How the Tech Industry Saved $60 Billion in Energy Costs

A new study details the effects of revolutionary efforts at streamlining one of the world’s most energy-intensive facilities—the data center.

In 2008, the Lawrence Berkeley National Laboratory—a US Department of Energy facility managed by the University of California—provided a report to Congress (PDF) that warned of the financial and environmental consequences of the rapid growth of internet access and usage. Emerging trends like the mobile web, video streaming, and the Internet of Things would mean rapid acceleration in the amount of data stored on the internet, which would in turn require larger and more reliable data centers to meet these needs.

As a result, the Berkeley Lab’s 2008 report estimated that energy consumption from data centers would effectively double every five years—an alarming figure for an industry that was already consuming close to 2% of all electricity in the US at the time.

Since that landmark report, some of the world’s largest technology companies have turned to energy software, more efficient hardware, and innovative data center design techniques to keep energy usage flat, even as the number of data centers in operation has grown, according to a new report from the Berkeley Lab released this week.

From 2010 to 2014, electricity consumption in US data centers grew 4%, reaching 70 billion kWh and accounting for an estimated 1.8% of nationwide consumption, according to the report. Those figures illustrate a sharp turnaround from a previously ominous trend—the Berkeley Lab estimates data center energy consumption grew 90% from 2000 to 2005 and 24% from 2005 to 2010, with much of the decline in the latter half of the decade due to a substantial decrease in server shipments in 2009 driven by the economic recession.

Going forward, the report predicts that energy consumption in data centers will grow just 4% from 2014 to 2020. If the industry continues this pace, the Berkeley Lab estimates these efforts will save an estimated 620 billion kWh from 2010 to 2020, and more than $60 billion in costs.

While data centers are unique in that they use significantly more energy than most other businesses, this report is a sign of the potential impact of a comprehensive energy strategy for any industry. By embracing innovative technologies and design standards, companies like Google, Amazon, Facebook, and Apple were able to not only gain control of a major line item in their cost sheet, but turned energy into a strategic aspect of their business. Dale Sartor, one of the report’s authors, explained how energy costs in data centers became a differentiator for these companies amid the growth of cloud computing.

“The cloud is certainly one of the drivers to more energy efficiency,” Sartor said. “Data centers used to be considered a fixed cost, but in a cloud environment, whoever is lowest cost provider is going to win. Energy is one of the easier things to optimize.”

This is an emerging reality in other industries, such as industrial and manufacturing, as large companies find themselves under pressure to work with suppliers that can show a commitment to energy efficiency and sustainability. Energy strategy is playing an increasingly valuable role in driving revenue.

In a sense, the 2008 Berkeley Lab report was a harbinger of things to come to the rest of the world. For a number of reasons—including their high-profile nature as the face of the world’s fastest-growing industry and the sheer magnitude of their environmental footprint—these companies recognized the importance of developing a strategy to take control of their energy consumption. Not only would they feel the financial burden of paying for the growing amount of energy used in their mission-critical data centers, but their environmental footprint would soon attract the attention of investors, regulators, and the public at large.

In December, the world saw an unprecedented level of international agreement to stem the effects of climate change at the COP 21 conference in Paris. Meanwhile, Wall Street is increasingly focusing on business’ environmental, social, and governance metrics when evaluating potential investments. The same trends that drove the tech industry to reevaluate its energy strategy are coming to businesses of all kinds.

Read the strategy brief from PwC and Enel X to see why energy strategy should be a C-suite imperative.
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Authored By Colin Neagle

Colin is a marketing manager for Enel X North America and editor-in-chief of the EnergySMART blog.

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