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July 26, 2010

Even Datacenters Can’t Afford to Live in California

Nicole Hemsoth

America, we might have a little problem here…

The one place in the United States most considered to be the hotbed of innovation and technological progress (no, I am not talking about you, Cleveland) could soon become among the least hospitable states in the country to perform works of tech greatness.

This potential crisis for those in the info warehousing industry is the result of a new law enforcing carbon emissions—and The Great American Datacenter gets its own special little section.

As John Parkinson reported, the pending California carbon tax or carbon cap-and-trade system “would directly affect the largest emitters of greenhouse emissions, such as power plants and utilities—with possible electricity rate increases for all datacenters.” Title 24 of the California Energy Efficiency Standards for Residential and Nonresidential (why not just say “all habitable structures”) Buildings would have a direct impact on data center “infrastructure and construction costs by mandating that certain energy efficiencies be installed.”

According to the legislation in its current form, these new standards would not affect existing datacenters in the state but would apply to any new datacenter construction and any additions to those already built.

While this might be a crisis for those in the industry, the case for environmental crisis is far stronger. It’s difficult to argue against this movement to make datacenters in the state as efficient as possible but it could also spell trouble for the future of technology in the state that is known its valleys of silicon.

As if it was not already expensive enough to build and operate datacenter anywhere to begin with within any state, California has contended with some of the highest utility rates in the country for some time already, which has meant that many companies who needed to construct data estates have long-since looked elsewhere. Those who stuck around were just diligent or otherwise well-funded (this institutions like Berkeley National Labs, for instance, which received a great deal of DOE money to continue their work in the face of rising costs).

Some make the argument that by adhering to the regulations about installing the most efficient components, companies will actually save money over time, but for any new data center, this promise of eventual savings over the course of many years versus a lower capex headache if they took their business to another state, the choice could very well not favor California.

What California is doing should be applauded since they are taking proactive measures to stunt carbon emissions by going for the jugular—datacenter and power plant coffers. One can’t help but wonder what will happen if a handful of other states enact such aggressive carbon policies—then another handful, and another until finally—outsourcing of data centers will take off again with even more force than that movement has already.

Parkinson’s article is quite in-depth and provides some comments from those who are directly involved in the legislative efforts and those who would be most affected. You can read it here.