Data centers and the vulnerable Texas power grid

As we all know the quality and availability of the data center stands or falls with the quality and availability of the power supply to the data center. But in Texas, a state with data centers of several notable IT companies, including WordPress.Com, Cisco, Rackspace and Host Gator, the power grid is on the edge of collapse.

Just like last year, the Texas power grid has struggled to keep up with demand during sweltering summer days (see Texas escaped rolling blackouts: Data centers and the power grid interdependency)

For Texas, it has been said that demand is growing faster than new power supplies and at the same time the wholesale power pricing environment doesn’t support expansion. The peak price for wholesale electricity is state-regulated. And although the Texas Public Utility Commission approved raising the cap on the peak-demand price from $3,000 per megawatt hour to $4,500/MWh starting August 1 this gives little incentive to build new power plants (see Not enough even higher price for electricity urged for Texas).

New power plants are very much-needed. Texas has a goal of having about 13 percent more power available than consumers need (also known as the “reserve margin”). By setting a proper reserve margin you can reduce the chance of a strained grid that will lead to blackouts. Besides the fact that Texas is the only state that isn’t meeting reserve margin goals, the reserve margin is also shrinking. The forecast is that by 2014 the reserve margin could be below 10 percent and in 2015 below 7 percent.

USA reserve margins source: EIA

The current power grid issues in Texas are an example that as a customer of cloud computing and/or data center services but also a data center provider you must have a good understanding of the power grid to appreciate the risks that are at stake in terms of resiliency and business continuity.

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