Data center powerplays as global energy supplies hit

How long does it take to move from the mindset of thinking 'There’s a plug, therefore we have power' to thinking 'Have we got enough power to run this?'?  We take electricity for granted, but that may have to change.

The idea of unlimited power is a relatively new one. Anyone over 50 in the UK will have memories of the power cuts in the early 1970s that were a common feature in the days of the miners’ strike.  And this is nothing new outside the west, of course. Asian and African countries have long got used to power outages.

Until now, however, it’s not a topic that’s been addressed much by the western world.

That could be about to change. In January, the Institute of Mechanical Engineers announced that:

The UK Government’s policy to close all coal-fired power stations by 2025, combined with the retirement of the majority of the UK’s ageing nuclear fleet and growing electricity demand will leave the UK facing a 40-55 percent of electricity supply gap.

In other words, the power stations in the UK will be struggling to supply half the electricity we need.

And it’s not just the closure of power stations that’s causing this – although that’s a major factor – but a perfect storm of circumstances.

Global warming, which is causing more people to use air conditioning; a multitude of devices (all those tablets and smartphones need charging); the rise of the Internet of Things and the growing use of electric cars. 

While all industries are going to be affected, the data center arena in particular is going to be struggling. It’s one of the largest users of electricity, currently about 2 percent of total capacity and the growing data demands are going to see some fluctuations of supply.

And although the Institute of Mechanical Engineers can warn about the problems facing the UK but, in reality, all countries are facing this issue.  According to Jorge Balcells, Director of Technical Services with data center operator Verne Global, the industry needs to face up to the issues thrown up by these variances in power.

It’s a global problem but there’s no common theme, however. While the US and the UK are both suffering from inconsistent power supply, the problems are very different say Balcells:

In the UK, it’s a problem of power generation - the power stations aren’t producing enough electricity. On the other hand, the US has a problems with its distribution as the problem is not supply or demand; the weaknesses are 100 year-old poles.

There’s certainly a problem with energy loss in the US. The country’s Energy Information Administration (EIA) believes that electricity transmission and distribution losses account for about six percent of the electricity that is transmitted and distributed across the US.

There’s also the problem of interconnectivity. Balcells points out that the US has several interconnected grids, if one’s affected then so could others:

Six or seven years there was an outage in Canada that hit 60 or 70m homes on the east coast.

And it’s not just the UK and the US, mainland Europe is not immune either: all countries face this problem says Balcells:

By 2020, more than 50% of the power coming into Europe will be coming from the east. It’s much more expensive than producing their own.

So, while these shortages exist, what are data center operators are going to be doing something to change the way they operate. 

Global challenge

Data center operators are aware of the issues and are taking steps to adjust to the changing situation. David Watkins, services delivery director for Virtus says they have actually been preparing for this situation for some time:

Data centers are very aware of the challenges related to the overall power capacity of the UK. In 2014, the industry was granted permission to apply for Climate Change Agreements (CCA).

He adds that data centers operating within the CCA programme are committed to increasing efficiency.

There’s a European dimension too.  Data centers also participate in EU carbon reduction programs, such as the carbon-trading scheme EUETS. Additionally the capacity challenges at grid level may drive locations for data centers to operate in the future, as the availability of large volumes of power can differ based on geography.

Watkins says that the recent energy market reforms will also affect costs:

For example, in order to support the subsidies for renewable energy generation and to assist with the new nuclear facilities, ‘Contract for Difference’ (CfD) is now part of the cost of electricity.

He explains how this has changed the way power is produced and it what it means for the market:

A generator with a CFD contract is paid the difference between the ‘strike price’ – a price for electricity reflecting the cost of investing in a particular low carbon technology – and the ‘reference price’– a measure of the average market price for electricity. This gives greater certainty and stability of revenues to electricity generators by reducing their exposure to volatile wholesale prices. 

There’s certainly the recognition that an overhaul of the power industry is required. Nations are looking to build new power stations, invest more in renewable energy – as Germany , in particular, is doing. Many of the major American players are looking to alternative energy sources too. These range from Apple’s solar-powered data center in Arizona to Facebook’s datacentre inside the Arctic Circle.

For Balcells, the CEO of an Icelandic datacentre operator, more companies should follow the Facebook example and move to the Nordics region and use the geothermal resources available there:

We’re not going to run out of power, we’re only tapping into 10% of what Iceland can produce – and we’re currently only using half of that.

But while it’s clear that the availability of cheap energy would considerably lower power costs (and the accompanying cooling costs) there’s still the bandwidth factor to take into account. It may well be more cost-effective to run a data center in a place built on geo-thermal power, but not if the costs of connectivity are so high. 

Balcells won’t be drawn on the actual costs of networking saying that these are calculated on a case by case basis but does say that even with the added bandwidth costs, it will still generally be cheaper to use a Nordic based service.

There’s also the issue that having a data center so far away will not be attractive to CIOs who feel the need to keep tabs on everything that's going on – the need to hug tin is still an overwhelming urge to many techies.

But there’s little doubt that the data center industry does need to look to ways to modify behaviour, supply of power is going to be an issue for some time yet.  Virtus’s Watkins talks of the steps that the company has taken to make its data centers more efficient but draws attention to other changes as well:

IT suppliers are developing technology that is less power hungry which in turn produces less heat and therefore will require less cooling. All of these initiatives combined will result in increased efficiency and will help to reduce the overall power consumption while alternative power generation strategies are being implemented.