Data Center | April 28, 2017

How to Get Utility Incentives for Data Center Efficiency Projects

The data center industry’s ability to improve energy efficiency is massive. According to the latest U.S. Data Center Energy Usage Report published last year that examines data from 2014, data centers in the U.S. consumed an estimated 70 billion kWh, representing about 1.8% of the United States’ total electricity consumption.

While data center capacity increased at a tremendous rate over the last five years, Data Center Knowledge points out that corresponding energy use only grew slightly and not in proportion to increased capacity. Clearly, data centers are increasingly able to manage energy consumption through efficiency solutions.


Data center utility incentives

With the enormous amount of energy still being consumed by data centers though, utility companies in recent years have been offering incentive programs to data center owners and operators who are interested in upgrading their facilities to be more efficient. These utility incentives are often key for data centers to identify, implement, and maintain the solutions necessary to keep energy usage low.


There are two types of incentives offered to data center facilities by utility companies:

  1. Prescriptive Incentives

  2. Customized Incentives

Programs in the prescriptive category provide incentives or rebates that are paid as a fixed dollar amount for the replacement of an older technology with a new and more efficient version. A common prescriptive incentive given to data centers is for Variable Speed Drive (VSD) fan motors on CRAC or CRAH units.

Each utility will have a different set of paperwork and rules for the types of equipment that will qualify along with the amount paid for each item that is being upgraded.

Other steps that are part of the process to take into consideration include:

  • Prescriptive qualification applications

  • Verification that purchase orders weren’t placed before meeting with the utility

  • Visits from the utility once efficient equipment and upgrades have been made


How customized data center incentives work

Incentives from customized programs are typically performance-based. Payment is tied to specific metrics, like the amount of kWh or kW saved through an efficiency project. An example of a customized incentive program would be adding economization (or free cooling) to a chilled water system along with monitoring and controls to CRAC units and air handlers.

But before the project even begins, an engineering justification must be created, which includes power metering for existing conditions, calculating the potential savings of a proposed measure(s), and then conducting power metering after the measures have been installed.

The justification must be approved by the utility and an engineering firm, and then the anticipated incentive is calculated and set aside for the customer.


Example data center case study: 111 8th

Engineers at our firm completed an HVAC and controls retrofit at a leading colocation company's data center in the heart of New York. The upgrades resulted in a total annual energy savings of over 1 million kWh per year. By calculating the total kWh saved, the local utility in New York qualified the project for a custom incentive of $250,000+, resulting in a project payback of 1.2 years. 

Incentive programs are usually based on an annual schedule by the utility companies, which may or may not correspond with the calendar year. The program year begins with a fixed amount of money to use for efficiency projects, so it’s best to know when the program begins while preparing for your project in order to best ensure that utility dollars will be available for your project when it’s proposed.

It simply makes good financial sense to reduce power and operating costs in data center facilities wherever and whenever possible. Data center utility incentives have led to some of the fastest return on investments (ROIs) for energy efficiency projects in data centers since the industry was founded.

For managers who want to pursue data center energy-efficiency rebates, our Efficiency Solutions Division has extensive experience communicating with utility program administrators and coordinating efforts to get the efficiencies in place. With the opportunities for upgrade available and the utility rebate programs currently offered, the return on investment can be achieved relatively quickly.

Utilizing data center utility incentives is a great first step toward beginning a long-term efficiency strategy.


No-cost energy audit to uncover data center energy savings

Learn more about energy conservation opportunities and which incentives programs for which you qualify.