CHARLOTTE NC, NOVEMBER 12TH 2014 MARK BRAMFITT, P.E. BRAMFITT CONSULTING THE UTILITY AND DATA CENTER INDUSTRY NEXUS The data center and utility industries are increasingly intertwined, with opportunities for mutually beneficial engagement. A review of industry trends will uncover those opportunities.

Topics ● Key intersections of DC industry and utilities: growth, cost, energy efficiency, carbon ● How energy efficiency is behind a key industry trend: the move to managed services or the “cloud” ● What it means for utilities and the DC industry, now and in the future

Utilities Data Center Industry (T25) ○ Regulatory Compliance ○ Risk Management ○ Load Growth ○ Competitive Rates ○ Load Management ○ Renewable Resources ○ Energy Efficiency Services ○ Smart Grid ○ Low Rates (OpEx) ○ Capacity ○ Time to Serve ○ CapEx Avoidance ○ Reliability ○ Carbon Content Utility and DC/IT Drivers

Data Center/Utility Nexus: Market Growth IT and data center energy use growing rapidly, though still modest portion of overall energy use ● DC energy use doubled , but only went up 56% in next five years! ● ~2% of US electric use, but regionally based ● Growth rate may be on the rise

Data Center/Utility Nexus: Market Growth IT and data center energy use growing rapidly, though still modest portion of overall energy use ● Enterprise users still report capacity pressure ● Data storage growth is an untold story: 50 to 100% annual growth rates ● Growth is being absorbed by colo and cloud providers, and limited by EE

Data Center/Utility Nexus: Market Growth IT and data center energy use growing rapidly, though still modest portion of overall energy use ● At the large end of the market (AAEFGM and DDES), growth is staggering ● Microsoft will have 300,000 servers supporting Xbox versus the 15,000 today, and announced a 10x expansion program for their DC fleet

Data Center/Utility Nexus: Growth Service capacity is now a challenge for data centers of all stripes ● “Utility scale” standard “throw weight” is 40 MW ● DC campuses are becoming popular ● Data center industry starting to feel utility capacity constraints

Data Center/Utility Nexus: Siting Pain Points Power price and carbon content becoming big issues ● Energy rates are crucial for DC developers, now and in the future ● Industry seeking sub 4 cents/kWh power, and clean too! ● Time to serve and tax incentives are crucial to business attraction

Data Center Utility Nexus: Siting – Utilities Respond Some utilities recognize the advantage of utility- scale data center loads – high asset utilization due to base load profile ● Some utilities have units to make siting utility-scale DCs attractive (Dominion, AEC, Duke, SVP) ● Many others are hopeless! ● Offering robust energy efficiency programs an added plus

Data Center/Utility Nexus: Carbon NGOs have successfully challenged leading industry players, with notable results from some firms ● Concern for carbon is on the DC industry’s radar ● Predominantly a fear of higher rates ● Three majors (AFG) in the forefront

Greenpeace Targets DCs and Utilities

NRDC Takes Carrot Approach

Press Attention Too

AFGE Response ● Apple: Self-generation (PV) ● Facebook: Energy efficiency – Open Compute Project ● Google: Direct access and wind purchases ● Ebay: Efficiency, fuel cells

More Renewables Are Coming

But Juxtapose With Utility Rates

Anecdotal Observations ● States with higher renewable requirements and tighter env. regs have higher cost power ○ CA and west coast ○ Northern seaboard ● Utilities with large coal component of portfolio have cheapest rates ○ Montana, Idaho, Wyoming ○ Virginia, PA, Carolinas

Hydro and Nuclear Are Exceptions ● MOUs in Pacific Northwest have (had?) 100% hydro at just over 3 cents per kWh ● Dominion Power in VA has 5 cent power that has pretty large nuclear component, yielding relatively low carbon content

Utility Reporting Is Poor ● CA utility portfolio reporting req. has gotten more lax ● No utilities report carbon on a time-of-use basis ● This hurts data centers, who with high load factor probably over-report carbon impacts

Caveat Emptor Utilities have widely divergent power source portfolios, even within similar regions

You Can Take Some Control ● Build on-site renewable ● Purchase renewable or cleaner energy if direct access is available ● Buy renewable credits ● Participate in a utility- sponsored green energy purchase program ● Choose your utility!

What’s It To You? ● With apologies to EPact, the carbon content of the power feeding your IT operations is the single largest environmental impact you make ● Your company, and outsiders, are starting to take notice

Energy Efficiency Is Behind the Cloud Trend Collocation, managed service, and cloud providers compete on price, and energy is biggest cost. ● To capture more market share, lower costs must break down institutional barriers ● CapEx for new construction and OpEx become a paramount concern

Move to the “Cloud” – What’s Driving The Trend Cloud, colo, and managed service providers aim to take on even more of the market, by competing on price ● Best in class data centers are now highly optimized for EE ● Theoretical limits of PUE being reached ● No mechanical cooling – only ventilation ● Back-up power and conditioning obviated by fail-over capability

Legacy DC Disadvantages ● Capacity constrained – can’t meet growth needs ● Reliance on inefficient support systems (cooling, generators) ● Heterogeneous IT systems difficult to support ● Above all, poor utilization rates of IT assets

Cloud Provider Advantages ● Energy efficiency (2:1) ● Low CapEx (2:1) ● Scale – homogeneous systems ● IT asset utilization (4:1) ● Lowest power costs (2 to 4:1) ● Ability to manage loads for fail over, balancing, and arbitrage

What Does It Mean To You? ● Managed service providers have an inherent cost advantage over even the best enterprise operations ● That gap will widen ● Your operation will look untenable as a result ● You can compete by undertaking EE upgrades and managing capacity

Why Pursue Energy Efficiency? You should pursue it like your life depended on it – it is driving the major shift in IT services ● Cost savings (financial return) ● Capacity avoidance ● Competition ● Commitment to the environment

Utilities Data Center Industry ● Able to respond to large load requests ● Low carbon service offerings ● Energy efficiency programs for existing customers ● Adopt efficiency throughout market ● Participate in regulatory process ● Communicate with utility industry The Future

Questions? MARK BRAMFITT, P.E GOUGH STREET, #100 SAN FRANCISCO, CA PHONE information technology  utilities data centers  energy efficiency demand response  smart grid program design  training strategic engagement  impact