Making Data Centers Lean and Green
Insurance Networking News, January 2008
High energy costs, concerns about power availability and pressure from company stakeholders are causing growing numbers of IT managers to consider green strategies for their data centers.
Although U.S. energy use is increasing in absolute terms, it is growing more slowly than the economy. That’s mostly because much of the economy’s growth is in service industries, and service industries consume less energy than manufacturing industries.
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Even though IT has been key in building the service economy, energy consumption in IT centers is beginning to draw greater scrutiny. In a report to Congress in August 2007, the U.S. Environmental Protection Agency (EPA) estimated that in 2006, the nation’s data centers and servers consumed about 61 billion kilowatt hours of electricity. That’s roughly what it takes to power 5.8 million households, and double the amount the centers used in 2000. By 2011, EPA says, IT energy consumption could reach 100 billion kilowatt hours, and peak demand would require construction of 10 additional power plants. The cost of 100 billion kilowatt hours, incidentally, is around $7.4 billion.
In a some cases, data centers already have reached the point where more electricity just isn’t available, says Richard De Lotto, principal analyst for Gartner Group, Stamford, Conn. “Eventually, the data centers are going to have to be redesigned and redeployed,” he comments. And, there are still many unanswered questions about possible technology responses to the problem. “This is very, very new stuff. Data centers take years to plan and deploy, and the people who jump early will be the people who get it wrong.”
It could become necessary for insurers to start co-generating their own power, De Lotto says. “You may want to investigate moving your data center to some place where you can put in a geothermal plant. These things will take a great deal of time to investigate. But if you could move your data processing center to some place where power was coming out of the ground for free, or where you could put in your own wind farm and be completely, or mostly, off the grid—that makes a lot more sense, and it’s a lot greener than just moving things around in the midtown location that you’ve chosen because it’s an easy commute.”
Thanks to a mix of rising power costs and growing environmental concern, green IT is starting to catch the attention of IT decision-makers, according to a report from Info-Tech called Info-Tech’s Green Index: How Green Are You? The London, Ontario research firm found that a quarter of the North American IT executives it polled said they were very concerned or extremely concerned about improving energy efficiency and environmental responsibility in their data centers. Yet, there’s still a big gap between good intentions and action: The study found only 9% characterized their own data centers as very or extremely green. Concern among financial services companies, at 17%, was significantly below the average, but the proportion of green data centers, at 7%, was close to average.
Part of the general push for environmental responsibility among insurance companies comes from stockholders and stakeholders who want higher profits and higher returns, but also demand green practices, De Lotto says. Financial services companies traditionally have a culture of doing good and being perceived as doing good. “Even if they don’t have activist shareholders and stakeholders pushing them toward green behavior, they would be doing it themselves because it’s being perceived as the right thing to do,” he says. “The other thing is, it can save a heck of a lot of money.”
Most of the major carriers, and many of the mid-market and smaller insurers, already have environmental policies in place. Some, notes De Lotto, go out of their way to insure, and therefore help enable, green development, which is often more costly than conventional construction and, therefore, off the usual actuarial charts. Similarly, some auto insurers give discounts to customers who drive hybrid cars. Other carriers invest in alternative energy projects and set green standards for their suppliers.
Internally, common insurer practices include installing more efficient lighting, recycling waste paper, encouraging car pooling and use of public transit, adding hybrids and fuel-efficient vehicles to the company fleet and encouraging customers to handle more transactions electronically.
Some carriers specifically address IT. Chevy Chase, Md.-based GEICO, for example, is replacing CRT monitors with more efficient flat-panel units, and installing more efficient air conditioning in its data center. State Farm Mutual Automobile Insurance Co., Bloomington, Ill., recycles computer components that aren’t fit for donation.
Richard De Lotto
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