I’ve been asked a number of times by providers in the industry, as well as analysts following the industry, if the regional variations on power price have been impacting the industry over the past few years or if they will be in the years to come. As such, I think it’s worth discussing my thoughts openly on this important topic and hearing your feedback.
Regional Cost Variations Impacting Demand
We have found that as the market becomes more aware of the cost disparity across the country on different power grids (13+ cents per kw/hour in Manhattan vs. sub 3 cents per kw/hour in Quincy, WA for example) there has definitely been a shift in demand for both retail and wholesale facilities located within lower cost per kw/hour regions. Looking at the following chart you can clearly see how just a few cents per kw/hour differential can make a huge impact for any client at scale.
For example, a client using a Megawatt of power each month deployed in Santa Clara will be paying upwards of $73K/month and $876K/year for the “privilege” of simply being in the Bay Area vs. Eastern Washington. When considering that the PUE surcharge for metered power billing is a multiple of the utility rate, the premium to deploy in facilities with similar/same PUE within regions with higher utility rates becomes even greater.