Construction cost per megawatt of data center capacity shrinking?


Will prefab data center pod designs, increased economization, and a reliance on application-based failover instead of physical redundancy cut data center construction costs in half over the next five years? Microsoft thinks so.

Christian Belady, General Manager, Data Center Research at Microsoft’s Global Foundation Services (and Uptime Symposium speaker) recently published a research paper projecting annual new data center construction market size.

Belady made the assumption that the data center industry will likely move from an average construction cost of $15 million per megawatt (MW) to something more like $6 million per MW in five years resulting in a flattening of year-over-year growth.

In 2006, Uptime Institute estimated data center construction cost between $10-$22 million per MW. Belady said that the cloud computing model would shrink cost dramatically:

There is a force that is effecting the annual growth in data center construction that is a bit more tangible: the shift from highly redundant and well-controlled data centers to lower cost, highly-efficient cloud data center designs. These designs leverage their scale and application redundancy, as opposed to hardware redundancy to drive down cost. In addition, these designs use aggressive economizations that employ either liquid or air to help drive down cost and substantially improve efficiency. These data centers today are characterized by costs on the order of $6 million per MW and will continue to go lower in the future.

Belady said he came to the $6 million number based on Microsoft’s internal numbers, and looking at public numbers from cloud scale providers like Yahoo’s $5 million per MW Yahoo Computing Coop.

I spoke with some Uptime Institute Professional Services Consultants who said savvy data center operators are reigning in costs of traditional data center space as well.

“A forward-thinking owner can take advantage of a phased approach and thereby lower initial construction costs and still achieve a resilient data center,” said UIPS Consultant Keith Klesner. “A recently Tier III Certified Facility was built at approximately $8M per megawatt. The facility owner is a longtime active Network member with a focus on both availability and efficiency. The facility used traditional data center design with limited waterside economizing.”

But the cheapest data center is the one you don’t have to build. “The real cost savings reside in optimizing the IT infrastructure,” said Shawn Novak, consultant with UIPS Digital Infrastructure Services. “After numerous engagements, we have seen many clients underutilized on the IT infrastructure. A simple optimization project could delay the need for a new data center project. By creating a more efficient IT environment, a company may save hundreds of millions of dollars in capital expenses. If the company needs a new data center, they should engage a third party to optimize the IT load. On average, for every 250kW of power saved, it is approximately $5M worth of Mechanical, Electrical and Plumbing (MEP) Infrastructure costs saved. When the IT infrastructure is underutilized, the initial cost for a projected data center are almost double what the cost should be. You will find that many companies will have dug a hole with a generic plan of 150 watts a square foot, with no clue on what really will be going inside the data center walls.”

UIPS also warns that pods, containers, and pre-fab designs aren’t going to be a fit for all customers. As UIPS Consultant Matt Mescall pointed out on Uptime Institute’s LinkedIn Group, Rakesh Kumar, vice president of Gartner Research said recently that the data center container market is drying up.

“This is not is not a solution for most users,” Klesner said. “An owner with business critical applications can often justify the expense of a Tier III solution when compared to the cost of a single outage.”

Posted by mstansberry on 25-03-2011
Categories: Uptime Institute Symposium
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