Utilities explore energy-saving incentives for IT

Representatives from 19 North American utility companies met in San Francisco on Thursday to explore ways of cutting IT energy consumption by offering rebates and other incentives.

The effort has been led by Pacific Gas & Electric Co. (PG&E), which serves much of the San Francisco Bay area and Silicon Valley, areas replete with technology companies and data centers that give PG&E some of the greatest need to reduce energy consumption.

Thursday's meeting marked the first time utility representatives from across North America have met to discuss how to implement such incentive programs, which focus largely on data centers but also include desktop PCs and other equipment.

Following a brief lull after the dot-com bubble, energy consumption at data centers has been surging again, particularly at colocation facilities that provide capacity for other companies, said Mark Bramfitt, PG&E's principal program manager of customer energy efficiency.

He estimated the current total demand from data centers in the PG&E region is 400 to 500 megawatts at any given moment. That has increased by between 50 and 75 megawatts in just the past 18 months, he said, driven partly by new colocation facilities.

"We had tremendous growth in data center capacity in the dot-com boom that never got filled. I can tell you that that capacity is now full to the gills, and they are asking us for more power," he said.

The programs being developed use different techniques to encourage efficient power use, with utilities offering to cover as much as 70% of the cost for companies that meet program requirements.

Seattle City Light will launch a program in the coming weeks that rewards companies for installing network-based software that manages PC power consumption. Such products cost between $11 and $25 (U.S.) per PC, and Seattle City Light will contribute $8 per PC, said Greg Whiting, manager for energy conservation. Vendors offering such products include Verdiem and 1E. Companies that take part in the program should get a return on their investments within 18 months, according to Whiting.

BC Hydro, which serves British Columbia, hopes to introduce its first data center initiative in the coming months. It will offer to pay up to 60% of the cost of implementing virtualization software to consolidate servers, said David Rogers, an IT adviser at BC Hydro Power Smart.

Besides reining in escalating demand for power, the utility companies have a financial incentive to offer such programs. "Our goal is to avoid the capital cost of building new power plants," Whiting said. "Encouraging companies to conserve power makes more sense than for us to keep spending to add marginal capacity."

PG&E's program, launched in 2006, also rewards companies for using server virtualization. The company has 60 customers in the program and has made payments so far to seven companies, said Randall Cole, senior project manager for PG&E's server virtualization incentives.

The number of utilities offering such programs is still low, however. No more than a dozen utilities offer incentive programs for IT today, Bramfitt said, out of perhaps 200 utilities in North America. Other utilities at Thursday's meeting were from Southern California, the Pacific Northwest, Texas and New York.

One challenge is that utility companies are not IT experts, so one goal of the meeting was to educate them about energy usage in data centers. "One of the companies in our region is Microsoft, and they probably know 50 times more about the technology than we do," Whiting said.

PG&E also had some teething problems. Some customers complained at first that it was too hard to calculate how much energy they would save, and therefore how much of a rebate they would be entitled to, so PG&E greatly simplified the formula, Cole said.

Interest among customers is high, according to Rogers. "I've visited 50 data center customers, and there's tremendous support for this program," he said.

Paul McGuckin, a Gartner research vice president who spoke at the event, said companies are interested in the programs for financial reasons and because they are "really frightened" about running out of data center capacity. Concerns about the environment are rarely mentioned, except for public relations purposes, he said.

A report last year from the Environmental Protection Agency said data centers account for 1.5% of the total energy consumed in the U.S. "This may not sound like a lot, but the escalation is truly frightening," McGuckin said.

Most data centers are run very inefficiently, he said. Some easy ways to conserve energy are to consolidate industry-standard servers, turn servers off when they are not in use, raise the temperature of data centers and, when possible, use natural air for cooling.

Joe Skorupa, another Gartner vice president, said networking equipment is often ignored but accounts for perhaps 10% of data center power consumption. Customers should explore high-density switches offered by several vendors, he said.

He advised against Gigabit Ethernet to the desktop, which he said consumes more power than lower-capacity Ethernet and is not required by most users. And he urged people to think twice about fancy voice-over-IP phones. "Eight-line color display VoIP phones suck up more power, and all anybody looks at is the last two numbers dialed," he said.

Copyright © 2008 IDG Communications, Inc.

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