September 26, 2016
By: Raul Saavedra, Executive Vice President, JLL
Silicon Valley Power (SVP) may not the best known utility in California but if you operate heavy power load facilities such as data centers, it’s one you probably should get to know…and fast. From my industry vantage point, data center operators throughout the Bay Area are scrambling to work with the nonprofit. There is currently single digit vacancy in the data center space market in Santa Clara and many major owner/operators are scouring the area for development opportunities.
SVP was founded over a hundred years ago to provide power for residents and businesses within the 19.3 square mile city limits of Santa Clara. In SVP’s early days, manufacturing – timber, and later semiconductors –were the utility’s major non-residential customers. As heavy manufacturing moved out of Silicon Valley, markets like Santa Clara grew in popularity with other large facility users, notably data centers. The appeal of relatively cheap (at the time) land and proximity to the emerging tech economy were big draws. So, too, was cheap, abundant power.
Today, SVP carries about a 530MW load but its current capacity is nearly double that. This “half loading” is one key reason why Santa Clara is an attractive proposition for data centers, since they typically require large 15-20MW loads and often need to ramp up quickly. But are there other reasons why Santa Clara makes sense to many data center operators? I sat down with Larry Owens, SVP and Customer Services Manager, and Wendy Stone of the utility’s Key Customer group, and posed that very question. They told me that data centers located in the city of Santa Clara currently represent north of 40 percent of the utility’s total load demand and gave me the following five good reasons why data centers want to locate there.
- The Price Is Right
Even though it won’t always be a deal breaker, price is still a critically important issue for heavy load electrical users. The simple fact is, even with transmission costs rising across the board over the last 10 years – the California Independent System Operator (CAISO) has raised the cost of transmission 400 percent – SVP has the lowest average system rate of any major utility in California. The utility’s nonprofit status and ability to sell off excess power capacity to other utilities support its low rates. “Our large load customers tell us that one of the most valuable pieces of information we can provide when they are assessing a move to Santa Clara is an analysis of our costs vs. PG&E,” says Wendy Stone. SVP rates are, on average, 20 percent lower for large energy users than in surrounding communities (see chart).
For companies with large load needs and a desire to draw as much energy as possible from green power, Santa Clara is one of the top choices in the state.
We’ve been consistently ahead of the game in many areas of our business, but especially renewables,” says Larry Owens. “We started investing in renewable energy in the 1980s, primarily to get away from dependence on more cost-volatile resources but today green power is absolutely a major part of our business and is increasingly valuable to our customers.”
SVP sources its energy from six power plants within Santa Clara that supply about one-third of its power needs, but also through relationships with power producers throughout the state as well as in Washington and Nevada. Some of the utility’s renewable sources include geothermal, hydroelectric, wind and solar, and even landfill gas. (The utility also currently sources from one coal plant, which will be phased out at the end of 2017 resulting in a 50% reduction in CO2 per kWh.)
“State mandates for renewable energy have come into play for all utilities in California over the last several years. However, we were one of the early-adopters who has easily exceeded those mandates and will continue to do so,” Larry says.
Data center operations don’t just need low cost, reliable power; they need connectivity. This is often a hidden cost overlooked by operators while they are scouring sites. During the dotcom boom, SVP and several other fiber providers laid hundreds of miles of fiber and conduit throughout Santa Clara. Usage dropped off dramatically when the dotcom bubble burst but the fortunate result was that “dark fiber” – fiber with no data running through it — is readily available throughout Santa Clara today. SVP’s Fiber Enterprise fiber can often be “lit up” faster and cheaper than alternatives touted by third party carriers.
“Access to fiber is an area of huge demand and with the increasing move toward cloud and mobile, if the fiber is already there, that checks a major box for data center operators,” says Wendy.
Wendy Stone’s Key Customer group is typically the first point of contact for large users like data center operators. According to Wendy, “When data centers are in the process of making the decision on whether or not to locate in Silicon Valley Power territory, our goal is to be there for them and provide proactive support from start to finish.”
Wendy’s team meets early on with prospective customers to walk them through the process. “We’ll include engineers and estimators in our meetings to discuss the timeline and technical aspects of their project. We’ll also connect customers with other city departments such as planning and permitting, and explain the CEQA process so that prospective customers feel they have all the information laid out for them,” Wendy says. The team also makes a point to research prospective sites to determine the current amount of power that’s available at that site and what upgrades might be needed, if any, to accommodate data center use.
“Reliability is something we pride ourselves on at Silicon Valley Power,” says Larry. “And that’s true whether we’re talking about reliable power or how quickly we can respond to customer concerns and outages.”
Reliability is baked into the utility’s model from the outset. System designers build to a 50 percent loading model, which is not only a huge benefit when SVP works to restore power, but also when customers need capacity quickly and on a tight timeline. “Half loading gives us greater flexibility throughout the system to support a rapid switch-to-restore outage response, but it also means we can accommodate sudden requests for additional power, even from very large users,” he says.
SVP receives high marks for customer satisfaction from data centers when it comes to emergency response. “Wendy and her team are tremendous advocates for our large customers and we feel that our responsiveness with those customers really sets us apart,” he says.
“When you operate a utility, outages are a fact of life but our customer outreach program and response to outages and power quality events are considered benchmarks by many of our peers. Others try to copy us,” he adds.
About the author:
Raul Saavedra is an Executive Vice President and data center real estate specialist in JLL’s San Francisco office. Prior to joining JLL in 2016, Raul was a senior asset manager with Digital Realty Trust, Inc., the world’s largest owner and operator of data centers.
Contact Raul directly by phone at +1 (415) 354-6914 or via email at firstname.lastname@example.org.
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