Cheap hydro dries up

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Thursday, July 23, 2009

The days of the Googles and Amazons of the world rushing to The Dalles and Boardman to cash in on cheap federal hydropower for secretive new server farms are officially over.

As part of an exhaustive process to negotiate new 20-year contracts with its key electricity customers, the Bonneville Power Administration has closed the loophole that convinced Google, Amazon, Microsoft and Yahoo to build high-energy data centers jam-packed with servers and powered by subsidized Columbia River hydropower.

Previously these companies were allowed to partner with local governments and public utility districts (PUDs) to negotiate bargain-basement power rates with the BPA of around 2.5 cents per kilowatt-hour in exchange for new jobs and guaranteed power purchases. But under the new rules, any new user of electricity will have to pay a fair market price rather than the historically low wholesale rate paid to PUDs.

“We are going to serve at the historic low rate for the current load, but for load growth, they will pay for the cost of the added supply,” says BPA administrator Stephen Wright. “The load server farms that got in before now, good for them. From this point forward, everyone is going to see basically the same price.”

The new policy will not sour the sweetheart deals that are already in place for Google in The Dalles or Amazon in Boardman. Nor will it slow the demand for new server farms to support the cloud computing boom. It just moves them out of the region. In July Microsoft opened new data centers in Ireland and Chicago, and Apple recently announced that it will invest more than a billion dollars in a data center in North Carolina.

BEN JACKLET
 

Comments   

 
thinking forward
0 #1 thinking forward 2009-08-05 14:43:50
Do you remember the FAKE Power Shortage that KILLED the Aluminum Plants? Here we go again!! Jobs Jobs we need Jobs!!!
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Ben J
0 #2 Ben J 2009-08-06 11:36:50
The subsidized power for the aluminum plants could not last forever. Neither could the cheap power for the server farms. Power costs are going up, not down. That will kill some jobs, while creating others.
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