California greenhouse gas law could mean higher electric bills for inefficient data centers
California is rolling out a new law to reduce greenhouse gas emissions, primarily from electric generating plants, and the cost of the effort is expected to be passed along to data centers, which are among the biggest consumers of electric power in the state.
This means data center operators in California will need to step up their energy efficiency efforts in order to avoid the higher costs. And the handwriting is on the wall for data centers in the rest of the U.S., as President Obama has directed the EPA to develop greenhouse gas controls nationwide.
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The law that took effect on Jan. 1 requires California to reduce greenhouse gas emissions to 1990 levels by 2020. The plan is to try to reduce emissions statewide by 2 percent to 3 percent a year. According to the California Air Resources Board, the lead enforcement agency, the law requires power plants to obtain permits, also called “allowances,” for every metric ton of greenhouse gases they emit.
As they reduce their emissions, they can sell their allowances to power plants that have not been able to cut back. The allowances will be bought and sold in a cap-and-trade market in which carbon emitters who keep their emissions below the cap of 25,000 metric tons per year can sell their allowances to other power plant operators. The value of the allowances, initially set at $13 per metric ton, will fluctuate in an open market based on demand, just like any other commodity.
Entities that are over the cap can use a combination of reduced use of fossil fuels, other energy efficiencies, or the purchase of allowances in the cap-and-trade market.
The law directly affects power companies, but it’s expected that they will pass on any higher costs to customers – and the biggest customers are data centers.
How much money are we talking about? Nobody can say for sure, but the Green Grid Association, a global organization of technology and energy companies that support green energy, is about to publish a white paper that calculates the impact on data center electricity rates of utilities converting from carbon to green tech.
Part of the study was shared at a Green Grid Association conference in Santa Clara, Calif., in March and the expectation is that going green will increase the cost of electricity.
The following estimates are based on a model of a hypothetical power plant operating in the Midwest, says James Grice, an attorney who deals with data center siting issues for clients.
If 25 percent of the energy generated is green, the “blended rate” of carbon and green power is $0.051 per kilowatt hour (kw-hr) and carbon emissions are reduced by 25 percent.
If green accounts for 50 percent of the electricity generated, the price rises to $0.063 per kw-hr and carbon reduction rises to 46 percent.
If the power is 100 percent green, the rate hits $0.093 per kw-hr and carbon reduction hits 95 percent.
There is no doubt that greenhouse gas emission controls on power plants under the new EPA regulations will make electricity more expensive for data centers, which creates an incentive for energy efficiency, according to a recent article in The Data Center Journal.
“For data centers, this policy clearly translates into higher operating expenses, although on the ‘upside,’ it could make certain energy-efficiency improvements seem more economical,” the article, published shortly after Obama’s directive, stated.
The article goes on to say, “In some cases, investments in efficiency — particularly in data centers with high PUEs [power usage effectiveness] — could offset or even reverse increases in energy costs resulting from new regulations.’’
(A PUE, established by the Green Grid, is a ranking of the energy efficiency of a data center; the lower the PUE, the more energy-efficient it is.)
Are data centers ready?
The attention to energy efficiency in data centers varies, says Nicole Peill-Moelter, the director of environmental sustainability at Akamai Technologies, a provider of application and content delivery technology and services.
Akamai operates data centers globally, including in California, and contracts with third-party data centers there, too, says Peill-Moelter. While Akamai constantly works to improve energy efficiency at its data centers, some of the third party data centers Akamai uses are behind the times.
“I’ve gone to some of the data centers where we have equipment hosted and a lot of these data centers don’t have implemented even the basic energy efficiency measures,” Peill-Moelter says. “They pass the costs directly onto their clients.”
There are a number of steps data center operators can take to improve energy efficiency and the IT industry overall is already moving on many of them.
Energy-efficient processors. Each generation of processors from Intel, AMD and the rest ushers in improved measures of performance per watt with multicore and multi-threading designs.
Servers. Software can reduce the total energy draw of data center servers by pushing more data through older servers to improve their efficiency, says Akamai’s Peill-Moelter. In addition, new network software can identify “zombie servers” in the data center that aren’t operating, but still drawing power, because the application or business unit assigned to that server doesn’t use it anymore.
Virtualization. Many servers operated at as little as 10 percent to 15 percent utilization. But running multiple virtual servers in one physical server can increase utilization to the range of 40 percent to 50 percent, requiring fewer physical servers.
Cloud computing. Contracting with a cloud service provider relieves a company of some of the energy expense of running its own data center, but because the compute cycles have to be created somewhere, the cloud provider’s costs will in some way be passed onto the user.
Data center cooling. Adopting a hot aisle-cold aisle strategy, physically separating the hot aisle (the backs of servers where heat is generated) from the cold aisle (where people work) keeps hot and cool air from mixing, Peill-Moelter says, and reduces the strain on air conditioning systems.
Data center operators can also invest in their own renewable energy systems to reduce their dependence on the utility grid for electricity.
While wind and solar are the most typical forms of renewable energy, San Jose-based eBay is in the process of installing fuel cells as an alternative to the utility grid’s power at a data center the auction site operates in Utah.
“Our Utah facility is our most carbon-intensive location, it’s something like 94 percent or higher coal-based,” says Jeremy Rodriguez, a distinguished engineer in the Global Foundation Services unit of eBay. “Onsite generation is new to us. We’re just getting our first fuel cells landed at the location and soon we’ll tell the world how they are going to work.”
It’s too soon to tell precisely how California’s new law will affect data center power costs because of many variables, says Grice. It remains to be seen how many plants will exceed the carbon emissions caps and what their costs will be in the cap-and-trade market. But it’s something data center operators need to watch closely.
The impact of the law on data centers will also vary based on their location in the state and which utility serves them, the utility’s cost structure and how much of its electricity is generated by renewable energy instead of carbon-based fuels, says Akamai’s Piell-Moelter.
Finally, data center operators and utilities outside California shouldn’t consider themselves off the hook. Instead of waiting for the U.S. Congress to enact climate change legislation nationwide, President Obama announced a directive in a speech on June 25 for the U.S. Environmental Protection Agency to work with states, industry and other stakeholders to regulate carbon emissions, first from new coal-fired power plants, and then from existing plants.
“Now that the Obama administration has directed EPA to put greenhouse gas regulations on all power plants, then all states will face similar costs before too long,’’ says California Air Resources Board spokesman Dave Clegern.
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