Mark Bramfitt - Utilities & IT

DCD on Apple's North Carolina Data Center

Bit of news reported by Data Center Dynamics on Apple's Maiden, North Carolina data center - I take particular interest as I am doing some consulting work with the local electric utility, Duke Power.

The squib is all about Apple's plan to install almost five megawatts of fuel cell capacity at the center (mistakenly referred to in the opening paragraph of DCD's piece as "cogeneration", unless Apple plans to do something with the low grade heat from the plant).

It appears that Apple plans to sell the plant output to Duke, rather than to use it to offset the data center load. This isn't necessarily a surprise.

If you have a self-generation facility, it can be more lucrative to sign a power purchase deal with a utility rather than offsetting your own use when you carefully assess the economics. For example, the utility will likely charge you a standby service fee if you use the power in-house to cover the infrastructure needed to serve you should the generation plant go off-line.

There might also be power purchase subsidies in play, which make the arrangement more lucrative.

And finally, there is real value in choosing when to run your plant. It would appear that running around the clock would amortize your investment the quickest, but off-peak power rates may actually be cheaper than your cost to produce power, so running only in on- and partial-peak hours may be better.

All by way of saying that I'm sure Apple has analysed the economics that support the purported power sale arrangement.

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!

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.

Google's Energy Use and "Equivalent Homes"

The New York Times reported today that Google has released information on the energy use of their global operations - dominated of course by data centers but including their offices.

I'm surmising now that Google has a data center footprint somewhere in the 225 MW neighborhood; I was off in some analysis I did for a client that pegged them at 300 MW, but I count that as close!

The article attempts to put the load figure into terms that are understandable to laymen, positing that 260 megawatts could serve several hundred thousand homes. That's a spot-on estimate in my experience.

In California, we often use the rule-of-thumb that a MW of capacity is needed to serve about 750 homes. It turns out that this estimate is really based on usage rather than peak demands. The average home in CA uses 750 or so kWh per month, or about 10,000 kWh per year. If you do the math, a MW of generating capacity at 100% load factor would therefore serve 750 homes or so.

But of course utilities do not have flat load curves. The big California utilities have load factors in the 30% range, meaning that you need something on the order of 3 MW of capacity to serve 750 average homes.

For the Google comparison, I fall on the side of using the energy equivalency rather than the demand, though for the best accuracy, we would compare Google's energy use to average home use, or demand to demand.

Natural Gas Perhaps Not As Clean As Advertised

The New York Times has an article today reporting the results of a study by an acknowledged opponent of shale gas extraction, noting that methane released during production and distribution may obviate to some degree it's advantage as a cleaner carbon fuel than coal.

The point is that methane is a potent contributor to climate change: it dissipates more quickly into the atmosphere and traps more heat than carbon dioxide, so leaks are damaging. (No one is disputing that natural gas is at least twice as clean as coal when it is burned.)

The natural gas industry of course argues with the estimates of fuel losses throughout the production and delivery system, and whether the losses are higher for shale extraction compared to traditional wells. The utility industry ought to be able to state with a large degree of accuracy losses in distribution. (I know we accurately account for leakage at the water district where I serve on the board.)

This isn't a tempest in a tea cup, but it does point out that all types of energy production and delivery should be evaluated on an end-to-end supply chain perspective. All fuels require energy for processing and delivery (in some parts of the world natural gas is simply flared off as a waste product because the LNG market can't handle the load), and environmental impacts should properly be accounted for.

The issue raised by the report reminds me of the perception of utilities that I found in the information technology industry when I first started getting engaged on energy efficiency. Smart, bright engineers were saying that utilities lost as much as seventy percent of power generation to transmission and distribution losses.

Simply not true. Utilities lose as much as seventy percent of the energy from source fuel (for coal, natural gas, and biomass) in the power plant, but only four to seven percent in line losses. There is also a small band of over-production to provide gris stability (typically three to five percent), but being very clear about where these losses occur is crucial to understanding efficiency and environmental opportunities for improvement.

NYT: St. Louis Attracting DC Development

Interesting article in the New York Times today about how the downtown St. Louis office market is attracting attention from data center developers including Unisys, Digital Realty Trust, Xiolink and Contegix.

Note the two primary factors noted for the development activity: low power rates from local utility Ameren, and available distribution capacity because former industrial tenants are long gone.

The latter case looks like a great reuse of stranded utility assets (though Digital notes it is spending "millions" to bring in power), which is good for everyone concerned.

However, note the reason for Missouri's low cost of power (forty percent lower than the national average price): it's coming from coal. If you have any concern at all about carbon management or potential regulation and taxation, you'd weigh a decision to locate in the fair city of St. Louis very carefully.

 

Utility Facility Charges: A Primer

A question came in today from a consultant pursuing energy efficiency opportunities in IT - thought it a good policy to answer here in the blog so that others can access the information. Edited question:

"Assuming a data center is over built with regard to its electricity capacity, does the customer have to secure a fixed amount of power from the utility upfront and pay up for it even if it isn't used?  Or does the utility company charge you based upon a variable rate on the energy you have used?"

If you ask a utility to install a given amount of electric capacity, to what extent are you "on the hook" for it if you don't end up using it all? The answer is "to a large degree"!

Utilities make capital investments in the form of distribution (and sometimes transmission) capacity based on customer load projections. If those loads don't materialize, there are tariffs in place that allow the utility to bill for their costs of ownership of the facilities. This arrangement is typical for any commercial load of appreciable size, and takes effect if energy use is below a preset level.

Reference Library: Glossary of Electric Utility Terms

I have a propensity for collecting old (classic?) engineering reference texts, and nabbed this one at the very beginning of my utility career. It's a 1977 copy of the Edison Electric Institute's Glossary of Electric Utility Terms, and it almost feels like a set of mimeographed pages stapled together in pamphlet format. It might even have been created on an IBM Selectric typewriter!

In any event, the terms and definitions are still pretty current, and you could develop a pretty good quiz to determine how deep a utility employee's experience is. For example, there are nine different definitions for demand and thirteen for electric energy.

Many of the definitions are clearly based on federal regulatory reporting requirements, and others are related to financial reporting specific to the utility industry.

EEI does maintain a current, on-line version of the Glossary, but unfortunately, it is behind a member pay wall.

 

WI Focus On Energy Data Center Forum Recap

Got back (late!) Tuesday night from Milwaukee from the second Wisconsin Focus On Energy Data Center Forum this year.

The WFOE folks did their usual outstanding job lining up a great location, solid turnout (over fifty), and a set of customer case studies to support our program that described the energy efficiency opportunities in data centers.

I was struck by the fact that the attendees were all operators of server rooms or quite small data centers, yet there was intense interest in the energy efficiency story, and how to implement measures and technologies that would stave off capacity shortfalls.

The four testimonials were also uplifting. One described the challenges of implementing PC power management across almost two thousand desktop users. Another showed how they implemented airflow containment in a small center to dramatically recapture cooling capacity, allowing for significant increases in IT equipment deployment.

As I said in my closing remarks at the event, Wisconsin Focus on Energy is showing true leadership in offering education and training, technical support, and financial incentives in the data center and IT space. Large-scale data centers may be few and far between in the state, but customers are responding to the outreach and accomplishing great things in their facilities.

I understand a third event in Green Bay in early 2011 may be on offer...

Apple's NC Data Center - Can't Be Kept A Secret

I just loved this report from Bloomberg about Apple's data center in North Carolina - evidently just down the road from one of Google's monoliths.

I hate to be a promulgator of rumors, but this facility has been reported as a 250 MW facility at build out, evidently with feeds from two different utilities.

But divide $1 billion by your estimate of the development cost of a utility-scale data center (my term for any facility in the tens of MW, requiring big time utility service), and that would put this half-million square foot center at 100 to 200 MW, depending on Apple's prowess in cost management.

By the way, I really like the discussion in the article about tax breaks.  As an elected official, albeit at a very local level, and as a citizen, I just can't see how this nonsense of offering property tax breaks and discounted utility rates makes any sense whatsoever. Until we make this some sort of mark of shame for the industry, it will continue.

In my mind, data center developers should negotiate energy efficiency (and perhaps demand response and renewable energy) credits from local utilities and officials, leaving the unseemly business of tax breaks by the roadside.