California Utility Expands Rebates for Power Efficiency

Pacific Gas & Electric is expanding a program that provides financial incentives for data centers to cut their energy use, but other utilities around the U.S. have been slow to introduce similar schemes.

PG&E, which serves much of Northern and Central California, including Silicon Valley, has set aside US$50 million to spend on a set of rebates and incentives between now and 2011. Those rebates will go to customers who employ energy-saving technologies such as virtualization, fresh-air cooling and high-efficiency power supplies in their data centers.

That's up from the $7 million PG&E doled out in 2008, and the utility can increase the money available if enough customers are interested, said Mark Bramfitt, the head of PG&E's customer energy efficiency program, in a presentation at the Next Generation Data Center conference on Thursday.

Bramfitt has been promoting PG&E's rebate programs nationwide and sees them as beneficial for both utilities and their customers. Utilities can save money by avoiding construction costs for new power plants or buying electricity at higher rates from other utilities, while businesses get to offset the cost of installing energy-saving technologies that can reduce their electricity bills.

PG&E's rebates are available for both new data centers and retrofits. In December, the utility wrote a check for $1.4 million -- its biggest so far -- to storage vendor NetApp, to offset the cost of using fresh-air cooling, high-efficiency power supplies and other technologies at a new NetApp data center in Sunnyvale, California.

Take-up by other utilities has been slow, however. While about 20 utilities -- including PG&E -- offer rebates for buying PC power-management software, "very few" have incentive schemes for data centers, Bramfitt said.

Part of the reason is that utility companies don't have expertise in IT, said Amy Spellmann, president of Optimal Innovations, a consultancy in Austin, Texas, that offers capacity planning services to data centers.

The data center programs can be fairly complex for utilities to manage. They need to be able to calculate what their own savings will be and ensure those savings will be sustained over time. That sometimes means monitoring companies that receive rebates for compliance.

The U.S. Department of Energy may offer the utilities some assistance. It is trying to develop standard rebate programs that can be replicated by utilities around the country, Spellmann said.

Awareness of the programs among end customers remains low. Spellmann estimates that perhaps only 10 percent of businesses in the Austin area are aware that rebate and incentive programs are available there, from Austin Energy.

There is also some cost and administrative overhead for end-users, who must apply for the programs before they start their energy-saving projects. And many IT departments aren't responsible for their company's power bill, so they have little incentive to spend their own budgets on reducing energy consumption.

Meanwhile, PG&E is looking at ways to extend its efficiency efforts. Some data centers run their backup generators for a few hours once a month for testing. "If I could get them to do that during my peak load times, I would happily buy that power from them," Bramfitt said. It might require substantial rewiring, but the payoff could be worth it, he said.

Other options include expanding the ways in which customers can be reimbursed for doing work outside of peak load times, or for generating power on-site using wind or solar, for example.

Bramfitt is also talking to the California Public Utilities Commission about allowing companies that lease data-center and office space to charge tenants directly for the power they use. That's illegal in many states because only utilities are allowed to resell electricity.

"If we don't charge the tenants in an office or at a collocation site for the power they use ... they're never going to get engaged in energy efficiency," Bramfitt said.

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