The impact of the Olympics power drain on London-based datacentres

News Analysis

The impact of the Olympics power drain on London-based datacentres

Kathleen Hall

Power shortages and costs are becoming an increasing concern for companies with datacentres in London as the Olympics approaches.

Verizon Business recently opted to locate its flagship European database in Amsterdam rather than London, as it was concerned about power shortages in the capital during the Olympics.

Hermann Oggel, president of European business at Terremark, which was recently acquired by Verizon, said London was considered as the site for the latest Verizon datacentre. "We spoke to utility companies in London and looked at premises, but found it economically better to manage from Amsterdam," he said.

The global telecoms giant is not the only business concerned about the issues of increased power costs and the threat of power outages in the build-up to the Olympics.

Stefan Haase, director of cloud services provider InTechnology, said the company has been renting space in a datacentre in London, but will not renew the contract next year because "power in London is up to 30% more expensive than other parts of the country".

"The power costs in London are going up dramatically. We looked around London to see if we could find anything suitable once we realised the total cost increases but we couldn't find anything suitable," he said. "The power issue is going to get worse as the Olympics approach," he said. As an alternative to London, InTechnology opted to build its own datacentre in Reading.

Alternatives to expensive city-based datacentres

For 85% of datacentre applications it's no longer a prerequisite to have your datacentre in London or the South East, said Simon Taylor of datacentre company Next Generation Data. More affordable fibre networks and sophisticated remote diagnostics have led to a growing trend of more companies moving out of the city, he adds.

"Power is very scarce in London and around the M25. There's a huge amount of physical development going on around the major Olympics project, with only so much power in the pot," said Taylor.

But Andy Buss, service director at analyst firm FreeForm Dynamics, said there are some advantages of being in London, such as the ultrahigh bandwidth and the city being well served by the London Internet Exchange, with good links to the global internet. For companies trading in the stock exchange, a faster connection can be the difference between profit and loss, he said.

There is a growing trend in co-location and banks ripping out non-critical applications, moving them to datacentres outside the city where power and real estate is much less expensive, Buss said.

Efficiency a priority

For datacentre provider Interxion, being based in London is crucial for its customers dealing in high frequency trading, as it puts the company just 15 microseconds away from the London Stock Exchange. Proximity to the exchange reduces latency as every 200km reduction in fibre cuts one millisecond.

"We run an extremely efficient datacentre. We've already secured power in advance of usage for the existing site. In the build-up to the Olympics we have had to make sure we're running to optimum efficiency and capacity, and forward planning for the event been in place for a number of years," said Graeme Creasey, UK head of operations at the company.

Even without the run-up to the Olympics, power capacity will remain an issue across the UK, and London specifically, until more power stations are built. But in the meantime, as costs remain an issue for companies, it looks likely that an increasing number will move out of the city for non-critical operations. While for companies that need to remain in the city, more investment in power-saving technology is likely to be needed to offset costs and power scarcity.


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