It used to be that energy was such a commodity that organisations would put as much thought into power consumption as into boiling a kettle. But as climate change takes the political centre stage, the IT industry and businesses in general, are waking up to a looming power crisis. Consumers have been switching off the television at source and recycling their household waste for years and businesses are under mounting pressure now to develop more responsible approaches. CIOs are being asked to account for ever-increasing energy bills and prepare for a tide of environmental legislation.

Two factors are focusing boardroom attention on power issues. First is the direct impact of rising energy prices and costs associated with the growing reliance on automation through IT. Second is pending legislation to control the unsustainable burden of power consumption and electronic waste, and the unknown effect it will have on the policy, strategy and development of the IT business function. “IT’s age of innocence is nearing an end,” says Steve Prentice, chief of research at Gartner. “Technology’s clean and friendly ‘weightless economy’ image is being challenged by its growing environmental footprint. While a number of regulations are already increasing the end-of-life costs for IT equipment, IT also has to face mounting concerns over spiralling electrical power consumption.”

Adding fuel to the fire

This is not least because energy prices are rising at an unprecedented rate, while supply is falling. Power cuts may not seem a realistic near-term prospect, but the signs indicate that the IT department should prepare for the worst.

The European Energy Markets Observatory Report, published last year, warned of electricity shortages as rising demand exceeds capital utility infrastructure investment.

The UK featured alongside France, Belgium and Greece in the report as the countries with the lowest levels of spare capacity. It found the average margin between electricity supply and demand fell to its lowest ever figure of 4.8 per cent in 2005 and early 2006, a full one per cent lower than the 5.8 per cent margin in 2004.The report said increasing consumption and the lack of capital investment by domestic energy operators was exacerbated by more extreme weather conditions.

Spot electricity wholesale prices surged in 2006 by 70 per cent compared to the previous year with peak prices up to 270 euros or £179 per megawatt per hour. This followed large increases in oil prices of 53 per cent in overall 2005 prices compared with 2004; an equivalent 38 per cent rise in the cost of gas; as well as high prices for CO2 emission rights; plus tight supply and demand conditions.

Rising concerns

The UK energy watchdog, Ofgem tried to address ageing energy distribution infrastructures in December 2006 by updating operator transmission tariffs. Ofgem says that suppliers may pass increased capital infrastructure investment and costs on to their customer bases, leading Ofgem to warn of a potential consumer price rise of eight per cent.

Trevor Rothday, Ofgem corporate communication manager, told CIO UK that calculating any similar forecast for business was a much harder task, even though he admits greater transmission investment was most likely to hit UK businesses harder. “It’s different for business customers,” he says. “Larger enterprises in particular strike their own contracts and the percentage taken up by transmission costs in billing is a significantly much greater part of their energy costs.

The individual contract agreements between companies and their suppliers are commercially sensitive, which means we are not in a position to produce reliable figures on projected business price rises.” But figures published for 2005 from the Office for National Statistics show UK electricity prices rose by 10.7 per cent overall last year. The general market consensus suggests businesses should be prepared for energy cost increases of as much as 10 per cent each year for the next four years.

"The possibility of computer equipment power consumption spiralling out of control could have serious consequences for the overall affordability of computing"

Luiz Andre Barroso, engineer, Google

In fact, Gartner predicts that, in line with rising prices, CIOs could struggle to justify increasing power-related capital expenditure unless they do something now to bring costs down. Vice-president of research, Rakesh Kumar warned that overspending on power will have a considerable impact on the IT department’s ability to grow and meet business needs in the future.

“Today, energy typically costs less than 10 per cent of an overall IT budget. However, this could rise to more than 50 per cent in the next few years. The bottom line is that the cost of power on this scale would be difficult to manage simply as a budget increase and most CIOs would struggle to justify the situation to board members,” says Kumar.

With prices on the rise, organisations are turning their attention to their own energy requirements. It is not unusual for them to discover they are already paying the price for power-hungry or wasteful IT systems and practises that consume energy at an alarmingly inefficient rate. Take, for example, blade servers, which have been reducing the equipment footprint and adding scalability to datacentres for the last three or four years. Kumar says that during the past 12 months, there has been a significant increase in the deployment of high-density servers, which is leading to significant problems in power and cooling for datacentres and greater power demands.

Escalating energy demands

Kumar says: “The power needed for a rack of high-density server blades can be between 10 and 15 times higher than the power needed for a traditional server environment. Most legacy datacentres built 15 to 20 years ago cannot meet this demand. At the same time, a similar amount of additional power will be needed to remove the huge quantity of heat generated by these new machines. If the machines are not cooled sufficiently, they will shut down, with potentially damaging consequences for business service levels and IT governance.”

If server power consumption grows at a rate of 10 per cent per year, Kumar predicts the four-year cost of a server’s electricity bill will be larger than the initial price of a typical low-end server. “If power consumption grows at 50 per cent per year, power costs by the end of the decade would dwarf server prices,” he says, even without power increasing beyond its current four to five pence per kilowatt-hour rate.

But the power needed to run datacentres is not the only issue. Power is also needed for technologies such as storage devices, networking controllers, uninterrupted power supplies and air conditioning. A realistic total figure for datacentre power consumption is therefore at least double that used on servers alone. A recent survey of CIOs by datacentre power and cooling specialist, APC, found capacity requirements were also exacerbated through poor datacentre management.

The vendor found 61 per cent of those surveyed were paying extra service costs; 48 per cent were purchasing more uninterruptible power than required; and 41 per cent buying more cooling than was necessary. Half of the CIOs said they were paying additional datacentre costs for one-time engineering and installation work and 56 per cent felt they were paying too much for their electricity.

Despite the trend towards consolidating datacentre overheads by buying more blade servers, 43 per cent also pointed out that they were suffering from wasted floor space. Combined with rising rents, this is impacting facilities budgets. Coupled with the increase in rising prices and looming shortages, APC estimates such wasteful practises mean 14 per cent more power provision must be made each year to run datacentres as a result.

Reality check

Some of the CIO-level responses to the APC survey also demonstrated how the datacentre is often neglected – much less is the focus for efficiency or cost reduction. “We have cables running along the floor from one room to another to connect our servers to switches. Our UPS are improperly balanced and servers are not spread across multiple UPS,” says one. While another admits to poor business continuity UPS provision and falling foul of additional failover and air conditioning costs associated with new hardware investment: “Each server is plugged into one UPS instead of two or more. With the introduction of our SAN the server room is getting extremely warm and there is no current way to exhaust the heat out.”

"Today, energy typically costs less than 10 per cent of an overall IT budget. However, this could rise to more than 50 per cent in the next few years"

Rakesh Kumar, vice-president of research, Gartner

Specialist research firm, Datacentre Dynamics predicts power failures and limits on availability will affect datacentre operations in more than 90 per cent of companies within the next five years. But business’ insatiable power usage and appetite for the next best gadget is not limited to the datacentre. Combined worldwide shipments of PDAs and smartphones – the executive or field force worker’s best friend – totalled 42.1 million units in the first half of 2006 – a 57 per cent increase from the same period last year.

This may not seem an unduly alarming trend in the context of ‘green’ issues. But when you consider it takes the equivalent of 60 (non-energy saving) light bulbs to power a Blackberry, the exponential and unchecked appetite for power technology fuels within businesses may be unsustainable. The IT industry itself has a lot of work to do. Luiz Andre Barroso, a Google engineer says: “The possibility of computer equipment power consumption spiralling out of control could have serious consequences for the overall affordability of computing, not to mention the overall health of the planet.” He says: “Fundamental circuit and architectural innovations are still needed to address the longer term trends.”

If these pressures are not enough to make CIOs look again at power expenditure and energy efficiency, then there is always legislation to force change upon organisations.

Laying down the law

While any direct legislation to measure, track and penalise excessive carbon footprints is still some way off, Gartner’s Kumar says any attempts by governments to cut carbon emissions are likely to penalise organisations with large datacentres. Especially those that cannot prove measures taken to manage energy consumption and waste. Any new regulation will most likely build on the implementation of the EU’s Waste Electrical and Electronic Equipment (WEEE) Directive. It mandates all WEEE manufacturers and retailers to recycle equipment responsibly at the end of its life. Gartner estimates that consumers and businesses worldwide will dispose of 512 million desktop PCs in the next five years.

Undoubtedly trends in IT hardware procurement, as well as global climate change, are forcing CIOs to look closely at the issue of power. Gartner advocates better supplier management, better technology choices and training to reduce environmental impact, as well as running IT operations more efficiently. “CIOs need to ask suppliers and service providers about their activities to reduce greenhouse gas emissions and their broader environmental policies,” says Kumar. He also recommends CIOs investigate short and long term options to reduce power consumption and the associated carbon emissions in the datacentre and client equipment. That is good not only for the environment but increasingly, the long term prosperity of the business.