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Free Money for Your Data Center Efficiency Project: Harness Utility Incentives

Free Money for Your Data Center Efficiency Project: Harness Utility Incentives
April 27
17:56 2017
Adam Fairbanks, CEO, Fairbanks Energy Services

Adam Fairbanks, CEO, Fairbanks Energy Services

The data center industry’s ability to improve energy efficiency is massive. According to the latest U.S. Data Center Energy Usage Report published last year that examines data from 2014, data centers in the U.S. consumed an estimated 70 billion kWh, representing about 1.8% of the United States’ total electricity consumption. While data center capacity increased at a tremendous rate over the last five years, Data Center Knowledge points out that corresponding energy use only grew slightly and not in proportion to increased capacity. Clearly, data centers are increasingly able to manage energy consumption through efficiency solutions. With the enormous amount of energy still being consumed by data centers though, utility companies in recent years have been offering incentive programs to data center owners and operators who are interested in upgrading their facilities to be more efficient. These utility incentives are often key for data centers to identify, implement, and maintain the solutions necessary to keep energy usage low.

Data center incentives are more attractive and now more necessary than ever before. But oftentimes, data center operators are hesitant to start a project because of the fear of unknown project costs and confusion surrounding the various types of incentives that are available. In most data center environments, uptime and redundancy trump energy efficiency. With increased knowledge and use of incentive programs, data center managers are better able to carve out and prioritize efficiency solutions into data center operations.

There are two types of incentives offered to data center facilities by utility companies: Prescriptive Incentives and Customized Incentives.

Prescriptive Incentives: Programs in the prescriptive category provide incentives or rebates that are paid as a fixed dollar amount for the replacement of an older technology with a new and more efficient version. A common prescriptive incentive given to data centers is for Variable Speed Drive (VSD) fan motors on CRAC or CRAH units. Each utility will have a different set of paperwork and rules for the types of equipment that will qualify along with the amount paid for each item that is being upgraded. Other steps that are part of the process to take into consideration are prescriptive qualification applications, verification that purchase orders weren’t place before meeting with the utility, and visits from the utility once efficient equipment and upgrades have been made.

Customized Incentives: Incentives from customized programs are typically performance-based. Payment is tied to specific metrics, like the amount of kWh or kW saved through an efficiency project. An example of a customized incentive program would be adding economization (or free cooling) to a chilled water system along with monitoring and controls to CRAC units and air handlers. But before the project even begins, an engineering justification must be created, which includes power metering for existing conditions, calculating the potential savings of a proposed measure(s), and then conducting power metering after the measures have been installed. The justification must be approved by the utility and an engineering firm, and then the anticipated incentive is calculated and set aside for the customer.

LED lighting upgrade at a New York data center

LED lighting upgrade at a New York data center

New York Data Center Facility Engineers at our firm completed a lighting and lighting controls retrofit at a data center in New York. The project consisted of replacing 147 2×4 T12 Paracube fixtures with dimmable 2×4 LED kits with integrated occupancy and daylight sensors. The upgrades resulted in a total annual energy savings of 230,500 kWh per year. By calculating the total kWh saved, the local utility in New York qualified the project for a custom incentive of $30,000, covering half of the project costs. This upgrade will save the customer $34,000 annually, and has project payback of less than one year.

Incentive programs are usually based on an annual schedule by the utility companies, which may or may not correspond with the calendar year. The program year begins with a fixed amount of money to use for efficiency projects, so it’s best to know when the program begins while preparing for your project in order to best ensure that utility dollars will be available for your project when it’s proposed.

It simply makes good financial sense to reduce power and operating costs in data center facilities wherever and whenever possible. Data center utility incentives have led to some of the fastest return on investments (ROIs) for energy efficiency projects in data centers since the industry was founded. With the opportunities for upgrade available and the utility rebate programs currently offered, the return on investment can be achieved relatively quickly. Utilizing data center utility incentives is a great first step toward beginning a long-term efficiency strategy.


Image from Fairbanks Energy Services

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