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Data Center Operators Double As Energy Brokers
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.'"
You mean, exclusive contracts can screw you over? WHO KNEW? See also: Every antitrust investigation. Ever.
#fuckbeta #iamslashdot #dicemustdie
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)
Questions raise, answers kill. Raise questions to stay alive.
sysadmins and parents of newborns get the same amount of sleep.
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.
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.
When our name is on the back of your car, we're behind you all the way!
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 further process power such as conditioning to add further value.
In any case, datacenters do not have a monopoly on the server hosting business. If your current datacenter's power rates are high enough to become a deal-breaker for you, taking your servers elsewhere is always an option to consider - at least until datacenters end up under common ownership and become an actual mono/oligpoly.
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 pricing. THAT is why rates are regulated for electric utilities - because there's no competition yo keep rates correct like there is with datacenters (and with most things).
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) rise.
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 location, self-generation is viable at small scales where renewables like wind and solar could power small setups. At the large scale, natural gas generaiton may be competitive with utility power.
I think there have been a number of articles on slashdot highlighting private data centers trumpeting their use of fuel cells or other "green" power generation on site.
I think that we'll probably see an increase in self-generation of power both at home and commercially as the grid gets less stable, prices increase and conservation-driven efficiency grows.
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-hand, how much they need to beef-up their battery-bank, and how many generators they need to have ready to go on-line.
The NYT calls it a scam that you pay for the power you have available, even if you don't use it... I'm somewhat sympathetic, having just gone through having to pay thousands for a couple new PDUs to be connected, all for the sake of one server that really needed it.
But on the other hand, power use is dynamic, and the datacenter can't closely police your usage... If power was usage-priced, I'm sure all those cloud-service providers would colo in rented datacenter space for next to nothing, with all their servers shut off, and then during peak load, network outage, or high temperatures in their own passively cooled datacenters, they could suddenly power up thousands of servers, and the datacenter would be on the hook for having the power infrastructure and cooling capacity to handle that, even though they weren't getting paid for all that standby equipment until it was put into service.
The only decent point the NYT article makes is that datacenters are trying to use a loophole to get out of paying taxes. Sucks wherever it happens, and the solution is to close those loopholes, not forcibly reclassify various businesses that don't nicely fit into previous definitions.
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant