As I have mentioned in previous posts, the New York State Energy Research and Development Authority’s (NYSERDA’s) Industrial and Process Efficiency – Data Center program, provides financial incentives to data center owners and operators to increase energy efficiency in their data centers.

When I talk to customers about NYSERDA’s program, people usually ask, What’s the catch? The answer is, of course, that you’re not getting the money for free. You (and the majority of electricity users in New York State) already pay into the System Benefits Charge (SBC) on your electric utility bill. The money collected from the SBC is then allocated to NYSERDA and the investor-owned utilities in the state (e.g., Con Edison) to implement energy efficiency programs like NYSERDA’s data center program. By participating in these programs, you recoup money you have already contributed.

The March installment of this blog, New York’s Changing Energy Landscape, outlined the regulatory reform and market transformation measures planned by Governor Cuomo’s Reforming the Energy Vision (REV) strategy. The latest REV initiative, the Self-Direct Program, is now open and accepting applications.

The Self-Direct Program allows large commercial and industrial customers to use the money that would normally be paid into the SBC for their own energy efficiency projects. By participating in the Self-Direct Program, you are essentially opting out of participating in the energy efficiency programs offered by NYSERDA and the utilities.

If your facility meets the size criteria (you must have a 36-month average demand of 2 MW or greater, or aggregate demand across multiple facilities of 4 MW or greater, with one site at least 1 MW), you are eligible to apply to participate in the program. The question is, should you?

A variety of factors need to be taken into consideration to answer this question. The obvious one is, Which program offers you the best financial return? Beyond that question, you need to understand the impacts of the rules for participating in the program, which include, but are not limited to:

  1. Forfeiture of unused funds at the end of the program cycle
  2.  Commitment of achieving energy savings at a certain $/MWh that cannot be adjusted after you are accepted into the program
  3. No access to all of your actual contributions (the utility may retain up to 15% of the funds for administration and evaluation costs)

For large data center owners and operators, this program may represent a better option than participation in NYSERDA or the utility programs. A careful accounting needs to be made of the energy efficiency projects you plan to undertake, realistic project cost and savings on a $/MWh basis, potential projects that can be realistically completed to leverage all of your funding and the changing regulatory landscape in New York State (i.e., the direction and requirements of future energy programs).