August 5, 2022

Q&A: The Current And Future State Of The Data Center

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What does increased digitalization mean for energy demand in the U.S. and abroad?

As consumer demands for smart cars, apps, and technology, in general, continue to evolve, the electrical demand continues to escalate. Density within data centers is shifting, and the capacity to power and cool this demand continues to be an issue. The impact is two-fold in these environments: there’s an impact on power consumption as well as water consumption (If the design of the facility is based on utilizing water towers). Right now it’s a big challenge. These challenges have always been there, but designers improving efficiencies and manufacturers seeking greater capability from the equipment have led the way.

Sustainability is also coming heavily into play now. Solar, wind, natural gas, lithium batteries, and so on are all trending. What can be solar? What can be wind? What can be natural gas?

In general, components of equipment like BMS and raw materials like steel and concrete are becoming more difficult to acquire due to demand and manufacturers' inability to maintain pace. Data centers get hit twice because they need highly sophisticated technology to operate efficiently and they need the basic components of a building to construct as well.

What environmental impacts are of greatest concern when clients are building new facilities?

The availability of power is one of the greatest concerns when clients are building new facilities, and working with whoever the utility provider is for that geography is a major influence on site selections. The second thing is working with the local jurisdictions on water. There’s a lot of consumption that happens with different types of data centers, but the primaries are power, water, and technology providers, such as Verizon. In theory, you might have the greatest, most efficient data center, with a low PUE (a power unit measurement), but if the technology is not there to support the bandwidth of information that has to go through that data center, you’re dead in the water or looking at a highly expensive solution to get it there.

Here in Northern Virginia and Ashburn, land has become so expensive, but when I first started working in the industry land was the last thing to worry about. You could get land anywhere. You look at many different factors while building a new data center, but primarily it’s power availability, water availability, and technology availability.

In Iowa and Kansas, for instance, we worked with all of these utilities. We worked with the phone company to extend fiber from the closest point, which at the time could cost as much as one million dollars a mile. It’s not quite that much anymore, but back in the day, if you wanted to put your data center in the middle of nowhere, you paid that kind of money to get the fiber to your building because it was a one-time charge — a capital exposure that you could address in different accounting ways. It’s different now. When you look at Ashburn, which effectively has become the key hub of the data center world, the utilities have recognized that and they have and continue to beef up power. The technology is here. All the major carriers are here. So both the technology and power boxes are checked, and Loudoun County has improved its water treatment exponentially. Landowners have started waking up. Now that it’s 2 million dollars an acre, in some cases, people are starting to push out to Prince William County and Frederick County, Maryland, and create smaller versions of Ashburn. This is happening all around the country — not just in this area.

What are the top challenges you see data center providers facing in the industry today?

Competition is the main challenge. The margins are so thin when it comes to data center facility providers, so they have to be as lean and as efficient as possible to maximize the backside of a build of a data center. It’s one thing to say you’re going to build a 200-million-dollar data center. You also have to consider what your competition is doing, what they’re offering, how efficient they are, and how much they’re charging clients to be in the space. It’s very commoditized, and providers have to be extremely diligent in how they spend their money and what they create when it comes to client demand.

Will there be an increase in community resistance as more and more data centers are built in Northern Virginia? If so, how are companies handling or going to handle this?

Data-centric companies are being challenged when they show interest in parcels of land due to concerns of the communities from both an aesthetic and environmental impact. Conversely, economic development leaders have focused on bringing data center providers with economic incentives due to the opportunity to secure revenues from pass-through revenues while minimizing impacts on the community traffic issues. Community leaders are trying to put all kinds of different incentives on the table (like tax breaks) that will generate revenue for a county. There’s all kinds of economic back and forth when it comes to whether you’re going to purchase land in places like Ashburn, Prince William, or Frederick, Maryland.

In an attempt to make data centers more presentable and because the local community doesn’t want to look at a building that looks like a big box, efforts are being made to create buildings that are more presentable as they consume more of the landscape. Communities feel like they are losing lands, forests, and green spaces to massive boxes that consume tons of power and utilities, taxes pay for those public services, but are unaware or provided the necessary information to understand that data centers contribute enormous revenue streams to the community despite any initial incentives offered initially to entice them into a particular location. For instance, In Prince William County, the community has pushed back and said they don’t want a data center near a battlefield. Loudoun County is starting to push back because they don’t want more forest areas torn down to put in another mega-patch of data centers and take away from the community wildlife environment. This resistance is not just specific to here — many communities want to keep their town the way it is. Again, the ability to find the balance is the key to positive revenue for the jurisdiction while maintaining the community's integrity.

In response, we're seeing more and more cases where owners and developers are trying to maximize the footprint available — building up instead of out. But it all depends on the geography. You’re limited in Ashburn because of the flight path for Dulles International Airport and a lot of Federal Aviation Administration rules and regulations that dictate what you can and cannot do in terms of going vertical. The concept of going vertical isn’t necessarily new, per se, but the data center world is finally starting to do it on a more frequent basis. Typically, the biggest data center has been around two stories tall. Now they are pushing five and six stories tall.

Are there new technologies that you’ve seen data center owners and operators embrace that are improving their operations?

I recently attended the 7x24 Exchange Conference and one of the key takeaways for me was the massive leap forward in existing technologies and equipment. They have gotten so much more refined. We now have even greater abilities to monitor operations - from power consumption to performance. For example, there are infrared cameras on equipment that can trigger a warning if something warms up too much. This has been around for a while, but the ability to do it is much more sophisticated now.

At these events, we are having conversations about needing to make improvements and pinpointing areas that could use more focus. People talking about that — about how to be better — is a good thing. When you stop talking about it is when there’s a problem. The constant communication that takes place between builders, designers, and program managers at all these types of conferences is important. They help to fuel the drive to find the answers.

And there are a lot of new faces at these conferences. A lot of young people are coming into the fields of design and build. They’ve grown up with technology which I think has helped them be more cognizant of how important sustainability is and how important efficiencies are, and how the two are intertwined. They’re much more attuned to it.

What’s next for the industry? What innovations or changes do you foresee in the future?

There is a constant desire from the design community to peel the onion back on what I like to call “battleship gray mentality”. Owners and operators fall into two basic camps; One gets comfortable with their design, and when the opportunity comes forward to use a new technology that hasn’t been used extensively and this is the battleship grey camp, which says, “I’ve done it this way and it has always worked” and repeat over and over versus the other side of the equation that constantly looks forward by being cognizant of the political climates and the continual push to be environmentally conscious. As I look across the landscape both here in the Americas and overseas, countries down to local communities are more active in ensuring that data centers are more environmentally focused.

Although the Americas are not as focused as Europe on carbon neutrality these challenges will eventually be global. With this in mind, and more designers supporting global clientele, many are trying to find new ways to meet the current and future regulations now while still being able to maximize ROI for owners. There are several companies really pushing the envelope with concepts such as underwater design or on-barges utilizing seawater to help cool systems and lower costs as well as minimize land acquisition. A lot of people are trying different things. Natural resources are a constant reminder to designers and facility owners to push the envelope and get creative when it comes to design efficiencies and lowering operational costs.

It starts with something as basic as lighting. Vantage is continually trying to improve sustainability and it starts with wind and solar site lighting as well as EV promotion by investing in on-site stations. They also consider CFD models (a heat disbursement map) to see how chiller plants perform with prevailing winds to ensure peak performance on any given day. It all starts in the design phase. Now, with the technology and tools available, designers can literally model how a data center is going to perform in the environment that it sits in while in the data center's infancy you wouldn’t be able to do that very well.

Building Information Modeling (BIM) has become a massive tool to eliminate waste. BIM is performed so that any contractor installing any material within a building (whether it’s the electrician, the mechanics, or others) can review the model throughout the building process to ensure materials are not wasted. Companies, under the encouragement of both the public demand and USGBC guidelines, push to minimize landfill. With the assistance of vendors and contractors, J2H measures and charts what goes to the landfill and holds vendors and contractors accountable to ensure it is minimal throughout all of our builds.

Mechanical units are the same way. Some companies are getting their CRAH unit, an inside air conditioner, and those manufacturers have optimized every bit of the unit to last longer and run as efficiently as possible, all the way down to ball bearings. They’re doing that for competition’s sake too because they know at the end of the day it’s the bottom line. How much it costs to install and run translates back into the cost to a client who wants to rent the space. Manufacturers want to be “the go-to” for these data center providers because their competition is fierce as well. And when they’re competing, it’s against the world. I have one client that has units coming from Jordan, for example.

It's really all about continually pushing design concepts and equipment performance to be able to not only meet ROI goals but be able to address ever-evolving environmental concerns.

What unique value does J2H bring to data center providers looking for project management and owner’s representation services?

Our client diversity provides us an excellent window into the multiple best practices and concepts. Our core responsibility is to make recommendations and to make those recommendations based on experience and knowledge of what is going, i.e., cutting edge while being practical and cost adverser on any given project and how vertical one may want or can go. Understanding what best practices are out there across the board gives us a unique insight to be able to assist our clients. That’s not to say we give away our client's trade secrets, but we can make recommendations on the performance of equipment, build sequencing, and overall program development. This includes everything from the type of building a client is building, to recommendations on things to look at which can potentially offer greater efficiencies, which ultimately leads to operational savings and maximizes long-term profitability.

We are vigilant about continuing to expand our knowledge. The goal J2H has always had is that at the core of our company is to constantly learn and seek answers to put our clients in the best possible position to make decisions. Providing a solution to a problem without regurgitating the problem is the goal for me personally — knowing the problem and not just repeating the problem back to the client, but having solutions and answers to it.

Learn more about J2H’s experience and how we can help on your next build.