Energy consumption is one of the largest operating expenses for a data center, contributing to nearly 50 percent of total operating expenses. Due to last winter’s “polar vortex” that caused a deep freeze in much of the U.S., many large energy consumers in unregulated markets saw their energy prices quadruple. In fact, we have seen a tremendous amount of volatility in energy prices over the last decade.
Data center operators and owners can minimize the impact of unpredictable energy markets by better understanding the markets and establishing smart energy procurement strategies. Below is background on energy pricing trends, factors likely to impact future pricing, and proactive strategies for procuring energy in an unpredictable market.
There are a number of factors impacting natural gas and electric rates, including:
1. Natural Gas Storage: In the beginning of 2014, natural gas stockpiles hit the lowest level since 2004 as a result of cold weather and winter storms. Due to the mild weather this past summer and so far this winter, natural gas storage is slightly above last year and about 260 billion cubic feet behind the five-year average.
What do these numbers mean for energy pricing? A cold winter will likely move this market higher. If we exit the 2014-2015 heating season with low natural gas storage levels as we did this past year, there will be upward pressure on the market through the 2015 season...