December 13, 2000

New Economy puts strain on old power plants By Andrea Orr

PALO ALTO, Calif. (Reuters) - As Californians unplugged Christmas lights and worked in dimly lighted offices to help avert a power crisis, many officials wondered whether such modest conservation steps were enough to offset the unstoppable demand for electricity, particularly in Silicon Valley.

High energy consumption is often dismissed as an innocuous by-product of a flourishing economy, but in a state that uses far more electricity than it produces the high-tech industry's unquenchable thirst for power has created a drain that is now being linked to everything from diminished quality of life to the future of the region's business base.

While the U.S. Energy Information Administration predicts nationwide electricity demand will grow at a modest 1.8 percent a year through 2002, some California cities are struggling to meet growth rates that are many times higher.

In the heart of Silicon Valley, Santa Clara says it would not be unreasonable to see demand doubling within a few years. The city of just over 100,000 people is home to high-tech and Internet companies such as Intel and Yahoo.

Santa Clara had a peak load this summer of 450 megawatts of power, and officials say they have requests for an additional 300 megawatts over the next two years alone.

``It is a bit of a new phenomenon for us and we are working on it as we go,'' said John Roukema, assistant director of Santa Clara's city-operated electric utility.

High-tech workers are famously workaholic but the power drain in Silicon Valley is not just a matter of employees burning the midnight oil. Far more consumption comes from the machines behind the Internet and the backup systems behind those machines, which are rapidly being deployed to insure things like e-mail services and online stock brokerages do not crash.

These Web hosting centers, which provide a secure home for Internet servers, have been one of the biggest bumper crops of the New Economy, showing relentless growth even as other Internet businesses slow down.

They also tap disproportionate amounts of power. By one estimate a Web hosting center uses 10 times the electricity of an office building the same size. And because they require precise climate control, they cannot simply turn the lighting off or the thermostat down as office buildings do in times of energy crunch, like the one the state experienced last week.

'MOTHER'S MILK OF PROGRESS'

``Electricity is the mother's milk of all this progress,'' said a spokesman for Pacific Gas and Electric, a major state utility. ``By their very nature, Silicon Valley businesses use more energy than most traditional manufacturing companies.''

Web hosting centers, also known as server farms, would consume a disproportionate amount of power in any region. In Silicon Valley, already tapping more than its share of the limited power supply, they leave an even bigger footprint.

No one is more aware of the potential crisis than the high-tech companies, which recently resurrected the Silicon Valley Manufacturing Group, an energy-conservation coalition formed back in the oil embargo days of the late 1970s.

``Over the years, the issue of energy conservation fell off the table, but here we are 20-plus years later and energy has resurfaced,'' said a spokeswoman for the group, whose members include Cisco Systems, Hewlett-Packard and IBM.

``We have an energy problem here in Silicon Valley. The power supply is not reliable and sustainable for the long term. ... Without reliable power, companies talk about going elsewhere.''

Some of the region's biggest employers say they deliberately located their heavy manufacturing operations in different regions not just to save money but also to be a good neighbor.

``We have always been geographically diverse and power consumption is a big factor in that,'' said Chuck Malloy, a spokesman for Intel, which has about 15,000 employees in California but has built most of its chip-making plants in other states and overseas. ``We don't' want to be the largest power consumer in a given region, just like we don't want to be the largest contributor to traffic problems.''

Many others, like software giant Oracle, which also operates energy-intense Web hosting centers, say the decision to keep expansion local will depend partly on how soon new power plants are built in California.

Randy Smith, vice president of real estate and facilities for Oracle, said although a power shortage could affect future expansion plans he remained optimistic that enough new power plants would be added to avoid a serious crisis.

After a decade in which no major new power plants were built, California seems to be addressing the problem. New plants are on the drawing board and local regulators are seeking to restart some older ones closed for emissions violations.

Yet, while just about every company in Silicon Valley agrees that more generating capacity is needed, many are taking a not-in-my-back-yard position.

Cisco Systems recently helped defeat a proposed new power plant in south San Jose adjacent to a corporate campus it was building. Although it will need a lot more electricity for its new offices, which it expects to house 20,000 employees and up to 800 children in day-dare centers, it argued that plant emissions would have created an inappropriate environment.

``We are as interested as anyone in sufficient and reliable power,'' said a Cisco spokesman. ``But we believe that there are numerous other plants proposed elsewhere that will be online before that one would have ever been turned on.''

http://www.contracostatimes.com/biztech/stories_techwire/743771l.htm

-- Martin Thompson (mthom1927@aol.com), December 14, 2000