NextDC predicts substantial power price increase for company following carbon tax

2.7 cent per kilo watt power cost increase could be incurred by operator says Bevan Slattery
NextDC predicts substantial power price increase for company following carbon tax

NextDC chief executive, Bevan Slattery, has predicted that it may be incurring costs of "2.7 cents per kilo watt" at its Melbourne facility once the Gillard Government's carbon tax comes into affect on 1 July, 2012.

Speaking to Computerworld Australia, Slattery said the company's calculations show that the carbon tax will create further incentives for it and fellow data centre providers to pursue energy efficiency measures.

"An example of this is in Melbourne where we have designed our facility to reduce our energy consumption compared to traditional data centres, but we have also designed the later inclusion of generating our own low carbon energy through tri-generation plants on site," he said.

"These plants are expected to go live later next year and are able to take 100 per cent of the electrical load for the mechanical plant. At these levels, we calculate we will reduce our carbon emissions by approximately 30,000 tonnes of carbon each year."

He added that building a green data centre with lower carbon emissions would assist NextDC in demonstrating to potential new customers one of the key values a purpose built facility was able to provide.

While Slattery had mixed feelings about the carbon tax, he personally felt that if Australia was to reduce carbon emissions, then the money raised should be more directed towards directly encouraging investing in Green energy infrastructure or research and development.

Ovum Australia research director, Steve Hodgkinson, agreed with Slattery's assessment on cost rises and pointed out that the expected rise in electricity costs would also be a factor as data centre operators were large consumers of electricity.

"As the Tax is intended to do, it will make energy efficiency more of a high profile issue for data centre [operators]. One of the facts of life for these businesses is that each generation of technology becomes more efficient so newer technologies are better," he said.

"The capital replacement cycle may become accelerated and one consequence may be to drive consolidation of the data centre sector because economies of scale will become more important around the need to have capital to invest in the latest technology."

According to Hodgkinson, the carbon tax would not lead to an "altruistic" message of Green IT concerns but could add some incentives for companies to invest in new business technology.

"It sharpens up people's perception of the actual cost of carbon and therefore the arguments to invest in new technology are stronger because operators can now quantify the cost of failing to invest. Companies can argue for capital investment in new technology in order to reduce the costs to them of the carbon pricing regime," he said.

He added that the rising costs may mean some smaller data centre operators could be forced to merge with others in order to survive.

"This [tax] adds pressure because data centres are an economy of scale game but there has already been pressure for some operators to merge for quite awhile," Hodgkinson sad.

"The technology refresh cycle is getting faster because the new equipment has a much lower power usage effectiveness [PUE], the ratio between energy that flows into the data centre and energy that is supplied to do useful computer work becomes really critical to the economic viability of data centres."

Vocus and ASG Group have also been contacted for comment on the carbon tax.

Follow Hamish Barwick on Twitter: @HamishBarwick

Follow Computerworld Australia on Twitter: @ComputerworldAU

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