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5: The Magic of “Incentive”—The Role of Electric Utilities 73

Example of Energy Utility Rate Case Incentives

Utility companies create their rate case rebates to customers based on
proven ways to save electrical energy on IT (usually at the company’s data
center). In Europe, for several years, consumers and businesses have earned
more favorable rates if they use less energy during peak hours. This way of
charging for energy has already been adopted in the United States as well.
So, during peak air-conditioning and lighting hours, prices go up.
According to the PG&E Web site, Critical Peak Pricing (CPP) benefits
customers on weekdays in the summer season by reducing or shifting
energy usage away from the noon to 6 p.m. peak period during 12 or fewer
CPP events. In exchange for this, customers receive a discount on all part
and on-peak usage on all other days of the summer period that starts May 1
and ends October 31.
With the capability to switch data processing over to geographical areas
not affected by the peak pricing, data centers can potentially avoid the
higher-priced energy—if they are prepared and if they receive enough
advance notice to send processing elsewhere. Data centers are used today to ptg
help smooth demand by working with electric utilities to go “off the grid”
during critical times to avoid brownouts or blackouts. The use of emergency
generators, normally diesel fueled units, might not necessarily be a green
alternative because the data center’s emergency generators might actually
produce more carbon emissions than the local utility. Clean cogeneration of
electricity can be accomplished today with fuel cells and natural gas, and the
use of small nuclear power plants has even been proposed for the future.
With the availability of high-speed networks, data centers can be moved
almost anywhere—offshore as well as out of the region. Ideally, multiple data
centers enable flexibility for natural or man-made disasters plus the capabil-
ity to operate to optimize for energy efficiency. The flat world of the 21st
century has enabled global corporations to optimize their IT anywhere on the
planet it makes business sense. As energy costs become a bigger factor in the
costs of operations, optimization will include energy efficiency, performance,
and qualities of service.
You might ask, “Are the electric utilities giving money away at the
expense of their stockholders?” Most electric rates can be built with a small
percentage added on for efficiency rebates. This rewards opportunistic inno-
vators with the overall market, not the shareholder, paying for efficiency
improvements. The small tax in the rate primes the innovation pump bene-
fiting society overall by reducing energy consumption.