Mass High Tech: The Journal of New England Technology, December 21, 2007
New England's High Energy Costs Thwart Data Center Growth
By Efrain Viscarolasaga, Mass High Tech
The high cost of power in New England has made energy one of the most significant cost centers in data-centric companies. And while the region's data center equipment vendors have benefited -- as data center managers seek technologies to solve the problem -- the region itself could be left out as companies look for sites to build new facilities.
"If you go back 10 years, energy wasn't considered too much in design, but today, energy costs are driving almost every decision in data center development," said Gabe Cole, CEO and founder of RTE Group Inc. in Wellesley, a realty consulting firm that focuses on data centers and technology facilities. "The bottom line is that fewer data centers are being built in high-cost areas like New England and users are looking at other areas."
The six New England states all rank among the top 10 most expensive states for commercial power, with Massachusetts the second-highest behind Hawaii, according to new research from the U.S. Energy Information Administration (EIA).
High energy costs, plus increasing power demand from data centers, has meant skyrocketing operations costs for both co-located and stand-alone data centers.
Gary McAuliffe, the general manager of Hosted Solutions Inc.'s Boston data center, said the energy costs at his local facility represent the second-highest expense center for the company (behind payroll, while its North Carolina location is the fourth or fifth most costly expense item.
"For companies that aren't based in New England, but looking at data center space, they could be encouraged to go to other areas," McAuliffe said.
The largest example is Google Inc. The company has established a local presence in Cambridge, covering about 60,000 square feet, eventually intended for "several hundred" software engineers. Yet the company recently purchased 466 acres in South Carolina with the intention of building the second of two data centers, at about $600 million each, in that state.
South Carolina ranked second-lowest on the East Coast, behind West Virginia, in terms of energy costs, according to the EIA figures, which represent the statewide average costs per kilowatt hour for commercial electricity in September 2007.
The drive to become more environmentally friendly has overshadowed the issue of how the Bay State's energy costs are hurting its ability to compete, said McAuliffe.
"If you listen to the governor's office, there is a lot of talk about conservation and 'greening' industry, but there is little talk about the economic development piece of the equation," he said. "You can't focus exclusively on one and forget the other."
Not everyone agrees, however.
Anna Sabasteanski, a trustee of the Massachusetts Technology Leadership Council and organizer of a recent panel on data center cooling, said the focus should remain on efficiency and conservation -- and that many people overlook the numerous programs available, both private and offered through the utilities, to make homes, businesses and facilities more energy efficient.
"The high cost of energy is not having a significant impact (on economic development) because the price is going up everywhere, which has a leveling effect," she said.
