Will energy prices power U.S. data centre growth at Europe’s expense?

Low and stable electricity prices are likely to make the U.S. a target for datacentre investment at Europe’s expense, according to a report published by 451 Research. Lower electricity prices are also expected to impact U.S. investment in energy-efficient technologies.

Tuesday, 19th March 2013 Posted 11 years ago in by Phil Alsop

The reason for this unexpected price stability in the U.S. is its booming shale gas industry. As a result, the energy bill for a medium-sized 2MW datacentre in the U.S. with a 50% baseload energy consumption could be as much as $500,000 or £335,000 a year less than a comparable facility in the UK – and about $750,000 or £500,000 less than one in Germany.

Electricity prices in some European countries, particularly Germany, are already twice those in the U.S. and prices have more than doubled in countries such as the UK, France and Germany during the past decade, while they have held mostly flat in the U.S.

The price of power can significantly alter the overall lifetime cost of a datacentre. Assuming a 15-year lifespan, a price of $0.067/kWh or £0.045/kWh contributes about 30% of a facility’s operating expense and usually accounts for 10-15% of the total cost of building and running a datacentre. “This figure is large enough to sway decisions about where a datacentre should be built,” said Andy Lawrence, Research Vice President, Datacentre Technologies (DCT) & Eco-Efficient IT, 451 Research, who co-authored the report with senior 451 Research Analyst Rhonda Ascierto.

“The effect on datacentre-technology providers is contradictory. The growth of U.S. datacentre activity and investment will boost the market for equipment of all kinds but may limit demand for certain energy-efficient datacentre technologies, especially where there is a trade-off with risk and availability. However, with its higher energy prices, the European market should be more attractive to suppliers of technology that improve datacentre efficiency,” Lawrence added.

Andy Lawrence will be debating the topic of energy, efficiency and economics at 451 Research’s Hosting and Cloud Transformation Summit on 9th and 10th April, London. Lawrence will be joined on the panel by Ibrahim Chadirichi, Director of Information Management, ARM, and Martin Bradley, Head of European Data Centre Engineering and Operations, Morgan Stanley.