Tool helps calculate TCO of datacenters

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Sheila Zabeu -

March 22, 2023

Datacenter architects and finance professionals can now rely on an enhanced tool to measure and improve the energy efficiency of data centre environments. Recently announced by The Green Grid (TGG),  tggTCO, a Total Cost of Ownership (TCO) calculator, will help them better understand how energy is being consumed and evaluate different technology alternatives, such as liquid cooling solutions.

Datacenters and data transmission networks consume a significant and growing share of the energy generated worldwide. To get an idea of this number, we can think only of the United States, which accounts for about 40% of the global market in this field. And, according to a  McKinsey survey, the energy consumption of these environments should reach 35 gigawatts (GW) by 2030, almost double the level of 17 GW in 2022.

Because of this high demand, the need to use energy efficiently and to count on specific tools in this endeavour is becoming more and more pressing.

Using a web interface, tggTCO demonstrates how different liquid cooling methods can impact the financial and operational return on data centre investment. It will also enable business and financial analysts to evaluate trade-offs and potential sources of savings before designing and building large datacenters.

tggTCO has been in use since 2016, and licenses of the updated version can be purchased here. An open consortium of data centre operators, cloud providers, technology and equipment suppliers, facility architects and end users, TGG creates tools, develops technical expertise and advocates for optimising the energy and resource efficiency of data centre ecosystems to enable a low-carbon economy.

Economics around datacentres

Datacenters have attracted investor interest, often because of stable cash flows and risk-adjusted returns. However, several factors could put the brakes on this trend, according to McKinsey. First, higher interest rates drive up the cost of financing arrangements. Also, the operating margins of co-location companies are under pressure from large cloud service providers such as Amazon Web Services and Google Cloud, which have gone from being major customers to being builders and owners of their own data centres. Other competitors that may emerge in the long term are real estate companies that are increasingly investing in building or renting space for datacenters.

This possible scenario, however, does not mean a lack of investment opportunities. For McKinsey, co-location companies will continue to maintain a solid position in the market, as hyperscalers still need them to meet rapidly growing demand. There are also opportunities in the field of data centre operations, energy, connectivity and other links in the value chain.

According to McKinsey, demand is particularly high and is being unmet by current offerings. In addition, innovation has chances to generate value in four main data centre perspectives:

1. Sustainable energy: Pressure to make datacenters sustainable is high, offering investors opportunities to help datacenters ensure carbon-free energy consumption. According to McKinsey, to meet sustainability goals, data centre owners are signing agreements with renewable energy providers. In addition, hyperscalers are beginning to fund the construction of renewable energy plants. In the UK, for example, Amazon backed Scottish Power’s wind farm project and is buying the entire 50 megawatt output.

2. Cooling and power consumption: Cooling accounts for about 40% of datacenter power consumption. The cost of downtime due to overheating can be high. That is why many data centres are replacing old air-conditioning systems with liquid-cooled systems: the heat emitted by the servers is removed by fans and then cooled with water or other media. However, more investment is needed.

In addition to cooling issues, datacenters also need to improve the relationship between processing power and energy consumption. Power usage effectiveness (PUE) – the energy used by computing equipment in the data centre relative to total consumption – has dropped considerably since 2007, but progress has slowed over the past decade.

To address these challenges, investments are being made in various technologies such as immersion cooling, artificial intelligence and machine learning, and the use of waste heat.

3. Prefabricated and modular buildings: According to Synergy Research Group, investments in datacenter construction worldwide are expected to total US$49 billion by 2030. Many initiatives have adopted prefabricated and modular solutions that allow part of the construction process to take place away from the site where the datacenters are installed. This helps reduce construction time and costs, as well as raising levels of safety, quality and sustainability.

The four main types of prefabricated or modular solutions are:

  1. Prefabrication of structural and architectural components;
  2. Platform-mounted equipment for assembling and connecting components and mechanical systems, IT, power and cooling elements;
  3. Closed modules that bring together and connect the same type of equipment in an enclosure;
  4. All-in-one, ready-to-use data centres aimed only at smaller 1.0 to 1.5 MW installations.

4. Edge computing: In this segment, there are two types of investment opportunities. The first is in real estate, as the demand for edge computing must be met by smaller data centres, often located in urban areas close to customers. The second is in technology. Components of the edge computing technology stack are not new. The challenge is how to deploy them at the edges and, for example, bring artificial intelligence capabilities to them.