NYTimes: Cost of Power Plants is Rising

The cost of building power plants is rising due to price increases in raw materials and competition for resources with China.

Rich Miller

July 10, 2007

1 Min Read
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The price of electric power is a huge issue for the data center industry. A story in today's New York Times suggests that energy-saving strategies will become even more important going forward, because power isn't likely to get cheaper. The cost of building power plants is surging higher due to price increases in raw materials and competition for resources with India and China. Duke Energy saw its projected costs for a project increase 80 percent between late 2004 and early 2007. An excerpt:

Part of the problem is huge price increases for the raw materials that plants are made from, including copper and nickel, which is what makes steel stainless. But the cost of finishing those commodities into components is also rising. "There's a lack of production and manufacturing facilities in this country, and that may be partly to blame," said Jason Makansi, a consultant with Pearl Street, a consulting firm in St. Louis that specializes in electric utilities. But, he said, "the bigger culprit is the incredible demand in China and the rest of Asia. Basically everything is being sent over that way."

The rising cost of new generating capacity affects coal, nuclear and even wind power projects, according to The Times. The result is that consumers and businesses are likely to pay even more for new generating stations, and utilities will pass those costs along to customers in their electric bills. The bottom line: if the Times' story is right, any savings in energy costs will have to happen inside your data center. I expect that's already the operating assumption for most data center operators, and this story should only steel your resolve to persevere in the effort.

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