The Race For The Most Efficient Server Is Turning Tech Companies Into Power Companies

Uploading your music to the cloud isn't as simple as you might think. As more data is stored online, the cloud takes more and more energy to maintain, forcing companies to get into the business of getting power as cheaply as possible.

1. The Cloud of Smog.

The companies of the cloud--the so-called “information factories” of Google, Facebook, Amazon, and Apple, among others--have collectively achieved a scale of which old-school factories could only dream. The cloud is, however, quite dirty. It takes a lot of carbon to run all the servers that power it. And since more carbon means more money, these companies are doing everything possible to make their operations as efficient as possible.

Just as Henry Ford met economies of scale with a level of vertical integration never seen before or since--amassing railroads, mines, and even rubber plantations to supply his factories--the cloud companies are coping with their billowing carbon footprints with their own version of integration. They're making advancements in data center design, hardware, and even remaking the electrical grid itself.

Storing 1.2 zettabytes of information (that's more than a trillion gigabytes) requires the construction increasingly massive data centers whose voracious appetite for power consumes 3 percent of U.S. electricity, while personal devices comprise 15 percent of home electricity use--a figure projected to triple by 2030, equivalent to the demand of the American and Japanese home markets combined.

Much of this electricity comes from coal, the cheapest and dirtiest source available. For example, Apple’s eagerly-awaited cloud music service will most likely be housed at its new data center in Maiden, North Carolina, which is expected to draw on an astounding 100 megawatts supplied by Duke Energy, which generates 61 percent of its output from coal.

2: Make Servers More Efficient.

In 2010, shortly after Facebook announced plans in 2010 to build its first data center in Prineville, Oregon, Greenpeace singled out the social network for shaming because the utility in Prineville uses coal power. Last month on the eve of Earth Day, the advocacy organization expanded its critique to the entire cloud, arguing in a new report that “many IT brands at the vanguard of this 21st century technological shift are perpetuating our addiction to dirty energy technologies of the last two centuries.”

But two weeks earlier, Facebook had taken the unusual step of publishing the blueprints for its custom-built, super-efficient Prineville datacenter under an open source license, labeling it the “Open Compute Project.” They were the result of nearly two years of work and “tens of millions of dollars” to wring still-greater efficiency from its operations by integrating the design of its servers and its data centers.

“You can make an average-joe server somewhat more efficient, but to build the most efficient architecture, you have to take the two together,” explains Tom Furlong, Facebook’s director of site operations.

Google--the fourth largest server manufacturer in the world, according to CIO Ben Fried--has reached a similar conclusion. It just published some of the specs for its integrated systems, “as we have hit the point where the datacenter itself--the facility--is hitting the point of diminished returns,” says Bill Weihl, Google’s clean energy czar.

3. Jevons Paradox.

But what if a new generation of hyper-efficient datacenters only makes the problem worse, driving down the cost of operating them, thus inspiring Facebook and Google to add new services (Google Music, anyone?) which in turn causes more datacenters to propagate across the landscape?

This is Jevons Paradox, named for a 19th-century British economist who was also obsessed with coal. In The Question of Coal, Jevons concluded “It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth." The more efficient something is, the more we use of it, canceling out any savings from efficiency.

In other words, while online music services have obliterated much of the need to manufacture, store, and truck CDs to stores (which have a carbon footprint of their own), does it make much difference if digital storage lockers from Amazon, Google and Apple cause millions of listeners to stash their record collections in the cloud, requiring those hard drives to spin in perpetuity? Does it matter how many trees are saved from being pulped if coal-fired power plants are required to keep those Kindles charged?

Even Google, the biggest of them all, has decided: no. “Our view of the Jevons Paradox is this,” says Wiehl. “It’s incumbent on us to be as efficient as we can. We’re much more efficient than we were a few years ago. But from a climate point of view, we’re not going to use efficiency to get to zero [emissions].”

4. The Google Electric Co.

Despite what it wants you to think, Google is no paragon of virtue. The Greenpeace report card gave it an “F” for transparency for willfully obfuscating the true number of its datacenters, officially listing seven when estimates range as high as 20 or 30. But it has moved aggressively in the last month to procure clean energy straight from the source, the only path (for now) to a zero-carbon footprint. In the span of a week last month, Google invested $168 million in BrightSource Energy’s forthcoming utility-scale solar thermal plant capable of 392 MW. That was followed by an approximately $100 million investment in the Shepherd's Flat Wind Farm near Arlington, Ore., which upon completion in 2012 will be the world’s largest, producing 845 MW of electricity--enough to power 235,000 homes.

That’s on top of last year’s $38.8 million investment in NextEra Energy Resources’ 169 MW wind projects in North Dakota, followed by a 20-year fixed contract to purchase another 100 MW of wind power (which it reupped in April with a deal to buy yet another 100 MW from a NextEra wind farm in Oklahoma). Google’s interest in clean energy dates back to 2008, when its philanthropic arm Google.org unveiled “RE<C,” i.e. renewable energy cheaper than coal, an initiative to fund clean energy projects. The following year, it formed Google Energy to buy and sell electricity at wholesale rates. This, combined with Google’s dabbling in on-site generation and its interest in the smart grid, suggests Google is beginning to vertically integrate its electricity sources just as Henry Ford once locked up his raw materials. In the process, will it create the template for the smart, distributed 21st Century power company?

“We have an interest as a company in scalability,” says Google’s Bill Wiehl. “We feel that we have a lot of money, and can invest some of it to do good and make money ourselves.” Beyond that, he is quick to pour cold water on the notion of Google being a utility or even “particularly vertically integrated.” While he concedes that the “smart grid maybe does change that a little bit,” he stresses that Google only has an interest in supplying smart meters to consumers, not in operating the grid itself.

Chandrakant Patel, who is director of HP Labs’ Sustainable Ecosystems Research Group at HP Labs, suggests the idea of Google and other cloud companies leading the way when it comes to renewable energy isn’t as far-fetched as it seems. The combination of the hyper-efficient datacenter and a private micro-grid composed of renewables will, in time, grow so large and so cheap compared to fossil fuels that IT companies will begin to offer municipal services--the "network-as-the-next-utility” vision HP, IBM and Cisco have been so hot about.

The injection of Google’s money into the clean tech sector has had a more immediate effect, however. Its backing no doubt helped convince BrightSource Energy to file this month for a $250 million IPO, prompting one VC to speculate that a “Google effect” could add a sheen to the entire sector. “I think it's going to be a hot one,” said Claremont Creek Ventures managing director Nat Goldhaber told a reporter. “If it's very successful, I think perhaps we might get a little bit of a gold rush.”

Note: Based on a corrected tweet by Google CIO Ben Fried, this story was updated to reflect that Google is the fourth largest server manufacturer in the world and not the third.

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