Low energy prices in US attract datacentre investment at Europe’s expense

Low and stable electricity prices are likely to make the US a target for datacentre investment at Europe’s expense

As datacentre energy efficiency becomes a main priority for IT, low and stable electricity prices are likely to make the US a target for datacentre investment at Europe’s expense, a report from 451 Research has suggested.

The reason for this price stability in the US is its booming shale gas industry, according to the research group. As a result, the energy bill for a medium-sized 2MW datacentre in the US with a 50% baseload energy consumption could be as much as $500,000 (£335,000) a year less than a comparable facility in the UK – and about $750,000 less than one in Germany.

Electricity prices in some European countries, particularly Germany, are already twice those in the US, and prices have more than doubled in countries such as the UK, France and Germany during the past decade, while they have held mostly flat in the US.

Lower electricity prices are also expected to affect US investment in energy-efficient technologies, the report suggested.

As operators seek to cost-effectively meet growing demand, nearly all facets of datacentre operation, from IT to cooling and power distribution, are being transformed by energy-efficiency initiatives and technologies.

Energy savings have driven investment in free cooling and advanced datacentre monitoring and optimisation systems.

“At the heart of all these energy-efficient approaches is a widely held premise – power prices are rising,” according to 451 Research analysts Andy Lawrence and Rhonda Ascierto, authors of the report.

Power costs affect datacentre lifetime cost

The price of power can significantly alter the overall lifetime cost of a datacentre. 

Assuming a 15-year lifespan for a datacentre, a price of $0.067/kWh (£0.045/kWh) contributes about 30% of a facility’s operating expense and usually accounts for 10-15% of the total cost of building and running a datacentre.

“This figure is large enough to sway decisions about where a datacentre should be built,” said Andy Lawrence, research vice-president, datacentre technologies and eco-efficient IT, at 451 Research.

“The effect on datacentre technology providers is contradictory. The growth of US datacentre activity and investment will boost the market for equipment of all kinds, but may limit demand for certain energy-efficient datacentre technologies, especially where there is a trade-off with risk and availability, he added.

“However, with its higher energy prices, the European market should be more attractive to suppliers of technology that improve datacentre efficiency,” said Lawrence.

Lawrence will be debating the topic of energy, efficiency and economics at 451 Research’s Hosting and Cloud Transformation Summit on 9 and 10 April 2013 in London. He will be joined on the panel by Ibrahim Chadirichi, director of information management at ARM, and Martin Bradley, head of European datacentre engineering and operations at Morgan Stanley.

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