Virtualisation: How to get your power company to pay

Some utilities are offering financial incentives to companies that undertake energy-efficiency initiatives

It might have been the rage in 2006, but interest in green IT drooped along with the economy during the last two years, analysts say.

Meanwhile, virtualization and cloud-computing projects hit the front burner because they can reduce the need to buy new hardware and take better advantage of old equipment, according to Ian Song, client-computing and green-IT specialist at IDC.

Virtualization and cloud computing initiatives also help to reduce energy and save money. Consequently, some utilities are offering financial incentives to companies that undertake energy-efficiency initiatives.

A 2009 study from Beacon Consultants Network found many utilities that are willing to pay anywhere from $6 per computer to 100 percent of the cost of power-management systems. Even projects only peripherally connected to power management could bring an unexpected payback.

Nationally, 55 utilities offer some form of payback for virtualization specifically, according to VMware. The California Public Utilities Commission has earmarked $3.1 billion to help fund such programs in California. PG&E, for example, provides a range of incentives for power-saving IT projects, as do other California power companies such as Sempra Energy in San Diego. The U.S. Dept. of Energy also helps fund and promote green-IT conversions.

Energy companies have good reason to offer these incentives to corporate IT departments. IT of all kinds generates two percent of global carbon dioxide every year, one quarter of which is from servers and cooling and 39 percent of which stems from PCs and monitors, according to a 2007 Gartner study.

Power management can save an organization with 2,500 PCs $40,000 per year by cutting power consumption by almost half, Gartner notes in a different report.

Companies Cash In on Virtualization, Energy Incentives

Many companies are benefitting from these incentives. NetApp earned $1.4 million in rebates at the end of 2008 after replacing its data center with a more efficient one. Hosting provider Fortune Data Centers got $900,000 last year for data center upgrades it said would save it $4 million in electricity costs per year.

Much simpler methods of power management, such as turning off all the desktop PCs at night when no one's using them, is saving Ford $1.2 million per year. Fewer than 10 percent of computers in the U.S. are configured to shut themselves down at night, a feature that could save organizations $50 per computer over the course of a year, according to the Beacon Consultants Network study.

San Francisco-based employment-law firm Littler Mendelson, PC received an unexpected check for more than $10,000 from a Pacific Gas & Electric (PG&E) program it didn't know about, says David Park, senior network engineer for the San Francisco firm.

Park was pushing virtualization as a way to ease pressure on a server room that, while beautifully situated--a 20th story corner office with windows looking out on North Beach, couldn't take the heat from its servers.

"What pushed us over the edge was the heat from some blade servers we installed during the winter," Park says. "We didn't realize how much the windows helped us dissipate heat until it got to be summer: the glass heated up and servers started shutting down."

By 2008 the company had already virtualized about 10 percent of its servers, largely by refusing to buy new hardware for the crowded server room and providing VMware VMs instead of iron when new-server requests were approved.

VMs continued to grow slowly, but stalled at about 20 percent of the 400 servers in San Francisco. The holdup came from managers who are naturally wary of new technology and business-unit server admins who thought VMs "meant you're taking away my server and putting me on this shared box where I have to fight for resources," Park says.

Still, the temperature inside the server room forced the issue.

"When they saw IT having to prop open the doors to the server room with fans to blow the heat out, they took that as a good argument for having to go virtual," Park says.

Park learned about the PG&E program from VMware, which has been helping coordinate incentives from 55 utilities since 2006, according to Daniel Mudimbe, VMware's alliance manager for the region. VMware customers who qualify get back an average of 10- to 18 percent of the capital cost of their projects, he says.

Littler Mendelson's latest burst of virtualization consolidated 86 servers into four, reduced IT's San Francisco energy consumption from 169,506 kWh/yr to 7884 kWh/yr, and made it possible to take the exhaust fans out of the server-room doors even during the summer.

All but a few high-I/O applications in the San Francisco office are virtualized; about 95 percent of the total. It doesn't make sense to virtualize in San Francisco the 300 or so servers spread among 50 other offices, so they'll probably stay as they are, Park says.

The $10,343 PG&E paid as incentive didn't come close to paying the $100,000 cost of the project, but it did help tip the scales in its favor.

"Some people like the knowledge that there's that box with the blinking lights that's their server, but having a PG&E program we could work with helped drive some of the fear away so there was less grumbling than before," Park says. "They figured if there's a program from a public utility, everyone must be going that way and they ended up liking it. I doubt you could get any of them to go back to their own box now."

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