Data Center Journal

VOLUME 44 | JUNE 2016

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10 | THE DATA CENTER JOURNAL the Myth of scale (aka the fIrst-cost trap) Perhaps there is no better example of how the myth of scale morphs into the "first-cost trap" than when a company elects to build out the entire shell of its data center up front, even though its initial space requirements are only a fraction of the capacity. It's important to note that this strategy is also used by providers of multi-tenant data centers (MTDCs), and it doesn't work any better for them. e average powered core and shell (defined here as the land, four walls and roof along with a transformer and com- mon areas for security, loading dock, restrooms, corridors, etc.) for a data center facility typically ranges from $20 million to upwards of $100 million. e standard rationale for this "up front" mode of data center construction is that it's not the "expensive" portion of the build and will be necessary in the long term. In other words, the belief is that since construction is cheap per square foot, it's logical to build the facility in its entirety—a rationale that's equivalent to justifying the purchase of an unnecessary object since it was on sale. e problem is that when the first data center pod or module is added, the costs go up in additional $10 million incre- ments. In other words, it's a $30 million minimum best case just to turn on your first server. optIon Value In analyzing this method of data center construction, what is gained is oen less important than what has been lost. Option value is the company's prospective economic alternatives (options) on making Free-Cooling Hours and Estimated Cost Savings—New Mexico 75°F Supply Air—Normal 75°F Supply Air—Adiabatic Mech Hours 6,883 hours 380 hours Mech Cooling kWh 1,720,750 kWh 95,000 kWh Mech Cooling $ $99,804 $5,510 Savings $ $94,294 Capital Cost –$500,000 10-Year Savings $442,935 Table 1. Savings assumes energy cost of $0.058/kWh, 0.25 cooling overhead and 1,250 kW of IT load. Figure 2. Assumes power cost of 0.058/kWh, water and treatment costs of $22/1,000 gallons, and a 7% discount rate.

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