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54
by
Tim Comerford
and
Joe Santo
How Data Center
Operators Can Avoid
Energy
Price Hikes
in
an Unpredictable Market
Energy consumption is one of the
largest operating expenses for a
data center, contributing to nearly 50
percent of total operating expenses.
Due to 2013/2014 winter’s “polar
vortex” that caused a deep freeze in
much of the U.S., many large energy
consumers in unregulated markets
saw their energy prices quadruple. In
fact, we have seen a tremendous
amount of volatility in energy prices
over the last decade.
The beginning of 2015 has seen
continued energy volatility with oil
prices down approximately 50% from
the fall of 2014. All the experts differ
on when and if the prices will
rebound. Natural gas prices this past
winter were relatively stable;
however, some regional markets saw
significant swings due to cold
weather in the eastern half of the
country. Part of the volatility
continues to stem from gas
pipeline/capacity constraints in
various regions.
Data center operators and owners
can minimize the impact of
unpredictable energy markets by
better understanding the markets
and establishing smart energy
procurement strategies. Below is
background on energy pricing
trends, factors likely to impact future
pricing, and proactive strategies for
procuring energy in an unpredictable
market.
FACTORS IMPACTING
PRICING
There are a number of factors
impacting natural gas and electric
rates, including:
1. Natural Gas Storage:
In the
beginning of 2014, natural gas
stockpiles hit the lowest level since
2004 as a result of cold weather and
winter storms. The deficit was closed
due to the mild weather during the
summer of 2014, record gas