September-October 2011

Who's Got Your Back?

The growing, and varied, market for backup power

Nick Kottyan wouldn’t be able to run his two colocation data centers without the eight uninterruptible power supply systems from Mitsubishi. These UPS systems provide his clients—healthcare organizations, financial institutions, manufacturing companies, and accounting firms—with the confidence that they’ll also have access to their electronic data.

With the 9900A and 9900B UPS systems from Mitsubishi, Kottyan's company, Winston-Salem, NC-based DataChambers never has to worry about losing power in its two third-party colocation data centers.

And in the growing business of data storage, reliability is the key to nabbing more clients.

“We have to be able to provide reliable high-quality power to our data center floor,” says Kottyan, CEO of DataChambers. “More businesses, of all types, are moving their servers to third-party data centers. We’ve proven that we can operate our data centers in a highly efficient and reliable way. Part of that lies in guaranteeing that we will never lose power, and that our clients will never lose access to their data.”

Kottyan isn’t the only CEO relying today on backup power systems. A growing number of businesses—and not just data centers—need to have their power on continuously.

Financial institutions must have constant access to their customers’ records. Hospitals and medical office buildings can’t afford to be without power. Office buildings need constant power to keep their advanced security systems, including monitoring cameras, operating at all hours of the day.

The providers of UPS systems even work with the owners of turkey farms in North Carolina. If the fans cooling these farms lose power, the farmers lose their valuable birds.

It’s little wonder then, that the manufacturers providing backup power systems say that their business is still growing, despite the nation’s struggling economy.

Kottyan sums it up well: “For a growing number of businesses, the power can never go out.”

New Sources of Business
Each year, the officials at Eaton Corp. study the possible new markets for their UPS product line. And every year, the number of new businesses that need UPS continues to grow. A quick look at some of Eaton’s quirkier clients proves this.

The company supplies UPS systems to a fish and aquarium retailer in a mall. The mall was shutting its power down on Sunday evenings for maintenance, and when they did the retailer’s fish went belly up. The UPS the retailer now relies on from Eaton keeps the fish swimming happily even with the rest of the mall is powered down.

The acrobats at Cirque du Soleil famously don’t use nets. But they do protect themselves with large inflatable air bags, bags that can cushion any major fall they take. The trapeze artists and tightrope walkers prefer that these bags stay inflated, even if the power goes out. That’s why this famous circus troupe also relies on UPS systems from Eaton.

Then there are those turkey farmers in North Carolina. It gets famously hot in the state during the summer months. Fans keep the turkeys cool. But if power shuts down and the fan blades stop spinning, farmers stand to lose a small fortune in lost turkeys. So a growing number of turkey farms in warm-weather climates are seeking the protection of UPS systems, too.

“We are seeing a steady increase in demand for UPS,” says Ed Spears, managing of marketing programs at Eaton. “All the evidence that we see supports a sustained increase in both large- and small-scale UPS business. It’s never quite as great as the powers that be would like it to be. But we are reading a lot of articles about how more companies are finding that their data center space is running out. These people, who need to do whatever they can to increase their data-storage capacity, are turning to colocation data centers, and these companies need UPS. We’re also seeing a growing number of commercial clients who need uninterruptible power supplies.”

Aniruddha Natekar, marketing manager for North America with Cummins Power Generation, points to several factors to explain the rising demand for backup power systems.

Photo: Cummins Cummins predicts that commercial construction levels are due to spring back.

First, officials at Cummins are predicting that commercial construction levels are due to spring back to 2008 levels. And as more commercial buildings rise, the need for UPS systems will do the same.

“The power generation market follows the construction market,” says Natekar. “Any time you see a rise in construction activity, you’ll se a rise in the power-generation market. In the next two years, we expect that the end-user market, including the owners and managers of office buildings, will be a significant market segment for us.”

Natekar also points to increased government regulation as a potential boon to the backup power business. That’s because standby generators make up a majority of the light commercial market for backup power. Demand in this segment jumps when code requirements change. A municipality might inform office building owners that they need to have backup power systems that keep all the exit lights functioning in the office buildings in case of emergency outages.

To comply with these regulations, office building owners invest in backup power generators, often the kind that Cummins provides.

Even the bad weather the country has been experiencing—the violent waves of tornadoes that have struck the US—has shown building owners how important it is to have reliable backup power systems.

“If you lose your business for a day or half a day, you lose a lot of money,” says Natekar.

The backup power industry is fortunate, too, that its client list continues to expand.

Spears from Eaton points to office buildings that rely on 24-hour security. If the power goes out, the security cameras and electronic door locks fail, too. UPS systems provide protection against this.

“We’ve seen the demand for this kind of application increase dramatically in the last three to four years,” he says. “It kind of surprised us, too. During a power outage, office building owners and managers don’t want their security to be compromised.”

Other office clients rely on UPS systems to keep their payroll functions running at all times. Buildings with mail rooms need to make sure that their shipping and receiving equipment—which automatically stamp parcels and prepare them for delivery—function even during power outages. If they don’t, these businesses can lose customers and income.

This growing variety of potential clients is a positive for the providers of backup power systems. It helps ensure that a major slump in one industry won’t decimate their business.

“Thanks to this wide variety of applications, we aren’t as tied to the fortunes of the computer or data-processing industry,” says Spears. “This would have been handy in 2000 when we had the online bubble burst. It would have been nice to have a large segment of business that didn’t involve data centers.”

Still the Core Business

Data centers, though, still remain the core business of UPS providers. Businesses are dealing more frequently with vast quantities of data. They need to store this information on servers. But sometimes office building space is limited.

That’s why so many companies today store their important data in servers that are located at third-party colocation data centers.

Dean Datre, general manager with Mitsubishi Electric Power Products, says that businesses today recognize how important it is to have reliable backup power. They know that they can’t afford to suffer a loss of data, or lose access to it for a significant amount of time, if they want to retain the trust of their clients.

“Look at banks or trading companies,” says Datre. “Look at any of their critical operations that are supported by microprocessor-controlled pieces of equipment. The interruption or loss of any data is going to cost them tremendous amounts of money. It goes all the way down to retail. People can ring the cash registers at Walmart if there is an interruption of power or if the power is dirty or unclean. The demand for these systems runs the gamut.”

Then there’s the emergence of cloud computing. As more companies offer remote computing services, another market for UPS systems is emerging. These cloud companies, after all, can’t afford to lose power for even a second. Their customers demand constant access to the programs they run.

“The cloud strategies are opening another market for us,” says Martin Olsen, vice president of global sales and business development for Active Power. “Look at companies like Microsoft and eBay, companies like Amazon. They are all adding to their own cloud services. They want to offer these strategies as services for their customers. This gives us another market to target.”

Advances in technology have also improved the fortunes of the UPS industry, Datre says.

The way Datre sees it, the most effective uninterruptible power source is an online UPS system. Commercial users can choose offline UPS systems. But Datre considers these risky.

“You want protection all the time, as often as you can have it,” says Datre. “That’s what you get with the online protection. It affords you the most security.”

Critics, though, have considered online UPS systems to be less efficient than their offline cousins. This is starting to change, Datre says. He points to his own company; Mitsubishi has developed an inverter technology that allows for less switching losses while still maintaining the protection level that comes with online UPS systems.

UPS systems are also performing better today even when they’re operating at lower load levels, Datre says. It’s common for manufacturers to boast that their UPS systems operate at 98% efficiency. But that efficiency level often holds only when systems are operating at loads of 100%. The problem is that most commercial users never run their UPS systems at 100%. They more often run them at small loads—as low as 20% to 30% of capacity.

Fortunately for commercial users, a new generation of UPS systems now operates at high-efficiency rates even at these low load levels, Datre says. “There is a lot of marketing magic or marketing hype about efficiencies. At low load ranges, many pieces of equipment are very inefficient. At the end of the day, building operators and owners should be looking at how much it costs them to run their buildings.

“It’s just like when you buy a car: How much will it cost you to run it?” he asks. “What is the gas mileage? What is the repair history of the vehicle? It’s the same thing with a UPS system. Building owners will know what the initial investment will run. But what is it going to cost them to operate the system? We’re seeing more consideration now of this question.”

The Questions to Ask

Investing in a backup power system is no small decision for a commercial user. These systems aren’t inexpensive.

Commercial users, though, can save themselves financial headaches by considering the right mix of factors before making a UPS decision.

Dann McKeraghan, vice president of sales with VYCON—a manufacturer of flywheel-based UPS systems—says that commercial users need to consider the cost of ownership of a backup power system.

“Any of the devices for backup power that users can buy will come with a maintenance aspect to it, regardless of the technology,” he says. “As the devices get older, some major maintenance activity takes place. The cost of ownership, then, is something that customers should take a hard look at.”

As an example, McKeraghan points to flywheels. They boast a typical lifespan of 20 years, while batteries tend to last an average of four years.

Some backup power systems also require more space in which to operate. This can be a burden for smaller office buildings or businesses that simply don’t have the footprint space to spare.

And sometimes, a simple matter such as the weight of a backup power system can make a significant difference, McKeraghan says.

“A lead acid battery cabinet might weigh as much as 4,000 pounds. You’re not going to put that in an elevator, are you?” he asks.

There’s one question though, that is more important than all the others. Commercial users need to ask themselves how devastating it would be if their power went out—what would happen to their business? Also, what would happen to the systems that they are running?

“The biggest factor that you have to consider is what you are trying to do with your backup power,” says David Windsor, product manager with Eaton. “How critical is the equipment that you are trying to back up? How critical is your load? The more critical, the more money you want to put into it. You can then go anywhere from a battery in a box with basic protection to the higher-end versions of backup systems, which provides protection to all of the power problems that you can imagine.”

David Filas, data center engineer for Trinity Information Services in Farmington Hills, MI, understands this. His information services department is a division of Trinity Health, a healthcare system that runs about 50 hospitals—plus medical offices and outpatient facilities—across the United States.

Filas can’t afford to see the power to his division go out. It’s why he relies on both batteries and flywheel-based UPS systems.

“Uptime is critical to us,” says Filas. “And that’s not something that you will get with only battery technology. Historically, we’ve had batteries on everything. I’d say that 70% of our outages were the result of failed batteries.”

Today, Filas relies on a combination of batteries and flywheel UPS systems to keep his division’s systems operating. The entire healthcare system, in fact, relies on UPS backup systems to operate. Filas says everything from data centers and telecommunication closets to life-support equipment is served by UPS systems at Trinity.

“We have UPS all over the place,” he says. “It alleviates my concerns. I know that if the batteries don’t hold, the UPS will. We have the best of both worlds in place now.”

Trinity has relied on UPS systems for about two years now for its backup power needs, Filas says. It’s been an investment that he has never regretted.

“I certainly worry a lot less now,” says Filas. “We do monthly generator testing. When it was just the batteries, I was constantly on the edge of my seat hoping that they would hold. Now I don’t bat an eye.”

This is the kind of testimony that Olsen from Active Power expects to see on an even greater basis in the future. The demand for backup power systems should continue at its steady pace as more businesses learn that they can’t afford power interruptions, he says.

“There is such a variety of applications out there today,” he says. “We are seeing growth in each one of these applications. The data center space is still growing. The computing power out there that has to be protected is increasing. Hospitals with imaging equipment and patient records need to have their power on at all times. The manufacturing side of the market segment is growing, too. We are seeing some pretty tremendous growth, and I don’t expect it to stop.”

Author's Bio: Dan Rafter is a technical writer and frequent contributor.

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