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In California, cap and trade could mean data center cost bumps ahead

New cap-and-trade regulations imposed on organizations that produce lots of carbon dioxide in California could increase electricity costs for data centers, panelists said during a session at the Datacenter Dynamics Converged conference in San Francisco on Friday. That could trigger more interest in software or hardware for monitoring and improving energy efficiency.

The cap-and-trade program established under California’s Assembly Bill 32 is initially impacting companies that generate carbon dioxide, such as utility companies, by making them take on carbon-dioxide allowances that can be bought and sold. Those companies could pass on increased costs as a result of the program to data center operators, which in turn might feel compelled to make their customers pay more for service.

The total increase in power costs might not be very large at the moment — maybe around half a cent per kWh, said Nicole Peill-Moelter, director of environmental sustainability at Akamai. (s akam) That might not be large enough to prompt data center operators to leave the Golden State. “I’d say Akamai has to be in California,” Peill-Moelter said. “That’s where our end-user population is, so we don’t have a choice.” Latency could be an issue otherwise. Then again, prices could vary by location around California, because some utilities make more carbon than others.

If data center operators do need to stay inside California, then it could become a matter of figuring out what to invest in to stay competitive, said another panelist, Kurt Salloux, CEO of Global Energy Innovations. And there are plenty of options in that department. Indeed, on the exhibition floor at the conference, startups and big vendors alike were working hard pushing software and hardware, including Server Technology of Reno, Nev., which has developed various fancy power strips (pictured) that distribute power up and down racks and can monitor power usage for each device plugged in.

A similar cap-and-trade program that was instituted in the European Union, the Emissions Trading Scheme, ended up not placing a burden on data center operators on the power-cost side so much as on the brand-value side, said Zahl Limbuwala, co-founder and CEO of Romonet. Companies don’t necessarily want to be labeled as big carbon producers, he said.

These are still early days, though. The compliance part of the cap-and-trade program kicked off on Jan. 1, and prices for carbon are close to the floor price — at $10.71 per ton of carbon-dioxide emissions per allowance — said Mark Wenzel, climate-change adviser from the California Environmental Protection Agency. But as the prices go up, the impacts could become more palpable, so it’s worthwhile for data center operators to keep an eye on the program.

And as that happens, investing in new methods of making gear more efficient might pencil out a bit more, Peill-Moelter said.

2 Responses to “In California, cap and trade could mean data center cost bumps ahead”

    • Will White

      SlowJoeB is having a slow day apparently … good luck with that whiner … nothing more annoying that a self righteous complainer taking joy in his perception of others suffering … CA is doing great without you.