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THE UTILITY AND DATA CENTER INDUSTRY NEXUS

Philadelphia PA, July 23rd 2013 Mark Bramfitt, P.E. Bramfitt Consulting. The data center and utility industries are increasingly intertwined, with opportunities for mutually beneficial engagement. A review of industry trends will uncover those opportunities.

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THE UTILITY AND DATA CENTER INDUSTRY NEXUS

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  1. Philadelphia PA, July 23rd 2013 Mark Bramfitt, P.E. Bramfitt Consulting The data center and utility industries are increasingly intertwined, with opportunities for mutually beneficial engagement. A review of industry trends will uncover those opportunities. THE UTILITY AND DATA CENTER INDUSTRY NEXUS

  2. Topics Key intersections of DC industry and utilities: growth, cost, energy efficiency, carbon How energy efficiency is behind a key industry trend: the move to managed services or the “cloud” What it means for utilities and the DC industry, now and in the future

  3. Utility and DC/IT Drivers Regulatory Compliance Risk Management Load Growth Competitive Rates Load Management Renewable Resources Energy Efficiency Services Smart Grid Low Rates (OpEx) Capacity Time to Serve CapEx Avoidance Reliability Carbon Content Utilities Data Center Industry (T25)

  4. Data Center/Utility Nexus: Market Growth IT and data center energy use growing rapidly, though still modest portion of overall energy use • DC energy use doubled 2001-06, but only went up 56% in next five years! • ~2% of US electric use, but regionally based • Growth rate may be on the rise

  5. Data Center/Utility Nexus: Market Growth IT and data center energy use growing rapidly, though still modest portion of overall energy use • Enterprise users still report capacity pressure • Data storage growth is an untold story: 50 to 100% annual growth rates • Growth is being absorbed by colo and cloud providers, and limited by EE

  6. Data Center/Utility Nexus: Market Growth IT and data center energy use growing rapidly, though still modest portion of overall energy use At the large end of the market (AAEFGM and DDES), growth is staggering Microsoft will have 300,000 servers supporting Xbox versus the 15,000 today, and announced a 10x expansion program for their DC fleet

  7. Data Center/Utility Nexus: Growth Service capacity is now a challenge for data centers of all stripes “Utility scale” standard “throw weight” is 40 MW DC campuses are becoming popular Data center industry starting to feel utility capacity constraints

  8. Data Center/Utility Nexus: Siting Pain Points Power price and carbon content becoming big issues Energy rates are crucial for DC developers, now and in the future Industry seeking sub 4 cents/kWh power, and clean too! Time to serve and tax incentives are crucial to business attraction

  9. Data Center Utility Nexus: Siting – Utilities Respond • Some utilities have units to make siting utility-scale DCs attractive (Dominion, AEC, Duke, SVP) • Many others are hopeless! • Offering robust energy efficiency programs an added plus Some utilities recognize the advantage of utility-scale data center loads – high asset utilization due to base load profile

  10. Data Center/Utility Nexus: Carbon NGOs have successfully challenged leading industry players, with notable results from some firms Concern for carbon is on the DC industry’s radar Predominantly a fear of higher rates Three majors (AFG) in the forefront

  11. Greenpeace Targets DCs and Utilities

  12. NRDC Takes Carrot Approach

  13. Press Attention Too

  14. AFG Response • Apple: Self-generation (PV) • Facebook: Energy efficiency – Open Compute Platform • Google: Direct access and wind purchases

  15. More Renewables Are Coming

  16. But Juxtapose With Utility Rates

  17. Anecdotal Observations • States with higher renewable requirements and tighter env. regs have higher cost power • CA and west coast • Northern seaboard • Utilities with large coal component of portfolio have cheapest rates • Montana, Idaho, Wyoming • Virginia, PA, Carolinas

  18. Hydro and Nuclear Are Exceptions • MOUs in Pacific Northwest have (had?) 100% hydro at just over 3 cents per kWh • Dominion Power in VA has 5 cent power that has pretty large nuclear and renewable components, yielding low carbon content

  19. Utility Reporting Is Poor • CA utility portfolio reporting req. has gotten more lax • No utilities report carbon on a time-of-use basis • This hurts data centers, who with high load factor probably over-report carbon impacts

  20. Caveat Emptor Utilities have widely divergent power source portfolios, even within similar regions

  21. You Can Take Some Control • Build on-site renewable • Purchase renewable or cleaner energy if direct access is available • Buy renewable credits • Participate in a utility-sponsored green energy purchase program • Choose your utility!

  22. What’s It To You? • With apologies to EPact, the carbon content of the power feeding your IT operations is the single largest environmental impact you make • Your company, and outsiders, are starting to take notice

  23. Carbon Summary • Cheap power almost always dirtier power • Cheap/dirty likely to go up the most • Remember that carbon and renewables are apples and oranges • Building new? Choose utility not just region • You have options • You should care

  24. Energy Efficiency Is Behind the Cloud Trend • To capture more market share, lower costs must break down institutional barriers • CapEx for new construction and OpEx become a paramount concern Colocation, managed service, and cloud providers compete on price, and energy is biggest cost.

  25. Move to the “Cloud” – What’s Driving The Trend Cloud, colo, and managed service providers aim to take on even more of the market, by competing on price Best in class data centers are now highly optimized for EE Theoretical limits of PUE being reached No mechanical cooling – only ventilation Back-up power and conditioning obviated by fail-over capability

  26. Legacy DC Disadvantages Capacity constrained – can’t meet growth needs Reliance on inefficient support systems (cooling, generators) Heterogeneous IT systems difficult to support Above all, poor utilization rates of IT assets

  27. Cloud Provider Advantages Energy efficiency (2:1) Low CapEx (2:1) Scale – homogeneous systems IT asset utilization (4:1) Lowest power costs (2:1) Ability to manage loads for fail over, balancing, and arbitrage

  28. What Does It Mean To You? Managed service providers have an inherent cost advantage over even the best enterprise operations That gap will widen Your operation will look untenable as a result You can compete by undertaking EE upgrades and managing capacity

  29. Why Pursue Energy Efficiency? You should pursue it like your life depended on it – it is driving the major shift in IT services Cost savings (financial return) Capacity avoidance Competition Commitment to the environment

  30. The Future Utilities Data Center Industry Adopt efficiency throughout market Participate in regulatory process Communicate with utility industry • Able to respond to large load requests • Low carbon service offerings • Energy efficiency programs for existing customers

  31. Questions? Mark bramfitt, p.e. 3055 Gough Street, #100 San Francisco, CA 94123 Phone 415.407.6291 mark@markbramfitt.com information technology  utilities  data centers  energy efficiency  demand response  smart grid  program design  training  strategic engagement impact

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