Electricity tariffs increased by another 25% last Friday, pushing up the cost of running a data centre and forcing some companies in the sector to pass on some of the additional expenses.
The cost of electricity is set to increase again next year, by about the same amount, with a third hike due in 2013.
Data centre operators are investing in green technology in a bid to offset current and future power hikes.
The hikes are necessary to aid Eskom fund the upgrading of older power station, and bring others back into service as electricity demand grows.
Nicholas Shaw, GM of Dimension Data's advanced infrastructure business, says about 15% of data centre costs come from power use, including cooling and servers. He says “costs would need to be passed through” to the end-user, but this is risky, because clients are on fixed contracts for at least a year.
The challenge of rising costs is two-fold, says Shaw. “Not only are the costs higher, there's also the lack of power availability.” DiData is looking into a number of green initiatives as alternatives to electrical power, says Shaw. Among these is gas, solar, wind or water.
Shaw says the best option is to make data centres more efficient in order to reduce the cost of running the data centre as a whole, and this should offset this against the increase in tariffs.
Greener technology
Richard Vester, executive head of managed services at Vodacom Business, says electricity is the data centre's single biggest operating cost. He says the company tries to limit the impact of the hikes, but will have to pass on some costs to its customers.
Tariff increases are spurring companies to adopt greener technologies, which have previously been prohibitively expensive, says Vester. Areas garnering attention are cooling and replacing power-hungry systems.
Vodacom Business has seen a trend, over the past two years, of companies moving from having an in-house data centre to a dedicated service provider to try and reduce operating costs. “The onus is now on the data centre provider to ensure efficiencies within that environment,” notes Vester.
Internet Solutions (IS) cloud executive Greg Montjoie says the company is trying to absorb as much of the increase as possible, while also looking at using power more efficiently.
One of the ways the firm is seeking to offset future hikes is by going green, and IS will launch a “green” co-location data centre in July. It will cater for 1 000 racks and will be located in Randburg. Phase one will cost R100 million to build.
Montjoie says the centre will make better use of power; for every 1KW delivered to the server, IS only needs 0.4KW to run the data centre. “This is good news as it allows us to pass on these power savings directly to our clients.”
Costly choices
Standard Bank spokesman Erik Larsen says the company's power cost, as a percentage of the data centre's operating costs, is about 65%. As a total of all costs, power accounts for 14%.
Larsen says electricity and, to a lesser extent, diesel and water consumption, are complementary costs, which are growing exponentially, particularly in SA. He adds that data centre owners and users will have to invest to limit electricity consumption.
Companies will have to look into issues such data centre consolidation, alternative power, and adoption of a form of public cloud. However, says Larsen, the cost of implementing these alternatives will have a financial effect. “Whether this results in loss of business remains to be seen but such costs will definitely have an impact.”
Larsen adds green technology, which the bank views as a combination of good business practices and the introduction of emerging technologies, “must play a significant role in the viability and sustainability within the data centre industry moving forward”.
“Companies that do not think and operate progressively will bear the brunt of utility cost increases and penalties.”
Larsen says Standard Bank is “some way down the road” in terms of offsetting future increases. The bank's focus includes consolidating its data centres from four to two, infrastructure virtualisation and green technology being incorporated into design.
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