How Energy Efficient Data Centers Can Earn More Than Customer Loyalty

August 03, 2018

Data centers are in demand.

The growth of cloud computing and the subsequent challenge of powering big data has led to a data center construction boom.

A 2018 industry profile by Dun & Bradstreet predicts data center space to grow to 1.94 billion square feet worldwide in 2018. Much of the industry’s new construction aims to continue the trend toward energy-efficient buildings, shedding the label of “comatose power drains” issued by the New York Times in a 2012 article that claimed, “data centers can waste 90% or more of the electricity they pull off the grid.”

Since the early 2000’s, data-hosting organizations have sought to discard their profligate reputation by making their buildings more efficient and (if at all possible) environmentally responsible.

While more efficient than their early 21st century iterations, data centers continue to use a lot of electricity–up to 50 times more than standard office spacesand subsequently face the high expense of large-scale electricity consumption.  

Green data centers–those which are environmentally responsible and resource-efficient–aim to lower costs and create a more sustainable operation through improved design and by using more efficient equipment. According to the London-based research organization Technavio, the green data center market is expected to grow at a compound annual rate of about 15% by 2021.

Data hosting organizations that have upgraded their existing facilities to be more energy efficient may be eligible to earn money for the permanent reduction of their electric demand.

That’s because the data center industry’s recent push toward a more efficient and sustainable future comes at a serendipitous time when energy markets around the country are working to reduce demand via energy efficiency investments and to integrate distributed energy resources (DERs) onto their energy grids in an attempt to diversify their fuel mixes.

Right now and for the foreseeable future, grid operators and electric utilities in each of the nation’s six deregulated energy markets have created a wealth of incentive programs to encourage commercial and industrial organizations to invest in energy efficiency and to monetize their generation capacity.

Energy Efficiency: Earn money for permanently reducing demand

Organizations that have recently upgraded their data center facilities by way of installing high-efficiency HVAC equipment, investing in more energy efficient IT technologies, improving airflow or data management and more may be eligible to earn money for their energy-reducing efforts.

Energy Efficiency (EE) is the permanent reduction of electrical demand through the installation of efficient systems, including improvements or upgrades to building infrastructure, mechanical systems, existing equipment or new devices.  

In some energy markets in the US (PJM and New England, for example) organizations can earn money for these permanent reductions in demand by partnering with a licensed demand-side management company who can offer these “negawatts” (capacity from conservation rather than power generation) into the Independent System Operator’s (ISO) forward capacity market.

Many electric utilities offer incentives to organizations that have permanently reduced demand through energy efficiency projects.  These opportunities create another revenue stream to either decrease project paybacks or allow for reinvestment for future projects.

Demand Response & DERs: earn money for helping the grid

Most data centers are powered by electricity from the grid, which is susceptible to outages due to the demand for energy outpacing the grid’s ability to supply it.

Data centers can’t afford to be down due to a brownout or blackout for a single second, lest they risk losing their customers forever.

The use of on-site power generation is, therefore, a ubiquitous practice amongst data centers. While primarily seen as a reliability resource of paramount importance, a data center’s generation capacity can also be a revenue-generating asset for organizations that participate in demand-side energy management, particularly demand response.

When the grid is stressed and demand for electricity exceeds supply, the grid operator must work to restore the balance.

Instead of calling for the generation of more energy at great expense to consumers and the environment, the grid operator can offset the imbalance by calling on commercial and industrial organizations to reduce the amount of electricity being consumed from the grid when demand exceeds supply.

That’s demand response–programs that pay organizations to reduce electricity usage during times of grid stress or high energy prices.

For data centers with on-site backup generation, earning money through demand response participation is possible without sacrificing service to customers. That’s because a properly permitted backup generator can play a starring role in an energy curtailment strategy that can lead to significant earnings for data centers.

Read to learn more: “Leveraging Your Generation Assets to Generate Revenue”

When selecting a company to guide your demand-side energy management, it’s important to consider the company’s scope of demand-side expertise. Do they serve the markets where your properties reside? Does the company specialize in one type of demand-side energy management, or is it equally skilled in a wide range of energy asset monetization practices?

Most importantly, a demand-side energy management partner should earn your trust in every aspect of the relationship your organizations share. 

Demand-side energy management is not a one-size-fits-all exercise. No two buildings are alike and every data center organization is unique in its complexities.

Like your business, your demand-side energy management strategy should evolve and refine over time, forever in pursuit of perfection as energy markets continue to change and your needs as an organization evolve.

CPower’s Senior Engineer Ray Berkebile also contributed to this article.  Learn more about Ray and read some of his other posts here.

Learn more about CPower’s extensive experience in the data industry.

Read the entirety of “Monetizing Energy Assets in the Data Center Industry: A Complete Guide for Earning Revenue with demand-side energy management”.

Published by

Danielle Bond

Danielle Bond

Danielle Bond is a senior engineer with CPower and has more than 10 years of engineering experience in the energy industry. She holds a Ph.D. in mechanical engineering and was a collegiate professor prior to joining CPower.

Danielle Bond
Danielle Bond

Danielle Bond is a senior engineer with CPower and has more than 10 years of engineering experience in the energy industry. She holds a Ph.D. in mechanical engineering and was a collegiate professor prior to joining CPower.