Utility Incentive Programs for Data Centers

Incentive programs from local utilities offer potential savings for customers doing server consolidations or virtualization projects.

There are dozens of incentive programs from local utilities or state energy efficiency programs offering rebates to customers who can reduce their energy usage through improved efficiency or the use of renewable energy sources. While only a handful of these programs are customized for data centers, they offer potential savings for customers doing server consolidations or virtualization projects.

The Database of State Incentives for Renewables & Efficiency (DSIRE) is a comprehensive source of information on state, local, utility, and federal incentives that promote renewable energy and energy efficiency. It maintains databases of incentives for both renewable energy and energy efficiency, broken down by state and individual utility, offering details on each program along with a link to the utility's web site. It's a great resource for identifying what's available in your area(s) with minimal research.

Here's an overview of utility programs specific to data centers:

  • In August 2006, PG&E became the first utility to offer rebates to business customers that implement virtualization and server consolidation projects. Qualifying customers able to earn a rebate of up to $4 million per project site. PG&E's High Tech Energy Efficiency Incentives program has industry support from VMware, Intel, Hewlett-Packard, Dell, IBM and Rackable Systems. The incentives are based on the amount of energy savings achieved through data center consolidation, and PG&E customers in northern and central California must apply for the rebate prior to pursuing a virtualization project. In addition to the rebate, customers can expect to save $300 to $600 in annual energy costs for each server that is removed, the utility said.

  • Avista Utilities, the utility serving Spokane, Wash., offers rebates of up to $5,000 per rack for customers implementing a chip-level liquid cooling solution from SprayCool. In June outdoor sports retailer Mountain Gear became the first company to participate.
  • Xcel Energy, which has operations in eight Western states (Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin) offers a custom project program in which business customers (including data centers) can get rebates of up to $200 per kilowatt of demand savings, as well as up to $15,000 towards an efficiency study to identify savings.
  • Austin Energy, the utility serving Austin, Texas, is planning to introduce a data center program that will include rebates on a variety of efficiency measures, including server virtualization and efficient cooling practices. In the meantime, a review of Austin Energy's Commercial Rebates may uncover savings opportunities within existing programs.
  • If you can permanently reduce electric demand by at least 20 kilowatts in Con Edison territory, NYSERDA (New York State Energy Research and Development Authority) will help pay for capital improvement costs with an incentive of $600 a kilowatt, with a cap of 65% of costs or $1.25 Million per facility. NYSERDA is examining potential incentives for data center procurement and energy management but has not yet finalized any incentives.

The utilities that are developing efficiency programs for data centers have formed a committee to exchange ideas and coordinate their programs, and the Consortium for Energy Efficiency is beginning an initiative to address energy use in data centers.

"The CEE Board felt that the time was right to establish a presence in this work area," said CEE Commercial Program Manager Jason Erwin. "Efficiency program administrators are eager to identify, understand, and develop data center program opportunities. Meanwhile, the industry is clearly trying to address their space and power challenges." CEE is working closely with the EPA's ENERGY STAR program and discussing program strategies to mine the great energy savings potential in data centers. The group featured a data centers and servers track at its industry partners conference in September.