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Power Hardware

Data Center Operators Double As Energy Brokers 35

Posted by Soulskill
from the more-power-to-them dept.
mattOzan writes "When data centers first opened in the 1990s, the tenants paid for space to plug in their servers with a proviso that electricity would be available. As computing power has soared, so has the need for electricity, turning that relationship on its head: electrical capacity is often the central element of lease agreements, and space is secondary. While lease arrangements are often written in the language of real estate, they are essentially power deals. 'Since tenants on average tend to contract for around twice the power they need, Mr. Tazbaz said, those data centers can effectively charge double what they are paying for that power. Generally, the sale or resale of power is subject to a welter of regulations and price controls. For regulated utilities, the average "return on equity" — a rough parallel to profit margins — was 9.25 percent to 9.7 percent for 2010 through 2012.'"
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Data Center Operators Double As Energy Brokers

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  • Contracts (Score:4, Insightful)

    by girlintraining (1395911) on Wednesday May 15, 2013 @12:21AM (#43728555)

    You mean, exclusive contracts can screw you over? WHO KNEW? See also: Every antitrust investigation. Ever.

    • by c0lo (1497653)

      You mean, exclusive contracts can screw you over? WHO KNEW? See also: Every antitrust investigation. Ever.

      Which you are you talking about? You as in the "consumer of cloud or hosting or co-location services" or you as in "the tenant that has exclusive use of the facilities for its data-center services business"?

      Because if it's:
      * "consumer of the cloud services, etc" you (maybe) are getting screwed over the price of power, but nobody locks you in exclusive contracts;
      * "the tenant conducting data-center business" - maybe the contract you sign is exclusive, but it is not you that is getting screwed.

  • And this is why using the cloud is good... for the business: you are going to be charged double for the price of consumed electricity and the data center operator has a secondary line of business as a power broker.

    (granted, the energy cost for the user may be lower in the cloud than running whatever on your own server, in case your server does nothing most of the time. Meh... in my case, I still find preferable to use solar panels)

    • And this is why using the cloud is good... for the business: you are going to be charged double for everything.

      Fixed that for you.

    • by cduffy (652)

      What in the world does any have to do with "the cloud"? The scenario is entirely relevant when you're putting servers you own in DC space that you lease.

      If anything, using cloud services negates this impact on pricing somewhat, since the service themselves is such a large customer of their DC that they have considerably more negotiating leverage (and, commodity OpenStack instances being reasonably fungible, it can be considerably easier to switch cloud providers than to move physical hardware between datace

  • by cultiv8 (1660093) on Wednesday May 15, 2013 @12:28AM (#43728573) Homepage
    I feel like this doesn't need an explanation but:
    1. Buy something
    2. Sell it at a profit
    3. Profit
  • by satsuke (263225) on Wednesday May 15, 2013 @12:30AM (#43728585)

    Wouldn't this be two different things?

    At least if the lease agreement is written to the _potential_ power consumption, rather than the actual power used, that is a fundamentally different proposition than taking power and marking it up, or otherwise being registered as a utility.

    e.g. you could potentially increase your power draw to the maximum provisioned, and the data center would be contractually bound to be able to provide that level of power, certainly on a particular circuit if there is a redundant power supply failure or other sudden spike in load.

    I know in my space (telecom), the logistics of ensuring the correct provisioning of power (access to 48V power, cooling, not overdrawing power slack batteries) can be as complicated as the provisioning of other, more typical server services.

  • by camperdave (969942) on Wednesday May 15, 2013 @12:37AM (#43728607) Journal
    AC power is a scam. First the electricity runs one way, then it stops and it runs the other way. They're selling you the same electrons over and over and over again.
    • by c0lo (1497653) on Wednesday May 15, 2013 @01:14AM (#43728775)

      AC power is a scam. First the electricity runs one way, then it stops and it runs the other way. They're selling you the same electrons over and over and over again.

      One's not better even with DC power: no warranties that a closed circuit won't recirculate the same electrons over a certain period of time. Even worse, once you power on the device, they are taking the electrons which are stored by your device and just replace them with foreign ones in the same amount - how can you be sure the others have the same quality? Furthermore, the electrons that are stolen from you are used to carry the same heinous substitution on other unsuspecting customers.

      Believe me, AC is much better - after powering off, you still do have the original electrons that the manufacturer of your device put in.
      No-no-no-no... don't underestimate the importance of this fact!!!... For example: never-ever use the Monster Cables with DC current: they'll quickly lose their quality if you do it... and this for no other reason than you replace the original carefully nurtured and handpicked electrons... (shudders) God forbid: maybe even with ones "Made in China".

    • Eeeeew, used electrons. Icky icky icky.
    • Plus AC power kills elephants.

    • by Anonymous Coward

      AC power is a scam. First the electricity runs one way, then it stops and it runs the other way. They're selling you the same electrons over and over and over again.

      What are you on about? There is only one electron [wikipedia.org] anyway.

  • by aaarrrgggh (9205) on Wednesday May 15, 2013 @12:56AM (#43728685)

    Sure, if you have a half-rack you are going to get screwed in terms of power provisions; you aren't really paying for power. Likewise, if you go with a site that is designed for high density and you are a low density tenant (or the reverse), you are going to get screwed.

    For a bigger tenant (every lease I have ever worked on at least), you generally negotiate a fixed PUE* of 1.4-1.6 to cover cooling and system losses. The annualized PUE is usually closer to 1.3-1.4 for most general-purpose sites at reasonable load factors, so they effectively have 14% markup. If you have a really good lease, that markup gets factored out based on actual operating costs.

    *PUE(tm) = Power Utilization Effectiveness(tm) = Peak Critical Demand (kW) / Peak Total Demand (kW)

  • At the very least, every watt that comes in the building also needs to come out so the power price needs to include the cost of getting rid of the resulting heat. This adds another 20-30% to power cost after you factor in the amortization, operating and maintenance cost of cooling equipment and the datacenter needs to make a profit off of that too on top of the underlying power utilities' own profit to justify the expense. We're already half-way to doubling the utility rate if the datacenter does not furthe

    • taking your servers elsewhere is always an option to consider

      If only someone could figure out how to do that without unplugging the servers, they'd be rich.

      • by Buzer (809214)
        Veeeeery long cables & redundancy.
      • If those servers earn you so little money per unit that you need to seriously consider moving due to power and cooling cost, you can probably get away with telling your customers that your service will be down for a few hours while you switch over to new servers next time you need to upgrade them.

        The likelihood of finding a datacenter with P&C costs low enough to justify the expense of moving servers for that reason alone is pretty low so the decision to move would require additional motives in most cas

        • The likelihood of finding a datacenter with P&C costs low enough to justify the expense of moving servers for that reason alone is pretty low so the decision to move would require additional motives in most cases.

          The obvious one being hardware upgrades. Many companies replace their servers every few years anway and there is no real reason the replacements have to be hosted in the same datacenter as the servers being replaced.

    • Re: (Score:3, Interesting)

      by gbjbaanb (229885)

      its often not so easy - they need the power because of modern inefficient programs running on supercomputers - your web app goes slow, just add a dozen more cores and a hundred gig of RAM, and then wonder why the cost of hosting is so high.

      As a result, you can take your business elsewhere, but they'll be charging as much. That power is not cheap in the first place.

      It is time to reduce the requirements of our programs, I understand that datacentres are 2nd only to the airline industry for co2 emissions.

  • If you aren't happy your datacenter deal, change. We've been in three different datacenters. One was very cheap. Because it didn't have more than twice the cooling it needed. When a cooling unit died, the DC went down. Now we pay more for more reliable cooling and power. We can pick whatever cost/reliabiity we want. Competition between DCs gives us options.

    That's completely different from uitility power. You normally can't cchoose a different electric utility for hour house, there is no competition for

    • by swb (14022)

      Yes, utilities are monopolies in the sense that there's generally no way to pick and choose among different utilities at a specific address (with the exception of rare addresses on the edge of two different grid segments served by different utilities).

      But no, in the sense that utilities don't have a monopoly on power generation. Nothing is preventing someone from generating their own electricity. Sure, at many scales it isn't competitive with the cost of utility power.

      My guess is that in the right locatio

  • I've worked with professional buyers; the good ones can get you a great deal, if you give them time and all the factors.

    The trouble is, how many managers are on top of the real cost of their processes & associated outputs?
    (Cost per transaction, Kw/h consumption, support etc.)

    Hell, most of them don't even know these concepts.

    So, most outsourcing is done on the basis of "saving costs". Surprise, surprise, instead of the expected "econmoies of scale", service level drops and costs, (after lock-in period)

  • If that's true, then APC counts as an electrical utility, too... They're CHARGING ME for their device that just takes utility power in, and pushes it back out! What a scam UPSes are!

    Datacenters charge for space, security, remote-hands services, power, cooling, etc. It just so happens that power happens to be the bottleneck these days, and also the single best proxy for their operating costs...

    How much power you will draw indicates how many lines they need to run, how much cooling capacity they need on-ha

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