Energy Savings Performance Contracts (ESPC) have existed for more than 20 years and fund needed facility upgrades through guaranteed energy savings. As the government pushes for expanded use of performance contracting while mandating a consolidation in the number of data centers, the pipeline of data center ESPC projects is increasing. In relation, the concept of performance contracts for data centers is becoming more widely adopted.
The physical infrastructure for data centers (UPS, PDU, cooling, etc.) is typically overbuilt and inefficient, resulting in high energy bills. IT trends, such as virtualization and server consolidation, can enhance energy savings when combined with physical infrastructure upgrades. As a result, the data center is a large energy consumer that represents a significant opportunity to reduce energy costs while increasing the reliability and performance of IT operations.
Data center improvement projects have been proven to fund themselves as a standalone ESPC or Energy Conservation Measure (ECM) within a larger performance contract. These projects can be funded through energy and O&M (operations and maintenance) cost savings in a single facility, or the aggregate savings from consolidating several IT spaces. Unlike a lighting upgrade with static energy savings, data centers are a dynamic load with shorter refresh cycles; to address this, additional parameters need to be built into the contract.
While utilizing performance contracts in data center environments is still a relatively new concept, the amount of cost savings potential can result in a short payback period and fund IT projects that may not otherwise be implemented.