Lawyer Bait

The views expressed herein solely represent the author’s personal views and opinions and not of anyone else - person or organization.

Wednesday, June 16, 2010

Fuel Cells and Green Tech in the Data Center

An industry peer, Ken Jamaca from Silverback tech gave me a heads up on an article whose subject is one of great interest to me - Fuel Cells in the data center.

One reason it is of great interest is that the current electricity grid in the US is resilient, barely, and has been for some time. Adding load to it does not help the problem, and given the lack of a US Energy policy generation is hard to come by and getting new power plants approved are even more difficult. Not great news to folks looking to construct new data centers as data centers are about access to power. Period. The other reason is that I am embarking on a new data center venture that will bring a new data center platform to the market.

Wind has generated the most buzz and been deployed the most in the US as a solution to increasing generation capacity and giving us more electrons to consume in a 'green' way. Wind is great - so long as the wind is blowing and since it is inconsistent (unreliable) as a power source, and it's expensive to store the electricity, it is used as a mix of total power available to customers. Solar is also a solution that has generated a lot of buzz however the land area required to put PV panels up is so large to be meaningful to a data center that many solar installations on roofs of large data centers and commercial buildings only provide enough electricity for parking lot lights and ambient lighting in hallways and common areas.

Fuel cells are getting more attention and the technology seems to be advancing as fast as it ever has. Bloom Energy has garnered the majority of the buzz in the market, and UTC (United Technologies) to a lesser extent, and there are some new entrants that have reached out to me to discuss their approaches and solutions.

As I have gotten into the nitty gritty of designing a system that is reliable, off grid, and can support a multi megawatt installation, some interesting things have popped up that have nothing to do with the technology, but have to do with a 100 year old set of policies, tarriffs, and agreements that make it difficult for a company to adopt the technology, especially a data center that wants 5 nines. Let me explain a little...

One major factor is utility costs per kWh and kW. Many utilities have 'demand charges' and 'stand by' charges that will impact the economics of the approach and drive design of a fuel cell system. Some also use what is called a ratcheted rates or tariffs. Should the data center need to transfer from fuel cell to the power grid/utility for backup, the demand charge is the charge per month for the next 12 months.

So say you’re paying $5,000/mo demand charge every month for 500 kW for a computer room. Then the fuel cell system trips off for even a few seconds, the full kW demand of the facility is now the current demand for the next 12 months. So say that 500 kW goes to 2,500 kW at $10.00/kW the new monthly charge is now $25,000 for the next 12 months. Ouch.

Developers need to play close attention to the tariffs and the structure of where they build these systems. The utilities clearly do not want onsite power in many cases and write the tariffs deliberately to keep out self generation. In some smaller municipal utilities they may welcome exporting excess power to the grid as a peaker during the summer months to help carry load on the grid for when every home turns on air conditioning during a heat wave. In other cases they may not want these solutions in their service area due to the adverse impact on transmission capacity on the local circuits and upgrade costs to meet the need should the facility go down.

So a word to the States, counties, towns, and municipalities looking to attract data centers, jobs, and tax revenues: Electricity matters more than anything.

The ability for a facility to generate power for themselves, especially low to zero carbon footprint power, and still be served by a utility as back up vs. primary power flips the 100 year old electricity business model on it head. This creates a threat for the utilities, because there are now competitive technologies made by companies that aren't restricted by a 100 year old business model, and will serve customers faster.

While the cost is still high for these newer 'greener' systems, the price comes down as adoption prolifererates. The confluence of technology, its incresing reliability, and the ultimate development of an alternative electricity ecosystem will seismically shift the models and markets.

I don't know about you, but after 100 years, I am ready to try something new.

No comments:

Post a Comment

Tell Us What You Think!