Rising Energy Costs and Datacenter Awareness

Rising global energy costs is a current hot topic, contributing in part to the same inflationary pressures that are playing out along supply chains, and ultimately leading to higher operational costs in the datacenter.

Energy Prices France Germany Graph. rising energy costs and datacenter awareness

.Many network operators and enterprises have recently opened invoices from colocation and office space providers only to find considerable price increases. Unfortunately, many colocation contracts have clauses allowing for these exceptional price increases, leaving the tenant with little choice but to accept the increased charges and hope that energy markets normalize in 2023. More than likely these prices will symbolize a new normal, and the plan forward is realizing how to best reduce your power usage, while also being aware of future power commits with your vendors.

Extreme examples include power costs at a German datacenter increasing by 50% starting in September 2022. Another datacenter operator based in Finland recently announced a price increase of 80% as a direct result of soaring energy costs. A major colocation provider in Germany issued a more modest 26% price increase on electricity effective January 1, 2023.

Although the highest price increases are being seen in mainland Europe, the rest of the world is not immune to the same market pressures. Within the US, wholesale electricity prices have also slowly risen. An earlier harbinger of price increases were seen in Texas in winter of 2021 when exceptional excess power costs were directly passed to colocation customers without warning.


Managing Power Related Cost Increases

1. Begin by reviewing your existing contracts and ensure that any price increases imposed on you are allowed by contract. In future contracts you can try to negotiate these energy cost increase clauses out, but in many cases this is not likely to be an option.

2. Calculate as best you can that you indeed require the power you are under contract for. Generally, colocation providers will sell power under two models: either usage based (per kWh) or flat rate (based on maximum draw for a plug set). Typically for heavier power users the latter will reflect better value per kWh. If you are a smaller power user it would be worth checking which power model your colocation uses, and seeing if there are any options to switch to usage based if you are not using the contracted flat-rate power. Calculate your break-even point between the models to ensure the model you are using is a good fit; renegotiate if required.

3. Check to make sure all connected and powered up devices are truly functioning in an active role. It’s not uncommon to have idle or non-critical equipment mysteriously still powered up in your colocation. Are you able to migrate any customers or devices to reduce the power used?


Power Hungry Hardware – Going Greener and Leaner

A simple example regarding total cost savings is difficult to calculate due to different ownership options with hardware and how this will impact your datacenter footprint. However, one thing is clear. Using power consumption considerations as a reason to trigger an upgrade cycle in hardware has never been more relevant than it is today.

Traditionally, companies are likely to depreciate hardware and other fixed assets over 5 years. That same hardware is often used for longer periods in order to generate a larger return on investment. Although not an apples to apples comparison due to the 100G density on a Juniper MX304 and its 2 RU rack size, consider the power consumption difference with an older generation Juniper MX240 at today’s power rates:


Power Expense

Comparison of: Legacy Modern

Juniper MX240

Dual SCB, RE, 2x100G+8x10G

~1.2kW per system


EU: €388.80

US: $155.52

Juniper MX304

Dual RE, 16x100G

~500W per system


EU: €162.00

US: $64.80

Enterprise Switching

Cisco 6509

Sup2T and 16x10G

~2.2kW per system


EU: €712.80

US: $285.12

Arista DCS-7280SR

48x25G + 6x100G

~300W per system


EU: €97.20

US: $38.88


100G CFP

~25W per optic


EU: €8.10

US: $3.24

100G LR1 (400G Breakout)

~10W per optic


EU: €3.24

US: $1.30

Assumes power cost of $0.18/kWh in US, €0.45/kWh in Europe. 720 hours per month. All figures are approximate. Rising energy costs and datacenter awareness.

With the simplified snapshot above, network operators are already rethinking how to leverage operating capital in the new paradigm of rising energy costs coupled with a predicted stagflationary economic environment. Depending on how many generations of hardware upgrades were skipped, possibly once with justified cost savings in the process, running a cost analysis for upgrading to the next generation of IT hardware (from switching to servers) may be a very eye opening experience.

Is it time to consider improving your network performance, reduce overall power consumption, lower your datacenter footprint, and recruit the support of one partner to help implement the project from start to finish?


We Can Help You

For any questions or help regarding infrastructure solutions mentioned above, please contact us directly:
US & Canada: sales-us@nesevo.com
EMEA & APAC: sales@nesevo.com
You want to talk to us about rising energy costs and datacenter awareness? Click here for more contact details.



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