The Credit Crunch! – The flip side of the coin for Data Centres

Having looked at the positives of a credit crunch for data centres, it’s equally important to consider what other implications there are for the industry.

As has been widely reported, utility prices – particularly electricity – are going up. An average 3 bedroomed house is said to use around 4,000 kW hours of electricity per year.

Put in monetary terms, at 9 pence per kilowatt hour, this would cost £360 per year to run.

Data Centres use huge amounts of power, just one rack of equipment (with power and cooling) will average around 42,000 kW hours of electricity in a year.

That’s £3,780 – an average sized commercial data centre might have 500 racks, so that’s an electricity bill of £1,890,000 at 9 pence per kilowatt hour.

Electricity prices are predicted to rise by anywhere between 25 and 40 percent by the end of this year. This could mean a price increase in power costs for a data centre of 500 racks of £750,000!

So, why is this bad news? Many data centres fixed the prices with the customers that they host many years ago ... and they included electricity!

In other words, some data centres will have to absorb these massive increases. They probably won’t survive. Those that do have pricing that allows them to pass on their electricity costs are still going to suffer. Inevitably margins will be tighter and this means that they won’t have the money to spend on that much needed maintenance that many are desperate for today.

Without the maintenance, they’ll have more unplanned outages and with more unplanned outages, more customers will move away to more reliable facilities. It is a spiral of descent that no business wants to get onto.

So, credit crunch ... good news or bad? Well, for good data centres that are well maintained and can attract e-businesses into them, it is definitely good.

For poor data centres that are already badly in need of maintenance and those that have power inclusive contracts, the credit crunch is very bad news indeed.

After the dot com crash of 2001, 9/11 and uncertainty in the markets there was a lot of consolidation of the data centre industry. The current credit crunch will almost certainly trigger yet more. The better data centres will do well, the bad won’t!

Migration Solutions is the computer room and data centre specialist; providing independent, vendor-neutral services in Data Centre Build, Data Centre Consultancy, Data Centre Operations and Data Centre Migration.