Utilities Subsidizing Server Consolidation Efforts

By Jeff Vance

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How’s this for a simple way to trim your IT budget: use virtualization to reduce the number of servers in your data center and get your utility to pay for up to 50% of the project’s cost? Utilities like Pacific Gas and Electric (PG&E) are dangling rebates in front of their customers to help sell them on the merits of going virtual.


“The typical rebate is about $158 per each server removed,” said Mark Bramfitt, PG&E’s principal program manager, Customer Energy Efficiency. “The energy savings is then roughly $200 to $300 per server, per year range, and that’s just for powering the server. When you factor in the reduced cost of air conditioning, you could easily double that.”


Air conditioning is where this all started, in fact. Cooling is one of the biggest expenses in the average data center, and PG&E initially had incentives in place to make data center cooling more efficient. “We realized we were missing the boat on the IT side, which, in a well run data center, is half of the energy use,” he said.


As PG&E sought ways to make the IT part of the data center equation more efficient, they quickly latched on to virtualization as the technology with the most promise. An incentive program was developed with consultation from VMware. “It wasn’t a formal partnership,” Bramfitt said. “One of their sales reps came to us and asked whether virtualization would be appropriate for our incentive programs. It was as simple as that.”


Unfortunately, customers weren’t so easily sold. The program was very publicly launched in November 2006 at VMworld, but few customers signed up. In the fall of 2007, PG&E had paid rebates for only four projects.


PG&E responded by streamlining the program, simplifying the application process, and in the meantime, virtualization as a technology has had more time to mature. The program itself is straightforward. Customers go through an application process that provides details on their current facilities, specifics of the project and predicted energy savings. PG&E has a calculation formula that customers can use to forecast their savings. After implementation, customers then apply for their rebates.


Today, PG&E has more than 125 customers involved in the program and other utilities are following suit. (For a list of participating utilities, go to: http://www.vmware.com/solutions/consolidation/green/pge.html.)


VMware Enrolls Its Own


Programs like these are a boon to technology vendors, of course. The rebate covers a good chunk of the cost of the virtualization project, yet the vendor doesn’t have to pay the rebate.


“Utilities across the country are offering incentives to customers who can demonstrate energy reduction in their data centers by doing server consolidation with VMware,” said Josh Leslie, VMware’s director of alliances.


(We should note here that the utility company rebates are for any virtualization project that consolidates servers, whether these use VMware’s technology or not.) Leslie noted that server consolidation is starting to be seen as a centerpiece of “green” data center initiatives.


VMware has worked to enroll more than 30 of its own customers into these programs, with another 25 or so currently going through the incentive application process. “We also know that many other (virtualization projects) have been submitted directly to the power companies, without VMware’s assistance,” Leslie said.  


Leslie confirmed that the incentive programs were helping VMware sales. In tough economic times, upfront costs can stall projects even if the technology will pay for itself over time. Trimming those upfront costs can’t help but boost sales. “These programs can offset the cost of a VMware project by at least 20%,” he said.


Autodesk, USPS Save


PG&E customers who’ve participated include the United States Postal Service in the San Francisco area and Autodesk. Bramfitt noted that many engagements are small, say trimming two dozen servers down to only a couple, and many of these are in the government and education sectors.


Autodesk, on the other hand, made much more significant energy reductions. Autodesk’s data centers were using more than 15 times as much energy per square foot as typical office space. Its largest U.S. data center, which has about half of all the servers the company hosts globally, represented about 13% of Autodesk’s total electricity use in the U.S. for 2007.


In the initial stage of the project, the company reduced the number of servers in this data center from 150 to seven. By the end of 2007, Autodesk had virtualized 350 total servers, eliminated the need to purchase about 90 new ones and pinpointed 40 other servers that will be consolidated in the future.

PG&E paid Autodesk a rebate of $25,000 for the initial virtualization project. According to Autodesk, the company decreased peak energy demand by 13% and realized an estimated ongoing annual savings of 326,500 kilowatt-hours—enough to power 35 average U.S. households for a year. All told, this adds up to about $1 million saved in equipment and energy costs for a single year.


When I asked PG&E what was in it for them, I was thinking back to the brownouts and rolling blackouts that hit California in the early 2000s. A reduced energy footprint for major consumers like data centers would help avoid this. That was part of the equation, but for utilities there’s plenty more to consider.


“I don’t recommend this as a business model. We reward people for using less of our product,” Bramfitt joked. “There is a fundamental financial dynamic at play. We avoid building new power plants and other infrastructure that are very expensive, avoid purchasing expensive power during peak times from other utilities, and our regulatory authority rewards us for these programs.”


Bramfitt also pointed out that incentive programs turn the hype of being environmentally friendly into a reality, which, let’s face it, can be tough for utilities. “We’ve driven the California market so that per capita energy use has been dead flat now for thirty years. These programs have tremendous environmental consequences,” he said.


Measuring Success


More than 125 customer enrolled in the program success is a hard number to judge. A single large customer can drive the number of servers eliminated or consolidated way up, while a bunch of small customers can make the program look more successful than it really is.


“We judge by energy savings, and we do it in a typical utility fashion: by megawatts,” Bramfitt said. Last year, taking into account all of PG&E’s data center incentive programs, they estimate that they saved about 4 MW. This year, it should be about 7 MW, and they hope to get to about 20 MW in the coming years.


Customers seeking to do more than simply virtualize servers can earn even more incentives pursuing the green data center concept. Some energy savings ideas are as simple as redesigning the data center to have separate hot and cool aisles, with air flow maximized to remove heat and focus cooling.


So called free cooling, or relying on outside air instead of expensive air conditioning, saves money and can earn rebates. Other efficiencies that PG&E is targeting include Energy Star PCs, thin-client computing and even basic data center upkeep and repair.


Amazingly, the obvious kinds of things that consumers hear about on television newscasts each winter apply to data centers as well. “We went into one collocation facility and found holes in the floors and box fans from a hardware store hanging from the ceiling to provide cooling,” Bramfitt said. “You’re not going to be energy efficient doing that.”