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Calculating TCO for Energy

Realistically estimate electric use and cost to compare servers

Realistically estimate electric use and cost to compare servers

Electrical Units and Price Units

Once typical power is determined or estimated, the expense can be calculated. Electricity is priced per kilowatt-hour (kWh). Watts and kilowatts are steady-state units, so electric bills are based on the use over time. The average price of electricity in the United States for the commercial sector, where most data centers reside, is 10 cents per kWh.

To determine the current average price of electricity in your state, reference the Energy Information Administration of the U.S. Department of Energy (, The data is in Table 5.6.B. Typically, you’ll use the commercial-sector price.

Cost Calculation

The yearly cost of server electrical (IT load) expense is calculated with the formula:

typical power W ÷ 1,000 x price x hours per year

Divide by 1,000 to convert watts to kilowatts, the unit for pricing. A year has 8,766 hours, assuming the server is always in service. So, if we use an example of a server with typical power of 380 W and price of 10 cents per kWh:

380 ÷ 1,000 x 0.10 x 8,766 = $333 per year

Energy Can’t be Created or Destroyed

The server’s electrical cost is variable. In an analysis where the example server is unplugged and its workload deployed elsewhere, $333 per year in server electrical expense will be saved. This is a hard dollar savings, whether it’s in IT’s budget or not. But that’s not all.

The server’s consumption is known as IT load from a data-center facilities perspective. In fact, data centers have three major electrical cost categories:

  1. IT load: The kW used by systems at power supply input
  2. Distribution: The kW of losses from conversion of voltage and rectification
  3. Mechanical: The kW of thermal dissipation equipment removing the heat generated by IT load and distribution

Every watt a server uses is converted to heat. Every watt lost in conversion of electric distribution converts to heat. At a constant rate, each watt generates 3.4129 BTUs per hour. That heat must be transported outside the data center. The outside transport also consumes watts of electricity, those of the mechanical category.

IT load reduction is a hard number savings. Reductions to distribution losses are also hard dollar savings.

Scott Barielle is a consultant with IBM STG Lab Services and specializes in IT energy efficiency, optimization and finance.

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Calculating TCO for Energy

Realistically estimate electric use and cost to compare servers

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