How Cloud Technology Can Cut Energy Costs

While growing computing demand will mean more energy consumption, wider use of cloud computing technology will prove to be a net benefit to the environment over the longer term, say industry watchers.

Professor Stephen Hawking
Courtesy: SGI
Professor Stephen Hawking

“I think cloud computing—either public, private or hybrid cloud—will become an increasingly important factor” in green computing, says Eric Woods, an analyst with cleantech research firm Pike Research.

“I think many medium-sized, and even large, data center operations will see a cloud-based service as an attractive means of reducing energy costs and (carbon) emissions without having to re-engineer their existing data centers.”

Virtualization of computing capacity is “another key development” says Woods, “allowing a large number of inefficient servers to be removed from the data center—enabling a 20:1 consolidation of servers in some cases.”

The most significant green impact of the cloud’s “on-demand” model of providing computing and storage capacity is less hardware, with companies consolidating data centers to require less hardware to perform the same tasks.

Cloud Computing - A CNBC Special Report
Cloud Computing - A CNBC Special Report

Aside from using fewer servers, new efficient server designs means greater computing and storage capacity for the same amount of energy used. Since a server farm generates enormous amounts of heat as it operates, it requires more energy to keep it cool, and better cooling systems means less energy consumed for that task.

“More efficient cooling and power systems are a key development,” he says. “The introduction of more powerful but also more energy efficient server technology (means) you are getting 2-3 times the performance for the same power draw.”

And with cloud-driven consolidation in data centers, facilities managers can take time to look for locations that provide cheaper, and greener, energy options.

Tech firm SGI has a facility in Chippewa Falls, Wis., where Lake Michigan’s cold waters are used to cool the data center, lowering energy costs. “We saw a big cost advantage—$1 million in our power bill alone” by moving to Chippewa Falls from Sacramento, Calif., says Bill Mannell, SGI’s VP of product marketing.

Tech giants like Google, Yahoo and Microsoft have built or planned data centers along the Columbia River in the Pacific Northwest to take advantage of cheap hydropower provided by the river.


Since this can mean leveraging infrastructure left mothballed by unused industrial capacity, such as old manufacturing and forestry centers, tax breaks or subsidized power can be available to cloud services providers looking to move their data center operations.

“The service provider might well be getting a fairly large rebate (from the local utility),” says Leonard Eckhaus, founder and president of AFCOM, a trade group for the data center management industry.

He adds that while going green can be a motivation by itself, cutting operating costs provides the best incentive. “It has to make dollars and sense,” says Eckhaus. “What it means to a data center manager is that he’s looking to save money.”

That bottom-line approach means the hunt for the lowest cost server farms to power the cloud will continue.

"In talking to some analysts, they forecast that the server market (outlook) is pretty flat, saying that cloud computing is causing demand to flatten out. " -SGI, VP of Product Marketing, Bill Mannell

SGI’s Mannell points out that one beneficiary of this energy efficient cloud computing will be start-up companies. He says building and operating a new server farm to handle data and computing needs was once a barrier to entry for start-ups, especially in web-related segments like online gaming or social media.

But with operational and capital costs cut by cloud computing, early stage companies could find “it’s an optimal time to go to the cloud,” says Mannel.

He adds that this cost-efficiency is even expected to drag on growth in server production in the near term. “In talking to some analysts, they forecast that the server market (outlook) is pretty flat, saying that cloud computing is causing demand to flatten out,” he says.

While the cloud may provide little silver lining for the server industry in the near-term, Woods sees a coming boom in new green data centers that would bring together cutting-edge practices in energy use, technology efficiency and facilities management.

He adds that he sees that market growing from $13 billion in 2011 to $41 billion in 2015, with cloud computing being a key driver.

But despite Pike Research’s predicted 23 percent cut in carbon emissions that this green data center boom could provide by 2015, this boom also creates an environmental paradox for cloud computing, admits Eckhaus.

While consolidating the number of data centers within one end-user’s fleet has clear environmental benefits, he says Woods’ growth predictions means new data centers will still be built—just by different market participants.

He adds that commissioning all this new computing capacity has environmental impacts.

“It’s unfortunate, but this is not especially green,” says Eckhaus, referring to the energy and waste created in building this new capacity and decommissioning old facilities.

But with the continuing growth of social media and mobile applications, as well as big jumps data collection and storage in general across all industries, the need for this new capacity would exist anyway.

Greening this sector now means we’ll get a bigger bang for our environmental footprint down the road, he says.

“Volume of data is growing exponentially and there’s no end in sight,” he adds.