Will Data Centers Be Regulated in 2009?

What changes will the Obama administration bring for the data center industry? The change in Washington figures to create both challenges and opportunities, with the potential for new environmental regulations, as well as new investments in industries that could boost demand for data center services.

President-elect Barack Obama's appointments for key positions reflect his campaign focus on the development of renewable energy sources and a "green economy." Obama has named Prof. Steven Chu, a Nobel Price winning physicist and the director of the Lawrence Berkeley National Laboratory (LBNL). Chu is well known in Silicon Valley, and LBNL has been conducted extensive research on energy efficiency in data centers, which are often among the largest users of power within an organization.

"I look forward to the positive attention that our new Secretary of Energy can bring to the whole Department of Energy’s priorities for data center energy efficiency," said Deborah Grove, Principal with Grove Associates. "Having an advocate in the top spot at this juncture can only bring terrific results."

While data centers may not be direct targets for regulation, they would feel the impact of broader regulations on corporate carbon emissions. The Obama energy plan includes an "an economy-wide cap-and-trade program to reduce greenhouse gas emissions 80 percent by 2050."  A cap and trade system would set limits on corporate emissions, but allow companies to purchase or sell capacity in a carbon trading market.

"I wouldn’t be surprised to see cap and trade mechanisms put in place," said Christian Belady, Principal Power & Cooling Architect for Microsoft, which has been a leader in measuring power efficiency in its data centers. "Tracking and trading carbon emissions will be a natural next step in evolution.

"However, many companies are still not measuring as they should and will have to invest heavily to ramp up these competencies to meet government requirements," he added. "I would recommend that companies start tracking power and carbon now."

One area where regulation may boost demand for data center services is the financial sector, according to Jack Pouchet, director of energy efficiency at Emerson Network Power.

"There will undoubtedly be a plethora of recommendations and perhaps legislation much like Sarbanes-Oxley that will dictate new practices in the area of financial data record retention," said Pouchet. "Most likely we will see a higher degree of financial transaction reporting requirements along the way to greater transparency in order to track the flow of Federal loan/bailout dollars.

"All of these requirements will drive the need for larger, deeper, faster database engines, increased network capacity, some form of 'watchdog' program, and a massive increase in data storage and retrieval systems," Pouchet continued. "Combine this with the related activities within the auto industry and you have the makings for a huge increase in not only the demand for increased data center productivity but also in the sheer number of data centers and related enterprise hardware required to enter, track, manage, and report the data."

Similar expectations have been voiced about the Obama administration's plans for health care. Comprehensive health care reform could increase data storage demand, especially if the plan includes a move to Electronic Health Records (EHR). John Halamka, the CIO of CareGroup Health System and Dean for Technology at Harvard Medical School, says his hospitals' move to electronic records shows it could be a job engine for the IT sector.

"We've created 22 jobs for the rollout and support of our EHR project," Halamka writes at his blog, Life as a Healthcare CIO. "Multiply this by the number of clinicians needing EHRs in the country and you'll see that the Obama plan will create tens of thousands of new high tech jobs."

While most of the current focus is on the potential impact of Obama's plans, the data center industry is likely to reap the benefits of existing government energy efficiency programs, including the EPA's development of and energy ratings for enterprise servers, which will allow companies to compare the performance of vendor offerings.

"We expect to see a greater push by the US EPA on ENERGY STAR for servers that will drive standby and idle energy demands down significantly," said Pouchet. "This may very well have the single greatest potential for energy savings within the data center industry as today’s idle energy consumption still averages well over 60 percent of full-power."