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Companies earn these certificates by reducing the energy consumption of their data centers either through an overhaul of the facility or a systems project (like consolidation and/or virtualization) involving IBM hardware. Certificates can be used as proof of having met internal environmental goals and then be sold to utility companies for cash or to companies looking to meet environmental goals of their own.
For every megawatt-hour per year that a company reduces its energy consumption, it garners one certificate, which can be worth between $3 and $31 depending on company location. In this way, data center energy efficiency becomes a commodity that can be bought and sold in the marketplace.
Commodity energy credits
The program is administered through the third party Neuwing Energy Ventures, whose role is to verify the energy savings of a project and report it to participating states.
"What's interesting," said Clay Ryder, president of analyst firm the Sageza Group Inc., "is that by quantifying and having a certification process with a third party, they're laying the mechanism by which a standard credit could be traded or sold in the market if that were to come into play."
There are restrictions, however. To qualify for a certificate, a company must have a separate utility bill for its data center from which to measure its before-and-after savings. And for now at least, if a company wants to gain credits through a project, the project must include a mainframe. Rich Lechner, IBM vice president of IT optimization, said the company plans to extend the program to IBM's Unix boxes, System p, this year and to other server platforms and storage next year. IBM hopes to use its own mainframe consolidation project to receive nearly 120,000 certificates.
Companies that want to sell energy efficiency certificates (EECs) back to a regional utility must be located in states that have a Renewable Portfolio Standards policy mandating that utilities enact energy efficiency and renewable energy programs.
Right now, those states include only Connecticut, Nevada, and Pennsylvania, although Pennsylvania's regional transmission organization, the PJM Interconnection, also coordinates electricity for all or parts of 12 other states -- Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Tennessee, Virginia, and West Virginia -- as well as the District of Columbia. That brings the total number of states and districts that can buy EECs to 15.
On the voluntary market, companies that win certificates can also sell them to companies trying to meet internal goals or to make themselves appear energy friendly. This system works in much the same way as when a company buys carbon credits every time one of its executives hops on a corporate jet.
Paul MacGregor, executive vice president and chief technology officer at Neuwing, added that companies seeking to cash in certificates from a utility can do so only with certificates that originated in that state. In other words, a company can't sell certificates to a utility if these certificates were generated outside the utility's service range.But a piece of the green puzzle
For this certificate system to work properly, Ryder said it needs to catch on nationally and extend to other IT providers.
"It's going to have to be larger than IBM and Neuwing for these kinds of programs to really work," he said. "There needs to be some kind of national requirements or standards or marketplace, if you will, for the credits. In a national program, all of a sudden you've got a much larger market in which these things can trade."
Ryder added that this program wouldn't preclude companies from going after local incentives from utility companies such as those Pacific Gas & Electric offers. "Why not double-dip?" he said.
Other efforts aimed at improving data center energy efficiency tend to center on building energy-efficient facilities. For example, the U.S. Green Building Council can designate a building as meeting Leader in Energy and Environmental Design (LEED) standards. Companies with LEED-certified data centers enjoy energy savings and any public relations brownie points that come with being environmentally friendly.
But the LEED standard was developed for buildings overall, and not specifically for data centers. Because data centers are so energy-intensive, it can be difficult to get them LEED-certified. Thus, organizations like the Green Grid and the Uptime Institute are considering data center efficiency certifications of their own, where a company could gain points for implementing environmentally friendly IT projects like virtualization, for example, or for practicing green facility practices such as blocking off a percentage of bypass airflow.
And IBM may be developing a points-based system for determining data center efficiency. A proposal will appear in the December issue of the American Society for Heating, Refrigeration and Air-Conditioning Engineers', or ASHRAE's ASHRAE Journal.