Sizzling profits if hot-rock outfit can power data centres

Courier Mail
Friday 5/6/2009 Page: 46

GREEN-energy developer GeoDynamics is hungrily eyeing emerging moves by major data processors such as Google, Yahoo!, Microsoft and financial institutions to slash their carbon footprint. Demand for data centres large facilities housing computer and telecom processing and storage systems is estimated to be growing by 10-15% a year. Such centres compete for space in urban areas and their emissions equal about one-third of the carbon emitted by the global aviation industry.

Enter Brisbane-based GeoDynamics, now sitting on the world's largest reservoir for hotrock geothermal energy at a site it has developed in South Australia's Cooper Basin. It and joint venture partner Origin Energy aim to have a commercial-scale geothermal power plant running in 2011 with capacity to continuously supply up to 50,000 households, then expand the number of plants tenfold. Unlike coal-fired and most gas-fired power plants, these plants wouldn't be a drain on Australia's water supplies or pump out planet-warming gases.

In preparing the business case for plant investment, GeoDynamics has been looking at supplying power to consumers located nearby and has had positive signals about demand for a data centre for one or more tenants near its production site. "We went to (Queensland IT consultants) Strategic Directions Group and said, 'we've got a left field idea if were crazy, throw us out now and we'll put cold flannels on our foreheads'. Three hours later they said, 'you're not crazy, this will work'," GeoDynamics managing director Gerry Grove-White said.

Strategic Directions is doing a feasibility study for a geothermal-powered data centre at the site and will identify potential partners and recommend a preferred model. "We'd picked up a trend of big companies looking to locate data centres where the energy was green or had no carbon exposure. We road tested this with one of the major names (I won't say who) and they said yeah, that works," he says.

Major information and communication technology companies would be eyeing the benefits of a greener image with consumers as well as lower future costs. Many countries, including the US and Australia, are set to put a price on greenhouse gas emissions. Such schemes will first target high polluting industries but eventually will be extended to less-polluting industries.

Google Australia spokeswoman Lucinda Barlow said the US-based internet giant has some data centres elsewhere in the world powered by hydroelectricity and an Australian geothermal power source "sounds like an interesting idea". Google this week proudly showed off the green credentials of its new national HQ in Sydney, inviting Governor- General Quentin Bryce to formally launch what it said was a first for Australia in being a Six-Green-Star building.

Steve Hodgkinson, an analyst at advisory and consulting firm Ovum, said green power at present was 20-40% more expensive so it would require a specific environmental policy setting to cause a company to wear such a cost rise. "If you look at Google for example. Most people regard it as being pretty much best practice in terms of reducing energy and water consumption.

But if you look at their five-step stated energy strategy, not anywhere in the five is "buy green energy". In practice, it's more expensive. These companies believe they can have a bigger impact by reducing the industry's energy consumption, rather than buying green energy," Mr Hodgkinson says.

But GeoDynamics says it has a compelling offering for companies with major data processing needs. "What we're offering is the ability to lock in green, longterm power supplies. We can do it economically because the power purchaser won't have to pay the transmissions and distribution costs because that's available to us as a margin. We can price our power to make it economically attractive not to build in the centre of Brisbane but in the Cooper Basin," Mr Grove-White says.

"Energy costs for companies with major data-processing requirements are about the largest single-line item in their revenue budget. We can offer a perfect hedge against the barrel of oil and the cost of carbon. We can offer 20-year certainty on their energy costs whereas a data centre on the east coast is facing renegotiation of their power contracts each one, two or three years at best."