Will Energy Star servers give your business a positive ROI?

Energy Star makes big claims about the cost savings and emissions reductions its Energy Star servers can bring, but calculating the actual ROI isn't always clear cut. This tip offers advice on measuring the real benefits of Energy Star servers in the data center.

IT has experienced a real rush to "go green" and the reasoning is easy to understand -- by lowering the energy

use of computing equipment, a company can reduce its impact on the environment and save money on power costs in the process. One of the easiest and most straightforward approaches to power conservation is to select and deploy Energy Star-rated systems, which have expanded to embrace enterprise-class servers. While there's little question that lowering power demands is a positive thing, the actual ROI and net impact on your bottom line is anything but certain.

A look at Energy Star
Energy Star is a voluntary labeling program developed in 1992 by the U.S. Environmental Protection Agency (EPA) and the US Department of Energy (DoE) to "protect the environment through energy efficient products and practices." Energy Star's goal is to "reduce greenhouse gas emissions and other pollutants caused by the inefficient use of energy" and the EPA uses a branding program that helps consumers identify compliant products. You can actually learn a lot more on the specifics of Energy Star through its website.

Given the astonishing growth in data center power demands, the EPA has developed and released an initial version of the Energy Star Computer Server Specification. As you might expect, a new initiative such as this takes time to implement, and there are few enterprise-class servers with Energy Star ratings today. Notable exceptions include HP's ProLiant series, Dell PowerEdge and the IBM Power 750 Express.

The standard that defines Energy Star-rated servers is currently version 1.0 (sometimes referred to as Tier 1). The Tier 1 specification began May 15, 2009, and Tier 2 is expected to take effect October 15, 2010, so manufacturers are able to design and market Energy Star-compliant servers today.

Here are the basics of the Energy Star server requirements:

  • The spec includes a matrix for power supply-efficiency requirements. If the server has a multi-output power supply, for example, the supply should be at 82% efficiency when the server is at full load.
  • The spec also sets power consumption limits for when the server is idle. For a single-socket server, the limit is 65 watts (W); for four-socket servers, the limit is 300 W. Allowances are made for additional installed components (such as 20 W for another power supply).
  • Manufacturers must provide a "power and performance data sheet" with each server or each server class detailing power consumption at various load configurations.

You might suspect that the reduced power could adversely affect performance, but this is not the case. The specification makes additional power allowances for configurations with additional hard drives, RAM, power supplies and Ethernet ports. Thus you can have a powerful server and still be Energy Star compliant. Note, however, that servers with more than four processor sockets are excluded from the Tier 1 specification, as well as blade servers, blade chassis, blade storage, network equipment, fully fault-tolerant servers and server appliances. These will likely be included in the future Tier 2 specification.

Cost and savings considerations
The challenge with Energy Star is that it's difficult to measure any actual savings. The Energy Star website makes a number of cost-saving and environmental-benefit claims. Specifically, it claims that if all computers sold in the U.S. met the Energy Star standard, energy savings would be over $2 billion per year and the greenhouse gas emissions reduced would be equivalent to that of 3 million vehicles. That sounds great, but you should always be suspicious when claims of cost savings are made, and this is no different.

Considering the vast number of variables involved, savings would be difficult to prove. But there are opportunities to save on energy costs and potential savings from utility and tax incentives.

Many utilities offer incentives for customers to reduce power usage. But it may not be that simple, and you'll need to do a little homework. Some industrial users pay a flat rate set at peak usage to ensure they will get the power when needed. This means that reducing power consumption will have no effect on the power bill and you may actually be penalized for using less power.

A quick visit to your power company's website will provide information about tax credits and rebates available for energy-conservation initiatives, which may include Energy Star products. These products and rate savings vary greatly from one provider to another, so check the local power company's policies. For example, my local power company provides a program that offers commercial users a rebate up to 50% of cost (up to $100) on Energy Star office equipment as well as rebates on other technologies. Companies upgrading their servers may see a small benefit from these types of rebates. See our list of data center utility rebates by state.

Figuring ROI for Energy Star
Now it's time to determine the ROI for Energy Star-rated computers and peripherals. Calculating ROI, in my opinion, demands proof of what I call "hard cost savings." If I am paying $200 per month on my home power bill and I convert to a number of Energy Star-compliant home products and the bill goes down to $150 per month, that is a hard cost savings. Unfortunately, many supposed cost savings are "soft" -- savings you can't actually prove on the balance sheet.

Figuring the savings is simple in principle -- just multiply the power savings by the number of devices. So if a new Energy Star server saves 10 kWh per month over the old server and you replace 10 of those servers, you save 100 kWh per month. Then it should be a matter of multiplying that savings by the cost of power. You can also toss in the savings of any local power company and/or government credit in purchasing the new equipment.

But there are other issues to consider that are harder to calculate. For example, less power means less heat, and this should (ideally) lower air-conditioning power costs. Energy Star servers typically won't cost more than non-Energy Star servers, so the amount of "investment" in Energy Star functionality is hard to measure in the first place. The real question in ROI is whether the move to Energy Star will have a meaningful effect on the payback for servers that you'd need to buy anyway. There are also costs involved in setting up and configuring the new equipment to enable its power-saving features, disposing of (or recycling) the old equipment, and so on. And these added costs may detract from the ultimate savings. Once you have a savings figure in hand, you can determine whether the move to Energy Star makes sense for your next technology refresh cycle.

Determining power savings to calculate ROI can be tricky when considering servers alone simply because it's difficult to measure and record power data for an individual server. However, when you look at servers as a component of the data center, Energy Star provides tools to obtain quantifiable data. Review the Enterprise Server and Data Center Energy Efficiency Initiatives information for more details. Note the data collection form under the Energy Star Rating Development Process. This is a spreadsheet that is used for program participants to record power savings to be submitted to the Energy Star program. The value here is that it also details how to measure that data. By using this spreadsheet and associated measurement techniques, power savings for the data center can be measured. Of course this will include power savings from other sources in the data center as well as servers, but it will give measurable data for the ROI as well as move toward an Energy Star-rated data center.

Making the case for Energy Star servers
A positive ROI on Energy Star servers will ultimately depend on the specifics of your own business situation. While you wouldn't run out and replace your current servers just for the sake of Energy Star functionality, I won't argue that there are savings and benefits to utilizing Energy Star-rated equipment and taking advantage of tax credits and power company and manufacturer incentives. I also won't question that these products actually do save power. But I will caution that they may not make a difference in your power bill or nullify the emissions of 10,000 cars. Power costs vary from one power provider to another and from one customer to another -- as I noted, you could see your power bill go up with less power usage. A few common-sense tactics can help you get the most from Energy Star adoption:

  • Contact your power company to determine if your contract takes advantage of power-reduction initiatives. See if there are options in another type of contract.
  • Don't assume you will save the world's environment by buying energy-efficient products. Be cautious of "green" advertising and do your homework on product claims.
  • When calculating ROI, be sure to use "hard" cost-saving estimates. Make sure you can get data to back them up two years from now when the CIO wants to know if you realized the savings.
  • Don't forget to add tax credits and incentives to the ROI calculation.
  • Consider using Energy Star's criteria for data center power efficiency as a method for collecting measurable data for calculating the ROI for power savings.

What did you think of this feature? Write to SearchDataCenter.com's Matt Stansberry about your data center concerns at mstansberry@techtarget.com.

This was first published in March 2010

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