The relationship between federal policies and data center owners, operators and tenants has been a somewhat rocky one over the past few years, especially when it comes to energy consumption. Data centers use massive amounts of power, but the utility of data centers makes the use of such energy necessary.
This rings true not just for private enterprises but for federal agencies as well, which are some of the biggest data center power consumers around. There are also a number of areas in which federal organizations and private firms collaborate, including data center design, infrastructure development and developing foolproof system recovery measures.
When it comes to examining data center finance through the lens of energy consumption, government officials and data center industry leaders have entered into conflict on several points. Currently, deliberations over the use of an Energy Savings Performance Contract (ESPC) by the U.S. Energy Department for its data center needs are causing a stir, and the outcome could have a substantial trickle-down effect on future energy efficiency initiatives for data center owners.
ESPCs have aided federal agencies for more than a decade in the effort to retrofit facilities for significant energy savings, reported the Federal Times’ Andy Medici. Under the terms of the ESPC, the vendor pays for the upfront costs of retrofitting buildings with energy-efficient technology. They are then reimbursed with payments that stem from energy cost savings. This allows federal agencies the flexibility to implement energy savings projects that would otherwise be slowed by CAPEX costs or the necessity of Congress approving special appropriations to the project.
Playing the Percentages
In what Medici termed an “unusual application” of an ESPC, the Energy Department picked Lockheed Martin to help them consolidate its data center footprint and decrease OPEX. Since the July 2011 selection, the contract has not been put into action, and it appears that the Office of Management and Budget may be the reason it’s being held up. Lawmakers from both the Senate and House have formally asked the Obama administration to allow the project to proceed, saying that the lack of action sends “a chilling effect across federal agencies pursuing data center ESPCs.”
The reason for the holdup seems to be a question of percentages, an industry executive who asked for anonymity told Medici. In particular, the forecasted energy savings of the project pale in comparison to predicted savings in operations and maintenance, which account for about 70 percent of expected savings. The debate centers on whether this constitutes “enough” of the proposed savings. When a decision is reached, it will likely have substantial implications for other federal agencies, which are amidst an effort to eliminate 40 percent of their data centers over the next several years. ESPCs factor heavily into federal agencies’ abilities to meet the scope of the project as well as its deadlines.
“The intersection of these initiatives and data center consolidation via ESPC is very much in the public interest, and CIOs want to pursue it,” stated Robert Flanagan, director of energy services at Lockheed Martin Information Systems and Global Solutions Civil Division, according to Medici.