Key Take-Aways of Colocation Research for Silicon Valley Power

Last fall EMI, under subcontract to Summit Blue Consulting (now a part of Navigant Consulting), performed a process evaluation for Silicon Valley Power (SVP) in Santa Clara California.  The process evaluation focused on identifying barriers to colocation data centers (or “colos”) participating in SVP’s energy efficiency programs.  Colos provide data center infrastructure to support other companies’ IT equipment – basically data center space for rent.  This space can be leased in units as small as half a rack and as big as thousands of square feet.  The latter situation, where whole rooms or even whole data centers are leased to one tenant, are known as “wholesale” colocation facilities.

Santa Clara has a dense concentration of data centers and colocation facilities.  This is largely due to their location in the heart of Silicon Valley, but also is due to their relatively low cost of power and high reliability of their power delivery. As a result of this high concentration, data centers are a main focus of the SVP energy efficiency programs, and in 2007-2008, roughly 60% of SVP’s energy savings came from data center related projects.

EMI conducted this research by performing: online research and a document review of appropriate reports, and in-depth interviews with colo managers from inside and outside SVP’s service territory and other industry experts.  Here are some of the main take-aways from EMI’s research into participation of colocation facilities in SVP’s programs.

• Aggravated Barriers – Since providing reliable data center space is a colo’s main business, some of the barriers to energy efficiency for typical data centers are aggravated in the colocation facilities’ case.  These include an extreme focus on reliability, with little interest in energy efficiency.  It also creates an extreme case of the split incentive, because the people paying the power bill and the IT purchasers work for completely different companies, so there is little motivation to invest in more efficient equipment.
• Pricing Models of Colos Affect Investment in Efficiency– Different colocation companies have different methods for splitting up charges for power, cooling and space.  While data centers become more constrained by power and cooling (and less constrained by space), some colocation facilities are moving away from space-based charges and more towards charging directly for power and cooling, which helps create more of an incentive for their customers to save energy.
• Difficulty in Reaching the Colocation Facilities’ Customers –SVP, like other utilities, is restricted to only offer incentives to their customers of record.  This is necessary as it allows SVP to be able to recoup the incentive amounts if the measure does not stay in place for the contracted five-year period, and therefore the measure does not deliver the full five years of savings SVP claims for the measure.  As a result, SVP cannot give incentives to the colocation facilities’ customers, as these customers do not pay SVP for their power, but instead the cost of power is bundled with their colo charges.  This is a major barrier for many utilities to getting colocation customers to participate in virtualization incentives, for example.
• Lack of Expertise for Completing Calculations – Some facilities indicated that they did not have the engineering expertise on staff to complete the necessary calculations to receive incentives, as operating colos are basically “a couple IT guys with a sales department.” SVP offers support to fill out the applications, but some potential participants were not aware of this, so this was an area where better communication of the program offerings could help increase participation from companies that need this support.

All in all, the evaluation found that SVP’s focus on data centers has been very successful and that they are undertaking a lot of efforts to help overcome these barriers such as: emphasizing new construction where the barriers and inertia to energy efficiency are not as great, and offering technical support where it is needed.  Other opportunities lie in collaborating with other utilities to identify new opportunities (e.g., for prescriptive measures which simplify the application process), and investigating new ways to get to colo customers.  Although there are many barriers in place for colocation facilities, this is a large data center market, it is growing rapidly, and it is worth having progressive utilities like SVP continue to push to develop programs and processes to overcome these barriers.

The full report (available here) offers more detail on the colocation market and barriers to their participation in energy efficiency programs.

Utility Sponsored Incentives for Data Center Efficiency

One of the big barriers we see to energy efficiency in the data center market is a knowledge gap between utilities that are new to the data center market and data center operators who are not necessarily fluent in energy efficiency or in the language of utilities.  Last week I presented at AFCOM’s 30^th Data Center World Conference in Nashville, TN.  I was there to share the research we’ve done at EMI into what utilities out there are offering data center efficiency incentives and to try and help close this gap.

Part of the presentation was focused on trying to get the data center operators to understand the utility mindset – what motivates utilities and what makes sense for them to offer money for energy efficiency. This is one of my favorite slides, because it attempts to answer one of the questions I get the most from non utility/EE folks:

I love this question because it really gets to the heart of the economics of energy efficiency.  In the end, it often comes down to this singular point made here by Bruce Folsom, the director of energy efficiency programming at the utility Avista in Eastern Washington State, “Our energy future is about using the resources we have wisely, and energy efficiency remains our lowest-cost resource.”

To further this goal of reducing the knowledge gap between utilities and data center operators, I attempt to explain incentives as trying to influence you to implement a project, or to help motivate a transition of an idea into an action. This transition is illustrated here:

The presentation includes explanations of how utility incentives can reduce payback times for energy efficiency projects and increase the ROI of these projects.  In addition, I do a run down of incentives offered for data centers and examples of utilities offering these incentives.  One breakdown I explore is where different incentives are applied within the data center, as illustrated in this slide:

I finish with a list of steps for data center operators to engage with their utility to pursue these incentives:

1. Become familiar with the utility’s programs

• Check your utility’s web site for information on available programs and contact information
• Contact your utility or your account manager to discuss available programs/incentives

2. Identify projects

• Schedule an energy audit or technical assistance from utility (where available)
• Find projects relevant for incentives

3. Confirm Projects

• Fill out any applicable pre-application paperwork to confirm relevance and incentive amounts

4. Perform pre-inspection with utility (where applicable)

5. Install measure

6. Perform post-inspection (where applicable)

• Calculate savings and incentive amount

7. Apply for incentive or rebate

So that’s my attempt to distill my hour long presentation into a blog post.  I was really pleased by the reaction at Data Center World, which speaks for the need for people to help plug these gaps in communication and knowledge.  I had a number of utilities in the room, a few consultants and some data center managers, and the question and answer period turned into more of a discussion between utility folks and managers.  That’s what I like to see.

I would definitely be interested in any feedback on what I’ve included here, or in any information readers have on available programs.  We’re attempting to fill out a matrix of available programs by utility so any information would be greatly appreciated.  Also if anyone is interested in the full presentation let me know.  You can always reach me at ajhoward (at) emi1.com

Based on the reaction I will be attempting to update the presentation and will resubmitting my abstract to hopefully speak at the next Data Center World Conference in Las Vegas in October.  Thanks!

Thoughts from PG&E’s Former Data Center Efficiency Program Manager

I’m getting caught up on some news from over the holidays (happy new year by the way!) and came across this two part interview with Mark Bramfitt, the former program manager for PG&E’s High Tech program which includes data center efficiency projects (found here: Part 1, Part 2).  Mark has been very vocal over the years in spreading information on PG&E’s ground breaking programs in this area and has been a great ambassador to the high tech and utility industries alike on data center utility incentives.

EMI performed the process evaluation of the PG&E’s High Tech Program (which can be found here) and I got to know Mark initially through his support for my work with the EPA on the ENERGY STAR Computer Server specifications.

Scouring through the two interviews I found a number of interesting points from Mark.

On Barriers to Program Adoption:

In my discussions with utilities across the U.S., this is probably the single biggest barrier to program adoption – they can’t find firms who can do the calculations, or resources to appropriately evaluate and review them.

What has slowed us down, I think, is that the IT industry and IT managers had essentially no experience with utility efficiency programs three years ago. It simply has taken us far longer than we anticipated to get the utility partnership message out there to the IT community.

These two quotes emphasize the fact that there’s a gap of knowledge (and talent) between the utility industry and the high tech companies that equip and run data centers.  On the utility front – there is a gap in knowledge about the IT industry.  The fast pace of technological innovation and quick growth in this industry presents challenges in finding or developing the expertise to implement effective programs (including performing the necessary calculations and analysis).  On the high tech company front – there is a gap in knowledge about how to identify and leverage these new programs and efficiently perform the analysis and calculations to receive the incentives.  My conversations with industry members on both sides highlight these frustrations, and the ultimate success of data center efficiency programs will hinge on closing these gaps in the coming years.

New Opportunities

On the retrofit side, we’re seeing interest in air flow management measures as the hot spot, perhaps because customers are getting the message that the returns are great, and it is an easy way to extend the life and capacity of existing facilities.

Metering and monitoring systems lead people to make simple changes, and can directly measure energy savings in support of utility incentive programs. We also like that some systems are moving beyond just measurement into control of facility and IT equipment, and to the extent that they can do so, we can provide incentive funding to support implementation.

There is a lot of room for potential growth from the basic programs currently offered by utilities.  Mark points out one of the areas of low hanging fruit is with air flow management.  This can include simple efforts like blanking panels or more advanced efforts like switching to hot/cold aisle containment.  The challenges here are in confirming the energy savings, which is where the expertise mentioned above is needed.

Metering and monitoring is always a hot topic of conversation in this industry.  Future and current efforts for quantifying energy efficiency gains rely on access to quality data, so the implementation of better measurement and monitoring would be a big a boost to future energy efficiency projects. The challenge, again is quantifying concrete savings from these measures.

These two points bring up what I see as a main challenge to the utility industry in simply and reliably quantifying the energy savings from these measures so they can use incentives to drive these right behaviors.  It’s a significant challenge and will take some creative thinking. Another of Mark’s points emphasizes the potential outcome of these challenges:

That being said, utilities in California are under tremendous pressure to deliver energy efficiency as cost effectively as possible, so some of the industry leadership activities undertaken by PG&E may have to be de-emphasized, and we may not be able to afford to develop new programs and services if they won’t deliver savings.

To get over this hurdle, the industry needs to think creatively on how to efficiently (i.e. cost effectively) justify incentives and programs that help drive the right behavior.  There’s a large potential for energy savings in this industry, and utilities should have a role in driving these behaviors, we just have to continue to push to find effective models for doing this.

Future Growth of the Industry

PG&E is not seeing the level of new data center construction that we had in ’07 and ’08, but the collocation community tells me demand is exceeding supply by 3-to-1. They just can’t get financing to build new facilities.

This last point emphasizes that despite the credit crunch, demand remains high.  Once some capital is freed up we should continue to see rapid growth of the industry and increased opportunities to effect change through intelligent incentives.