When crude oil goes up, drivers can shop around for gas but when it comes to electricity, businesses are subject to paying high rates because most operate during daylight hours when prices peak. They can't simply up and move our homes or businesses to the cheapest energy location.
One major headache for business are data centres, those special secured and cooled rooms with rack upon rack of monolithic black towers humming away amidst a tangle of cables that consume vast amounts of electricity.
"Up to 30 per cent of energy costs in a business can come just from the servers," says Bill St. Arnaud, Chief Research Officer at CANARIE (Canada's Advanced Internet Development Organization). "And if that's dirty power – from coal or oil – under Carbon Tax legislation proposed in the U.S. it could be triple the cost it is now."
Add in the cost of cooling those servers and lighting the room, and power costs can run 50 per cent of an IT budget, says Duncan Campbell, Hewlett-Packard vice president, adaptive infrastructure.
A 200,000 square foot data centre can draw up to 40 megawatts of energy (enough to power 40,000 homes) if it's based on older technology. Manufacturers have responded with greener, leaner hardware that consumes less power and generates less heat, but even datacenters just five years old can be power pigs.
At the same time the trend is toward ever larger datacenters driven by fundamental changes in computing. Software as a Service, for example, is becoming more popular with more and more enterprise's applications being hosted on a provider's servers; Cloud computing, in which all data sits in cyberspace and desktops are merely "dumb terminals" accessing that information. Video streaming, and music downloads; TV on demand via Internet TV.
Industry analysts, Tier1 Research, says demand rose 14 per cent in 2008 and is projected to increase at the same rate for the next several years.
The challenge facing business is how to contain the costs associated with not just operating their datacenters but growing them.
"You can't just add power," says Mr. Campbell. "In places like San Francisco you're on a fixed grid, for example."
The demand curve set against the energy cost curve represents a "perfect storm," he says, and a ripe opportunity for businesses to rethink their datacenter option.
"It's very much like driving an SUV," he says, noting that opting for less energy-hungry hardware isn't just good for the environment, it's good for the bottom line.
The most obvious fix is to refit mainframes with modular racks but that's only part of the story, explains Rob Zelinka, director of IT for TTX Company, which provides railcars and related freight car management services across America, Mexico and Canada.
"We're not really doing anything exciting or fancy in IT," says Mr. Zelinka while acknowledging it's an integral part of the business. With a 20-year-old mainframe system, however, it was time to look for a solution. After weighing the options of moving, outsourcing or rebuilding, they settled on one off-site recovery facility and another in-house datacentre – albeit designed from the ground up to maximize cooling and minimize heat and power consumption.
"Were in the third year of a four year migration plan," he says noting one of the key hurdles was configuring software from the legacy system to the new system. "We're planning a celebration on New Year's Day 2010 when we switch over."
The upshot will not only be lower operating costs but space savings. The datacentre and tape storage alone currently occupies 10,000 square feet in the Chicago headquarters and will be reduced to about 1,000 square feet, power cost cut 44 per cent and maintenance by 50 per cent.
There are also some sustainable options for those who are willing to outsource or go offsite, says Mr. St. Arnaud, since data is liquid, and not anchored to a place.
He says further savings of 40 per cent are possible powering data centres with renewable energy, say solar or wind? St. Arnaud is working on setting up facilities around the globe and then switching access on the fly as the winds shift or the sun shines and expects to reduce energy costs to almost zero.
"The carbon offset credit could also be sold though cap-and-trade legislation," he says and could represent a new revenue stream. It's not a pipe dream.
Where there's a pipe there's a potential especially in obscure places where land is cheaper than collective corporate headquarters in downtown Chicago, Bay St. or Manhattan.
Data centers are good for local economies. They don't noticeably pollute, they're quiet, they pay taxes, they stick around and while they don't create a lot of jobs – 25 to 50 positions for the average 100,000 to 200,000 facility – they're good paying jobs with lots of spin offs.
Municipalities, provincial and state governments all offer incentives to lure data centers. Apple Computer, for example, is building a $1-billion, 500,000 square foot facility in Maiden, North Carolina on 200 acres of land over the next 10 years. It chose the location based on power prices – about a half to a third cheaper than California and because the state offered tax breaks.
Similarly, Yahoo is building a 200,000 square foot datacentre outside Buffalo because it will save $100-million over 15 years by accessing Niagara Falls' sustainable and affordable hydro. They're also planning to offset cooling costs by using the frigid Buffalo winter air.
Canada has many suitable locations, says Mr. St. Arnaud, pointing to our abundance of hydro, cold climate, deep lakes and river, political and geographic stability.