PG&E as "we" a couple of times!

For those of you who attended and are looking for a copy of the presentation deck, here it is: Download GSMI 2 4 10

Consulting Available!

Perhaps my most important post to date is simply to note that I have added a new page listing the areas of expertise and types of consulting services I am offering to clients.

I've divided the document into four sections, focussing on services for utilities, for the IT industry, for data center operators, and for the start-up and venture capital communities.

Essentially, if you're a potential client, we can pull from this document to develop a consulting scope of work that meets your needs.

I am available to work on a project-by-project basis, or on retainer, and look forward to speaking with you if I can offer the services and insight you're looking for.

Cheers!

PowerAssure and DoE - After IT Utilization

I'm a firm believer that focusing on the efficiency of IT equipment, while a meaningful long-term project, shouldn't consume the majority of industry and regulatory attention.  The fact that most IT equipment (certainly servers and some data storage technologies) operates at a ridiculously low average utilization rate represents the far bigger opportunity - driving energy conservation in data centers and IT infrastructure should come before energy efficiency considerations.

Even first-tier, sophisticated users of servers, with only a limited set of IT processes (e.g. internet search companies and etailers) only manage utilization rates in the twenty percent range by their own admission, and every other enterprise user would be an industry-leader if they pushed above ten percent.

So what is the problem?  After all, we're talking about turning off (or "down") equipment when it isn't being used...just like turning off your car when you park it in the driveway.  

The industry will point to an IT management ethic that values redundancy and availability above all else, so absent some sophisticated new approach, once a server gets plugged in, it is on for life.