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Low US energy prices put European data centre investment at risk

Wed, 03/20/2013 - 17:36 -- Editor

Low electricity prices are likely to make the US a target for data centre investment at Europe's expense, according to a report published by 451 Research.

The so-called shale gas boom means the energy bill for a 2 MW data centre in the US with 50% baseload energy consumption could be as much as $500,000 a year less than a comparable facility in the UK – and $750,000 less than Germany.

Electricity prices in some European countries, particularly Germany, are already twice those in the US and prices have more than doubled in countries such as the UK, France and Germany during the past decade, while they have held mostly flat in the US.

The price of power can significantly alter the overall lifetime cost of a data centre. Assuming a 15-year lifespan, a price of $0.067/kWh contributes about 30% of a facility's operating expense and usually accounts for 10-15% of the total cost of building and running a data centre.

"This figure is large enough to sway decisions about where a data centre should be built," said Andy Lawrence , Research Vice President, Data centre Technologies (DCT) & Eco-Efficient IT, 451 Research, who co-authored the report with Rhonda Ascierto , Senior Analyst, 451 Research.

"The effect on data centre-technology providers is contradictory. The growth of US data centre activity and investment will boost the market for equipment of all kinds but may limit demand for certain energy-efficient data centre technologies, especially where there is a trade-off with risk and availability.

However, with its higher energy prices, the European market should be more attractive to suppliers of technology that improve data centre efficiency," Lawrence added.

Andy Lawrence will lead a panel discussion on energy, efficiency and economics at 451 Research's Hosting and Cloud Transformation Summit on April 9th and 10th in London.  Lawrence will be joined on the panel by Ibrahim Chadirichi, Director of Information Management, ARM, and Martin Bradley, Head of European Data Center Engineering and Operations, Morgan Stanley.