Q&A: Mark Bramfitt on Utilities and Data Centers

Mark Bramfitt is a leading expert on the relationship between the data center and electric utilities. After years of working with data center operators in a position at California utility PG&E, Bramfitt is now consulting on energy efficiency and power management. Last week on his blog Mark shared some thoughts on the recent Facebook-Greenpeace controversy over power sourcing for data centers.

He wrote: "The resolution of this conundrum, in my view, is an increased partnership between the industry and utilities, addressing energy efficiency, demand response, and yes, power sourcing. The IT industry as a whole needs to engage proactively in these matters to avoid potentially damaging criticism now and in the future."

How does this come about? What's the path forward? Mark graciously agreed to an email question-and-answer session to share some of his insights.

DCK: You've cited the need for increased partnership between the data center industry and utilities. What's happening on that front right now?

Bramfitt: I see some good engagement, especially from developers and operators of what I call “utility scale” data centers, on energy efficiency. New multi-megawatt facilities have far better efficiency performance than just a few years ago, and some of these large facilities are being retrofitted to improve performance.

There are two imperatives that now face the industry: moving the energy efficiency needle in the vast market of mid- and small-sized data centers, and addressing more opportunities for engagement and partnerships with utilities.

I envision the second pathway leading to cooperation on demand response and load shifting, as well as addressing the environmental impacts of electric use. The utility-scale users will again take the lead, and they have tremendous market power and profile, but that level of partnership hasn’t begun to take shape in my experience.

DCK: What are some short-term steps that might help the two industries work together more effectively?

Bramfitt: Well, I don’t want to spout the typical platitudes about establishing better lines of communication, etc. But let me step out and say this: of the 12, or 25 (but I don’t think it’s 50) leading utility-scale data center operators, some are going to see the strategic value of pursuing a higher level of engagement regarding electric supply and use.

These breakout firms are going have the discussions with utility partners on how to manage a typical 40 megawatt load. They’re going to do some load shifting with thermal energy storage, backup the grid with their emergency generation capacity, and work with the utility to source clean or renewable power.

DCK: What do you see as the best way for data centers to boost their use of renewable energy? Can utilities address these issues in key markets, or must large data center providers develop on-site generation of renewables?

Bramfitt: It’s a real mixed bag from a regulatory standpoint across the country. In some cases, a customer can directly source generation, and therefore they have the opportunity to pick their source. In other places the utility has a renewable portfolio requirement, so you might get ten percent renewable now and twenty percent in 2020.

So, utility-scale operators really have two main avenues for boosting the use of cleaner power in their facilities: picking the right location (and therefore utility) in the first place, and acting as an advocate in the regulatory arena for changes in the utility industry.

DCK: How might the focus on renewable power - and the prospect of carbon regulation - impact the geography of the data center industry and where new facilities are built?

Bramfitt: I’ve taken a look at this, and believe it or not, the answer is “less than you might think”.

First, what carbon regulation? I don’t see the US charting a carbon regulation scheme in the next few years, or putting one into action in five years. And in the absence of any sense of certainty, businesses simply won’t base their decisions on the “specter” of future taxes.

Many states have set a course for increasing amounts of renewable power in utility generation portfolios – a great thing, but it fails to send a clear price signal because utilities haven’t been able to figure out how to meet the requirements, let alone how expensive it will be.

But let’s say we add a straightforward carbon tax next year born by utilities and therefore their ratepayers. If you are getting 100% coal-fired generation at a retail rate of five cents a kilowatt-hour, I might see a staggering percentage raise of say fifty percent.

If you are sourcing your power from a utility with a much cleaner generation portfolio – natural gas, nuclear, hydro, and some renewables, the percent increase would be much lower. But your existing rates are already much higher – usually twelve cents or more per kWh.

In my estimation then, power price remains the primary consideration for a utility-scale data center operator, and carbon taxation, while raising rates generally, won’t change the relative price disparities that are driving site choices today.