CEO Tech Guide

Servers Served by Wind


Servers Served by Wind

Photograph by Ian Waldie/Bloomberg

It takes a certain audacity to bet that an energy-gobbling data center can be powered entirely by wind. A company in Texas is doing just that. In fact, Baryonyx will spend $280 million over the next 10 years to build a 600,000-square-foot data center with five buildings that will be powered entirely by wind. The company says it will break ground on the first data center near Austin, Tex., in the next 90 days.

Baryonyx owns both offshore and onshore wind farms in Texas that it will use to generate power for the data center, which will be run by a unit of the company known as WindData. Already Baryonyx says it has been talking to potential customers that find the costs associated with wind power as attractive as the fact that it’s renewable energy. “We thought the renewable aspect would have customers falling over themselves to sign up, but the real green is dollars in their pockets,” says Chief Financial Officer Graeme Walker.

WindData will be able to give customers longer-term visibility on power and lease rates because the costs associated with wind farms are stable, says Walker. In the long run, he says, that can save companies money because fossil fuel prices are likely to rise.

“If you take out lease costs, power comprises about 80 percent of the residual costs of running a data center,” he says. Many utility companies will only sign 12-, 24-, and 36-month power contracts for data centers because of the volatility of prices for fossil fuels. By contrast, WindData plans to sign longer contracts, he says.

Both natural gas and coal-generated electricity are now cheaper than wind power. The levelized cost of natural gas is $62.24 per megawatt hour, while coal is $76.51 per megawatt hour and wind is $80.04 per megawatt hour, according to Bloomberg data for the most recent quarter. So why would companies want to sign up for a data center whose energy costs in the short run may be higher than conventional forms of electricity?

“The purpose of buying green or renewable energy is sometimes purely because a company feels it’s the right thing to do and sometimes because they feel it will offset future price increases on fossil fuels,” says KC Mares, president of MegaWatt Consulting, which has helped Google (GOOG) and Yahoo! (YHOO) arrange renewable energy for their data centers.

A data center powered entirely by wind will need an alternate source of power at hand for when the wind stops blowing. Initially, Baryonyx will use additional forms of generation, including natural gas and electricity from the grid. Later, the company says, it will look to use other renewable-energy technologies and compressed-air energy storage.

Even if the company does on occasion use electricity from the grid, it will still be using a greater share of renewable energy for its data center than most other companies. Google, for example, buys renewable energy to offset about 35 percent of its electricity consumption. Google had to become an energy company so it could purchase renewable energy at affordable utility rates.

As a wind farm that’s getting into the data-center business, Baryonyx is going in the other direction. The data center will be located in Pflugerville, Tex., 16 miles northeast of Austin. During the first three-year phase, WindData will spend $70 million in capital investments. The company has agreed to create 30 area jobs that will pay $67,500 annually and provide health benefits.

“For us, this is a new market,” says Walker, “but we think it’s slightly easier for us to build a data center than for a data-center operator to build a wind farm.”

Click here to see more from the CEO Guide to Wind Power.

Rachael_king
King is a writer for Bloomberg Businessweek in San Francisco.

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