Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Bloomberg Customers


Averting the IT Energy Crunch

As a threat to operations and the bottom line, corporate computing's fast-growing power consumption is forcing companies to adopt green energy practices

Engineers at Hewlett-Packard (HPQ) made a startling realization about the servers running the company's computing systems. Surging power consumption, along with rising energy costs, will soon make it more expensive to keep a server going for a year than to acquire one in the first place. Left unchecked, costs like these could interfere with HP's goal of cutting energy consumption 15% by 2010.

So when HP began constructing a new 50,000-square-foot building to house high-powered computers, it sought advice from Pacific Gas & Electric (PCG). By following the California power company's recommendations, HP will save $1 million a year in power costs for that data center alone, PG&E says.

Like HP, companies across the globe are adding equipment to keep up with surging computing needs—and then are forced to make substantial changes to curtail the leap in costs associated with running the big buildings, or data centers, housing all that gear. "Data centers use 50 times the energy per square foot as an office [does]," says Mark Bramfitt, principal program manager at PG&E.

Industry experts say the power consumption of data centers is doubling every five years or so, making them one of the fastest-growing drags on energy in the U.S. "The IT industry is where the automotive industry was 20 years ago," says Rakesh Kumar, research vice-president at consulting firm Gartner (IT). "We are so backwards when it comes to using alternative-energy and energy-efficient technologies."

Chilling Data

To keep servers at the right temperature, companies mainly rely on air-conditioning. The more powerful the machine, the more cool air needed to keep it from overheating. By 2005, the energy required to power and cool servers accounted for about 1.2% of total U.S. electricity consumption, according to a report released in February by staff scientist Jonathan Koomey of Lawrence Berkeley National Laboratory and sponsored by chip manufacturer AMD (AMD). Gartner reckons that by 2010, about half of the Forbes Global 2000 companies will spend more on energy than on hardware such as servers. Energy costs, now about 10% of the average IT budget, could rise to 50% in a matter of years, Kumar says.

That is, unless companies take some radical measures—soon. The first step is coming to terms with the power constraints of existing data centers and then deciding whether to construct new ones. That's a pricey choice, considering a new data center can cost $1,000 per square foot, by PG&E's estimates.

Another, often more alluring option: operating current centers in a more energy-efficient way—a tack taken by a growing number of companies, including Sun Microsystems (SUNW), Verizon Wireless, and Wells Fargo (WFC). They're lowering energy bills by making better use of existing gear and harnessing advances in cooling techniques and data-center design. "We've avoided roughly $20 million in build-out costs by being more efficient," says John Hinshaw, chief information officer at Verizon Wireless. The joint venture of Verizon Communications (VZ) and Vodafone (VOD) cut its number of data centers from 10 to 3, he says.

Who Gets the Electric Bill?

But if cutting costs isn't enough incentive, some executives may soon have little choice in the matter. Before now, at many organizations, the chief information officer didn't even see the utility bill, and operations or facilities departments often picked up the energy tab. But at a growing number of companies, reducing energy consumption is becoming part of the CIO's job description. "More [chief financial officers] are becoming aware of the energy bill and are starting to hold CIOs responsible," says David Douglas, vice-president of eco-responsibility at Sun Microsystems.

And while the boss won't enforce the greening of IT, Uncle Sam might. In December, Congress passed a law requiring the Environmental Protection Agency to assemble a report about power consumption in data centers by midyear. One aim: to outline possible incentives and voluntary programs for promoting energy-efficient computer servers and data centers. "It's big enough to get the government's attention," says Andrew Fanara, a team leader at Energy Star, an EPA-created program that encourages energy efficiency. Gartner's Kumar says it's possible that in the next few years, companies will face environmental legislation that would essentially tax data-center costs.

That could be bad news for companies such as Microsoft (MSFT), Yahoo! (YHOO), and Google (GOOG) that have rushed to build massive new data centers in recent years to meet demand for Web-based software and services (see, 6/12/06, "Servers as High as An Elephant's Eye").

Reliability vs. Conservation

For now, there's still a lack of incentive to conserve energy in many cases. "There's a legitimate concern on the part of IT managers and facility managers not to mess with something that's working," says PG&E's Bramfitt. "They don't want to do anything that might reduce reliability."

Yet that's just what might ensue for companies that fail to act until they hit the upper limits of power consumption in data centers. In some situations, the problem stems from electric companies that simply can't supply any more power. "In the last two months, I've heard from three customers that suddenly they can't get more power to data centers on Wall Street. That's a big deal," says Sun's Douglas.

Douglas declined to say which companies faced constraints, but there's little surprise that financial institutions would be among the hardest hit. Many banks and brokerages rely heavily on servers to process transactions. About four years ago, Wells Fargo noticed that some of its data centers were reaching full capacity. "That spurred on the need to conserve energy," says Bob Culver, senior vice-president of the technology information group at Wells Fargo.

Toward More Efficient Cooling

Gartner estimates that anywhere from 30% to 60% of the energy in a data center is wasted. One big culprit is the inefficiency of the cooling systems required to keep servers from overheating. Any company serious about reducing energy in data centers will need to deal with cooling systems since they consume nearly half of a data center's power, PG&E's Bramfitt says.

When Wells Fargo built two new data centers, one in Minnesota in August, 2005, and the other in Arizona in January, 2006, it worked with an outside firm to devise energy-efficient cooling systems that could ratchet up or down as needed—a move Wells Fargo says will reduce energy consumption 15% in those centers. The Minnesota facility also uses systems that take advantage of cool outside air to moderate the temperature in its data centers, a technique known as "freecooling." "When the air temperature is about 40 to 42 degrees Fahrenheit, we shut off the chillers entirely," says Culver. For each chiller shut down, the company saves 300 kilowatts an hour.

One of the best ways to conserve energy in data centers is to make better use of existing servers. Unlike with desktop computers that can simultaneously run a number of software programs for e-mail, word processing, and spreadsheets, servers in data centers conventionally run one program per machine, for reliability reasons. Over time, servers have become more powerful so that the utilization of the average server is only around 5% to 15%. Researcher IDC estimates that there's $140 billion in excess server capacity worldwide.

On May 10, IBM (IBM) grabbed headlines with plans to invest $1 billion a year in products and services that will help reduce IT power consumption in data centers. By using new techniques, within the next three years IBM plans to double the computing capacity of its data centers—more than 8 million square feet worldwide—without increasing power consumption.

The Virtual Solution

Software company VMware, a subsidiary of EMC (EMC), has created software that lets companies reliably run multiple software programs on a single server through a process known as virtualization (see, 2/9/07, "EMC's Billion-Dollar IPO").

By using one server in that manner, companies can significantly reduce the hardware in data centers. PG&E's Bramfitt says that just taking one server out of operation can save a company $600 to $1,200 per year in power and cooling costs. PG&E gives customers a rebate of $150 to $300 for every server they virtualize. It's working with the U.S. Postal Service. "We think they might go from 6,000 servers to 500," says Bramfitt. By using VMware software to consolidate servers, Solvay Pharmaceuticals has been able to save roughly $67,000 a year in heating and cooling costs.

Some companies such as Sun and HP are also consolidating data centers. Sun has been replacing older equipment with smaller, newer gear, so the company can fit more hardware into the same space. By upgrading some older systems in its Colorado data center with more energy-efficient equipment, Sun will save about $100,000 in energy costs per year, Douglas says.

HP has chosen to completely overhaul its data centers by taking 86 data centers and consolidating them into 6. The idea is to take the design used in that first center, with PG&E's advice, and apply it to the remaining five, the last of which will be built in 2008. HP has not only devised efficient cooling systems, but has paid close attention to other details such as room layout, more efficient power supplies, and power management software. With all this newfound knowledge, HP is helping other firms create energy-efficient data centers.

Alternative Energy to the Rescue?

Down the road, companies may even opt for alternative sources of energy to keep data centers cool. One small data center in Romoland, Calif., has figured out how to run on only alternative energy. "We use no electricity from the power grid," says Phil Nail, chief technology officer of Web hosting company The company operates its 2,000-square-foot data center with solar energy captured via ground-mounted solar panels. But right now alternative energy is not a viable option in most cases. "The day is not upon us when you'll see windmills on mission-critical facilities," says Energy Star's Fanara.

The folks at HP look forward to when that and any number of other methods for saving power do become realistic possibilities. In its bid to cut consumption by 2010—a drive that includes reducing product energy consumption 20%—HP is leaving no stone unturned. "This is going to be pretty darn aggressive," says John Frey, manager of corporate environmental strategies for HP. "A lot of this involves HP innovation that doesn't exist yet."

blog comments powered by Disqus