Dean Barber

New Data Centers Mesh Natural and Digital Worlds

In Corporate Site Selection and Economic Development on July 26, 2015 at 8:06 am

Wind, sun and rain are all reminders that we live in a natural world.

And if you are like me, you like to get out in that natural world and do a little exploring, learn new things.

I just returned from a vacation in which I did a horseback tour of the Gettysburg battlefield.

Riding atop a horse, something that people have done for eons, is a natural world thing. Whereas me writing this blog on a computer, to be almost instantaneously published over the internet, well, that’s a digital world thing. And we haven’t been doing that too long.

So we have these two worlds colliding or at least co-existing, sometimes for the better in advancing civilization and sometimes in ways that frightens even the so-called futurists among us.

Tesla and Space X CEO Elon Musk, the closest person we have to a real-life Tony Stark, describes artificial intelligence as “summoning the demon”, and the creation of a rival to human intelligence as probably the biggest threat facing the world.

Physicist Stephen Hawkins has said the development of full artificial intelligence could “spell the end of human race.”

 A New Digital Age

What is apparent is that we are entering a new digital age in which we are able to reproduce things at close to zero marginal cost with perfect quality and almost instant delivery.

Now I have spoken on this subject to economic development and business groups around the country. And people by and large recognize the tensions involved with technology advances. This stuff touches lives in sometimes very personal ways.

I cannot tell you with any authority how many people have lost their jobs because of new digitally-based technologies, nor can I tell you how many jobs have been created as a result of those same technologies.

What I can tell you is that throughout history new technology has been met with fear, especially with regard to substituting a person with a machine.

We Don’t Know

But I have to believe that fear of massive job loss reflects a lack of imagination of how technical advances will shape tomorrow’s economy.  We don’t know today what all of those jobs will be. And in a way, that’s a good thing.

What we do know is that digital data, with its bits and bytes, will likely be the lifeblood for the business world for some time to come, and that it is transforming much of the American landscape as a result.

Think about it – each text, email, download and transaction on your smartphone or computer is processed and/or stored on a server somewhere.

That somewhere is in data centers, which are essentially industrial warehouses for servers.

In my role as a consultant, I have seen many “sites” that local economic developers have pushed as being appropriate for data centers. Too often, many of those sites are revealed to be raw land, in which case I have had to gently point out missing pieces to the puzzle, usually regarding utility infrastructure.

New Requirements for Data Centers

Having said that, data centers are now going into some places that we never would have thought of a few years ago.

And to make things a little more interesting, some of the owners and operators of data centers now want utility companies to source their power with renewable energy, which should be a wake-up call.

Two projects announced in the past few weeks highlight both of those points. They also show the interdependence of the digital world upon the natural world.

The first one is being built by Facebook in Forth Worth, Texas, about an hour from where I live. The second one is not far from my former home in Alabama and it will be built by Google.

Like the companies themselves, both projects are very big, and I believe they portend to the next generation of data centers, as well as having huge and lasting effects on their respective communities.

Facebook in Fort Worth

Facebook’s 750,000-square-foot data center in Fort Worth, now under construction, will be one of the biggest, if not the biggest, in Texas, valued at $1 billion. The company’s fifth data center, it will be 100 percent powered by a 200-megawatt wind farm now under construction on 17,000 acres about 90 miles away.

This isn’t Facebook’s first rodeo with wind. The company is powering a data center with wind energy in Iowa.

It just so happens that Texas and Iowa have large and growing wind industries. Of the 131 megawatts of wind power added in the United States in the first quarter of this year, 110 megawatts were installed in Texas and 20 megawatts were installed in Iowa.

Keep in mind that internet companies not only have consumer brands, but they also recruit and retain young employees, probably most of whom are interested in environmental issues. Using (natural) solar or wind energy touches on both camps, especially in places where it can be made to be competitive with fossil fuels.

Google’s Plans in Alabama

Google has spent close to $2 billion in clean power projects over the years, which takes us to our second project in rural Jackson County, Ala.

It is there where Google plans to spend $600 million in converting an old coal-fired power plant into a data center powered by renewable power. It will be the tech giant’s 14th data center.

Apparently the old Widows Creek coal plant, operational since 1952, was soon to be retired for environmental reasons by the Tennessee Valley Authority, which is the dominant electricity provider in North Alabama.

Paramount to the deal with Google was TVA’s pledge that it would supply the future data center with renewable sources of electricity.

Enormous Opportunity

Google saw clear benefits of repurposing the old coal facility by the fact that much of the needed infrastructure was already in place.

“There is an enormous opportunity when you take over the infrastructure that is there – the transmissions lines and the water intakes – and use that to power a data center that is powered by renewable energy,” said Michael Terrell, who leads energy market strategy for Google’s infrastructure team.

Google claims to be the largest non-utility user of renewable energy in the U.S. The company says it uses 1.5 percent of wind power capacity in the U.S., and has plans to bring in more alternatives over the next year.

About 46 percent of Google’s data centers are powered by renewable energy, which is man essentially harnessing nature.

A Gateway for Future Growth

The Google announcement is being touted as a watershed moment in Alabama, not unlike that of Mercedes-Benz of the 1990s.

“We recognize them for what I consider to be a gateway company,” said Alabama secretary of the Department of Commerce Greg Canfield. “When Mercedes made its decision to come to Alabama over its other choices, that decision has ultimately opened Alabama as a significant participant in the automotive sector in the U.S., and indeed the world.”

“Having Google come to Alabama, because of their brand and because of their leading role in the industry sector in which they are in, will open the door as a gateway to see further growth in technology and data center opportunities, we think.”

An Absolute Gold Mine

Most data centers are in the 30,000 to 100,000 square feet range, far smaller than that planned by Google and Facebook. But the key is they are often valued at $1,000 to $2,000 per square foot because of huge capital investment.

Cisco Systems’ data center in Richardson, Texas, netted the city and the county more than $11 million in tax revenue in one year.

“They are an absolute gold mine for cities,” John Jacobs, executive vice president of economic development for the Richardson Chamber of Commerce, told the Dallas Morning News. “I think a lot of cities have caught on to this.”

I would suggest that Mr. Jacobs’s comments are an understatement. Cities in North Texas have been aggressively recruiting data centers for years (Richardson has 18), looking to benefit from the millions in tax revenue each center promises.

Things like wind, sun, and rain are part of a natural world. And then man invented taxes, computers and data centers.

I think I need to get on a horse.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a location advisory and economic development consulting firm based in Dallas. He can be reached at dbarber@barberadvisors.com or at 972-767-9518. If you liked what you read here, invite him to speak at your next meeting.

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  1. Lovely article Dean. Important to highlight how seemingly unrelated companies in Data Management and Power and coming together for a new future.

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