The top five data center real estate investment trusts (REITs) have a combined market cap approaching $100 billion, while aggregated revenues for the top 10 biggest data center operators are around $18 billion, according to Hoya Capital.
The company defines wholesale data centers as those that serve large customers with leases of five to 15 years and states that data center REITs own roughly one-third of investment-grade data centers in the U.S. and one-fifth globally.
Companies and REITs have typically built their reputations for uptime and security by providing critical infrastructure at scale through Tier III+ facilities, usually with 2N or N+1 UPS, N+1 or two back-up generators, and dual-path infrastructure as standard. In power terms, redundancy was king.
But, in an increasingly competitive market, where high capital expenditure is needed to maintain market share, hyperscale, wholesale, and colocation players need to squeeze costs and improve income wherever possible. One way to do this is to address power infrastructure inflexibility.
The growth of the wholesale data center colocation industry proves it has done a fantastic job of securing and deploying grid power capacity for customers across the globe. But having secured and paid for many megawatts of grid capacity, data center owners should face up to the constraints of traditional static power topologies that restrict their access to available power, leaving costly stranded capacity unused and pushing costs onto customers.
This is exactly where adaptable redundant power (ARP) can help.
Cost and Service Questions
ARP addresses the following key questions faced by the data center sector.
- Are data center owners being forced to look for ways of improving margin and growing the top line?
- Are they maximizing their use of available (and paid for) power?
- Is the current model where customers pay for capacity irrespective of whether or not they use it sustainably or will it have to change?
- Are data center operations being held back by inflexible power infrastructure?
- Is unused stranded capacity pushing up power prices as a cost of business?
- Do data centers have the ability to align the power SLA with IT when the workload is continually changing?
- Can they meet the inevitable near-term customer requirement for power on a pay-by-use basis?
- Are requirements for outage mitigation without additional premiums possible in order to meet increased competition from cloud service providers?
- How can data center owners respond to market changes?
Large hyperscale customers inside wholesale colocation facilities are buying massive amounts of space and paying for huge chunks of dedicated power capacity. They may not be able to name their own price, but their scale certainly gives them leverage in pricing negotiations. For the provider, this makes power cost efficiency of paramount importance.
Smaller customers, those drawing less than 1 MW from shared infrastructure, want guaranteed access. In order to maintain profitability, data center owners can oversubscribe the shared portion of their power capacity. But this is risky, as demand from customers, such as managed service providers (MSPs) and retail colocation providers, is unpredictable.
Operators may want flexibility, but, in power terms, the reality is that data center engineers are as constrained as the rest of the market. Over the last 20 years, there has been no step-change away from the four main power topologies fault tolerant, block redundant, distributed redundant, and isolated parallel.
The decision-making process hasn’t changed much either — developers consult with engineers, and the system is designed, installed, and tested. Once it’s switched on, it is rarely, if ever, changed. And what is common to all is that, in all data center power topologies, little or no automation exists.
Once in operation, the main reasons for not changing the power topology are expense and difficulty. Altering a 2N system to an N+1 system is complex in terms of distribution and components, and the change may require planned downtime, which inevitably increases risk.
ARP is a newly developed way of thinking about how power provisioning can be both flexible and responsive while capturing stranded power and, therefore, delivering cost savings.
ARP has four operating modes: adaptable redundancy, inherent redundancy, adaptable inherent redundancy, and IT load prioritization.
Different modes offer complementary features and functions. ARP can enable unused power capacity to be accessed in normal conditions. It provisions predetermined redundant levels to IT loads where the power is derived from unused power capacity. With IT load prioritization, ARP can service different hierarchies of application needs in the event of an unplanned power outage.
To meet the external pressures and customer challenges, wholesale data center owners must look for ways to make operations more profitable.
Mechanical, electrical, and plumbing (MEP) is typically 70% of total CapEx (excluding IT) in large data center builds. Power infrastructure accounts for around 40% of that 70% and approximately 13% of operating costs on an ongoing basis.
The numbers are huge. For companies looking to provide better service and improve their long-term return on capital deployed and their OpEx bottom line, ARP may be the answer.