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The Greening of IT
74 How Companies Can Make a Difference for the Environment

Using Utility Rebates to Minimize Energy Costs
in the Data Center

In the previous sections, we discussed the types of energy-efficiency incen-
tives that energy utilities can give to their customers. Based on a 2008 sur-
vey, here are some of the actual incentives in place or planned.

The Incentive for Utilities
In response to customer concerns, utilities look for ways to provide
greener power. One way utilities can be green is to reduce power demand in
the first place by encouraging greater energy efficiency from their customers.
This seems to run counter to a utility’s self-interest because profits are nor-
mally tied to energy sales. But in a growing number of states, utilities are
motivated to promote energy efficiency by decoupling and other forms of
regulatory reform. Decoupling separates a utility’s capability to make money
from the amount of electricity that it sells.
Decoupling uses a rate-adjustment mechanism to break the link between a ptg
utility’s capability to recover agreed-upon fixed costs, including its profit
margin, from the actual volume of sales. The basic principle is that if the
actual sales are less than what was forecast, there is a slight upward adjust-
ment in rates to compensate the utility. California, the first state to adopt
decoupling, discontinued it during deregulation in 1996, but then brought
it back in a groundbreaking energy-efficiency campaign that includes $2 bil-
lion of approved investments in efficiency from 2006 to 2008. Other states
adopting, or in the process of adopting, various forms of decoupling include
Oregon (natural gas), Maryland, Idaho, New York, and Minnesota.

Available Incentive Programs

In August 2006, PG&E in California became the first utility to offer
rebates to business customers that replace existing computing equipment
with new, high-efficiency servers or implement virtualization and server con-
solidation projects. In 2007, PG&E extended its rebate program to data cen-
ter disk-storage equipment.
With PG&E’s High Tech Energy-Efficiency Incentives program, qualify-
ing customers can earn a rebate of up to $4 million per project site. The pro-
gram has industry support from many high-technology companies, such as
VMware, Intel, HP, Dell, IBM, and Rackable Systems.