Editor’s note: A digital version of this article first appeared on Forester Network’s website in March 2014.
Colocation and cloud-computing company LightEdge Solutions has succeeded in the data center business largely because of one key reason: The company’s data centers are reliable. The power at these centers never goes out.
And this is thanks to a series of backup power systems on which Des Moines–based LightEdge relies, many of them redundant.
Providing this backup protection is costly. But LightEdge’s customers expect reliability. Most of them can’t afford to be without access to their data for even seconds. This means that even the shortest of outages at LightEdge’s data centers can cost LightEdge customers.
“Even outages of the smallest amount of time are now unacceptable for a growing number of businesses,” says Jeff Springborn, chief operating officer of LightEdge. “Having data go offline is just not an option for so many clients today. Keeping the power on all the time is what they expect.”
This trend is not a new one. But it’s an important one, that’s providing a boost to the backup and emergency power business. And it’s a trend that doesn’t look likely to slow any time soon.
That’s largely because so many mission-critical businesses—everything from data centers to financial institutions to hospitals—can’t ever be without power, even for seconds. At the same time, more businesses are questioning the reliability of the public power grid. They’re investing in backup onsite power solutions as a safety net in case the public grid suffers an outage.
Then there are the worries left over from natural disasters such as 2012’s Hurricane Sandy, the superstorm that decimated huge swaths of the eastern United States. Businesses are more likely today to invest in mobile emergency power systems to protect themselves from oncoming storms, say manufacturers in the onsite power industry. And this, too, is a trend that doesn’t look ready to slow any time soon.
“Awareness of the need for emergency backup power is certainly increasing,” says Rich Thompson, marketing director for commercial and industrial power products for Waukesha, WI–based Generac Power Systems. “There is an understanding that the reliability of the public power grid is not where it needs to be. There are pockets of the country with a raised sense of awareness and urgency for backup power.”
And, Thompson says, it’s not just data centers and medical providers that are looking at boosting their backup power capabilities. Increasingly, businesses of all sorts are no longer tolerating power outages.
“There are businesses that are worried about brownouts in the summer when there are too many air-conditioners running at the same time,” he explains. “Even a brownout of just 20 seconds is enough to make a cash register, a gas pump, or anything without an uninterruptible power supply in it come to a hard stop and need a reboot. That costs money and time, and it is happening across the country more than you might think.”
Of course, knowing that they need backup power is one thing. The true challenge for companies and building owners lies in choosing the right backup power system for them, whether they are interested in permanent onsite solutions or entering into an agreement with a provider of rented mobile power equipment.
LightEdge Solutions is heavily invested in backup power systems. And this will be the case in the company’s latest data center to be built in the SubTropolis Technology Center in Kansas City, MO. This is an interesting location for a data center, as SubTropolis is built underground. The entire SubTropolis facility—a business park—is built in a former limestone mine. It offers more than 5 million square feet of space.
Hunt Midwest Real Estate Development broke ground in September on the first phase of the SubTropolis Technology Center. LightEdge Solutions will be the first tenant of this center when it opens its 60,000-square-foot data center sometime in the first quarter of 2014.
The technology center will be a sturdy one: It features a hardened limestone infrastructure that is six times stronger than concrete. But Springborn with LightEdge knows that what really matters is how sturdy the center’s power system will be. And the good news for future clients is that LightEdge will boast a highly redundant—and reliable—backup power system for its new data center.
The data center will rely on the public grid for its power in normal times. But when an outage occurs on this grid, the data center will switch over to a battery stack that can power the entire center for up to 20 minutes. This will give the center’s generators time to warm up. Once they are ready, they will power the center. And LightEdge can rely on these generators indefinitely, as long as they keep the fuel trucks coming. The generators each have enough power to run for 36 hours.
The center will also be protected by redundant power. If one generator fails, a backup power feed on a different line will kick in, starting another backup generator.
“These are the steps that IT guys are looking for,” says Springborn. “If we don’t offer this sort of redundancy, our competitors will. Not all centers offer this redundancy. But we have to if we want to attract the type of clients we are seeking. That is what they are looking for, and they will find it elsewhere if we don’t provide it.”
LightEdge works with clients in the health care and financial sectors. Most of these clients have from 50 to 1,500 employees. “They are clients with mission-critical needs,” says Springborn. “They might have a website or app that always needs to be up and running. So they want to work with a data center that does have the type of redundancy we offer.”
A Growing Trend
David Matuseski, technical counsel with the critical protection group of Cummins Power Generation, says that the demand for emergency and disaster backup power is only growing as the number of businesses that can’t afford to be without power, for even minutes, continues to increase. And this is a trend that Matuseski says isn’t about to slow.
“There has definitely been a steady increase year over year,” he says. “And there seems to be much less tolerance for businesses or organizations being out of power. You can see that in almost any market. You can even see it in the residential market. From the biggest levels to the smallest, you can see it. Even in the smallest market for us, residential, there is an increased desire for people to keep their houses backed up. That has become a big market for us.”
Much of the increased demand stems from economic reasons, as businesses—whether manufacturers, data centers, or financial institutions—can’t afford to lose power even briefly. Such outages can cause expensive delays for manufacturers. And they can cause data centers or financial institutions to lose customers. It’s why emergency backup power has become a necessity in these businesses.
Jim Crouse, executive vice president of sales and marketing for Chatsworth, CA-based Capstone Turbine Corporation, says that more companies in the coming year will take a longer look at their backup power sources. The reason? These companies don’t want to lose either money or customers.
“It’s happening everywhere, from data centers that are storing data, to telephone systems that can’t be without power for even seconds, to manufacturers who, when production goes down, lose the material in process,” says Crouse. “Look at the manufacturing example. When manufacturers lose power in the middle of a process, the material in that process can be destroyed or damaged. That costs them money.”
“People don’t want to deal with downtime in their plants or factories,” says Matuseski. “And in the data center industry, downtime can be a disaster. The same thing holds for health care and water treatment. In health care, you can’t go without power for any length of time. People’s comfort—even their lives—relies on having a powered building.
“And when it comes to data centers, it’s very much a financial issue. You do not want to lose money in the data center world. And if you don’t want to lose money, you
can’t handle having power off for any time. There is a huge financial payback for data centers associated with having extensive power systems that can fully power their buildings in an outage or emergency.”
Some customers want even more. They’re not just looking for backup onsite power systems. They also want to generate at least some of their power off-the-grid, even during non-emergency moments. The reason for this? Savings. Those building owners who invest in onsite power generation, and power all or some of their facilities by generating their own power, can dramatically reduce their annual energy bills. They also gain more control over their power, something that gives them, in turn, more control over their businesses’ bottom lines.
Finally, by generating at least some of their power onsite, these businesses reduce their carbon footprints, a positive for the environment.
“There are many reasons driving the increase in the backup power business,” says Crouse. “It’s not just one thing.”
Another factor driving this trend? The problems with the public power grid. Few businesses feel confident that their public power grid is reliable enough. That’s partly because utilities are struggling today to come up with the funds necessary to replace aging infrastructure.
“If you look at the electrical grid, the peak investment in it occurred in 1993,” says Crouse. “The average transformer and transmission system in the United States is about 25 years old. The investment required by utilities to maintain and modernize the utility grid is huge. Many utilities won’t be able to make this investment. The grid is only set to become less reliable as time goes on, absent a significant investment not being planned today by utilities.”
A Mobile Mini-boom
Manufacturers are seeing an increase in demand for mobile emergency power, too, says Matuseski. Part of this is a result of Hurricane Sandy.
Matuseski points to the coastal areas of the country, places that have suffered through several hurricanes and other powerful weather events. Business owners in these parts of the country might work with big-box rent-a-generator services, he says, to order a generator set once meteorologists spot a large storm heading toward them.
“Their goal is to get quick-connected,” says Matuseski. “They might not have backup power systems permanently onsite. But they will make arrangements to have one delivered for storm abatement. They’ll make arrangements for a last-minute delivery.”
But government regulations are playing a role, too, Thompson says, in the increased business that the manufacturers and renters of portable backup power systems are seeing. Many businesses today are required to have emergency backup power plans. And these businesses often turn to the traditional mobile solutions to meet these requirements, renting out mobile power equipment that is trucked to their sites when a bad storm or weather event is heading toward them.
This approach, though, is not always the most efficient, Generac’s Thompson says. Businesses have to rely on someone to get their mobile power solutions to them on time. Someone has to be at the business to plug in the power source and make sure it switches on when needed. None of this is easy when severe weather is hitting an area. And it’s why many businesses eventually switch from mobile solutions to more permanent backup power solutions once they’ve dealt with the difficulties of such equipment.
“It happened after Sandy, and it happened after Katrina. The first adopters go for a switch and a mobile unit,” says Thompson. “Over time they realize the difficulties that come with that approach. People who have suffered through multiple bad events will eventually go with a more permanent backup power solution.”
This bodes well for the future of the backup power industry. Thompson predicts that many companies will soon invest in mobile solutions to meet tougher federal regulations. Eventually, these same firms will make the move to more permanent backup solutions, he says, something that will provide a sizable boost in the sale of backup generators and onsite systems.
“When businesses are told that they have to do something, they usually go first with the easiest alternative,” says Thompson. “They will learn, tough, after going through multiple events, that it is easier to provide that backup power without having to rely on mobile solutions. Generally, owners learn that the second time through a severe event.”
Finding the Right Solution
But just because more businesses need backup power doesn’t mean that these companies know the right questions to ask or the right factors to consider before investing in this technology. Changing this situation is a matter of education, a task that the manufacturers of onsite power systems have to take on if they hope to continue growing their industry.
Matuseski points to several questions that building owners need to ask before choosing an onsite emergency backup system. The first? What size backup system does a facility need? And the answer to this question doesn’t depend solely on how large the facility is.
A building owner, for instance, might want to provide backup power to just a portion of a facility as a way of keeping most of the core processes running long enough for the public utility grid to return to life. “Customers need to understand their loads,” says Matuseski. “They need to understand how much of their facility they’ll need to back up. Knowing this will help guide them when they are trying to determine what size of a generator or system they need to purchase.”
Then there’s reliability. Every business owner wants a backup power system or generator that works when called upon. But there are certain options that are more reliable than others.
The challenge? The most reliable of options are generally the costliest. And in today’s rough economy, many businesses struggle with the thought of investing the large amount of upfront dollars high-end backup power systems can require.
The key, then, is for the manufacturers of this equipment to educate their clients about how quickly they can pay for themselves. As with most decisions in the business world, it all comes down to return-on-investment.
“It turns into a return-on-investment question,” says Thompson. “When companies ask why they should get a backup generator, we have to tell them that even if their power is out for just five or six hours they’ll have lost more money than they would have spent on a backup power solution. The backup power pays for itself quickly. It has a short ROI period.”
There are many businesses that are required by government regulations and codes to have adequate backup power systems. Selling to this group of businesses is, of course, little challenge. As Thompson says, these businesses know that they have no choice but to invest in backup power.
What is more challenging are the more than 21 million businesses across the country that aren’t required to have backup power systems. The key to growing the onsite power business rests in educating the owners of these businesses on what a smart financial move backup power can be, Thompson says.
“It can be difficult depending on the business or organization,” says Thompson. “When we talk about home standby power, that is an emotional decision that homeowners make. It’s all about peace-of-mind and protection. For businesses, the decision comes down to dollars and cents. They might be on a budget cycle where they can’t make a significant upfront investment. Their cash flow might not be where it needs to be.”
How best to reach these customers? Thompson says that the key is to illustrate for them just how big of a bite not having adequate backup power can have on their bottom line profits each year.
“How much does a business lose when its power is down three hours, five hours or a whole day?” says Thompson. Businesses need to factor in the soft costs of power outages, too, he says.
“There are disgruntled employees and customers,” says Thompson. “There are all sorts of other costs that they often don’t take into consideration. If you are shut down for a day, you are still paying your employees. Your customers might not come back again. They might leave your business and find somewhere else to shop for your product. These are all important costs that have to be part of the equation.”
Matuseski from Cummins agrees that once businesses understand the ROI associated with backup power systems, they are more likely to invest in them. And the good news for this industry, and for the business world in general, is that a growing number of commercial users are getting the message that backup power is a sound financial investment.
“I think we’ll see demand only continue to rise for backup power,” says Matuseski. “Unless the world of business changes—and I don’t think it will—you will see more businesses that have no tolerance for being out of power. You’ll have more businesses that want to invest in backup power systems to keep their facilities running.”