California has the largest economy in the United States. It also has its fair share of challenges that affect business continuity. Nicholas Laag explains how with the right strategies, those challenges can be overcome
California has the largest economy in the United States and the fifth largest in the world1. With fantastic networking opportunities, a supportive entrepreneurial ecosystem and access to government and investor support, California remains synonymous with business success. It’s no coincidence that the Golden State is also home to some of the world’s most powerful companies and tens of millions of valuable consumers.
Unfortunately, California carries its fair share of environmental challenges, as well as other challenges, when building data centers to serve the needs of its booming economy.
Climate change is making droughts worse and shrinks the vital snowpack of the Sierra Nevada and Cascades, which raises wildfire risk and makes generating hydroelectric power more difficult. Without water in reservoirs to turn turbine blades, there has been a significant drop in hydroelectric generation2. Rolling blackouts have become the new norm for California while utilities shut down power lines in an attempt to avoid sparking fires during hot, dry, windy weather. California also gets one to three earthquakes a year that are large enough to cause at least moderate damage to structures3.
Despite all of these environmental obstacles, it’s still possible to build a resilient and sustainable data center in California as long as you follow the right processes and procedures.
Choose the right location
When choosing where to build a data center in California, there are many factors that come into play.
Prime Data Centers recently chose McClellan Park in Sacramento as a building site because it’s situated outside of the 500-year flood plain and has low seismic risk. In fact, according to the USGS, there is a less than 0.72 percent probability of a 6.0 magnitude or higher earthquake over the next 30 years, whereas San Francisco has an 89 percent chance of a 6.0+ earthquake in this period.
There were other advantages to building on this site as well, including the tax advantages of building on a qualified opportunity zone, and the fact that renewable power is 30 to 50 percent cheaper than the rest of the San Francisco Bay area. It’s also located on major fiber routes with physically diverse pathways to multiple Tier1 long haul and metro fiber providers with direct access to dark fiber, major interconnection sites and on-ramps to major public cloud infrastructure providers.
Secure power supply
Due in part to California’s power supply constraints and in part to the high demand, power is a hot commodity. Securing power supply is therefore fundamental to developing new data centers because it’s a go/no-go element in the development decision process. If you can’t get power entitlements, you don’t build.
If you’re a moderately sized data center development, you need to seek specific approval from the utility to provide a predetermined amount of power to the site. These agreements are usually not-to-exceed agreements, meaning that the data center site can’t necessarily stretch above its allotment during periods of abnormal consumption.
If you’re a hyperscale data center builder, you often go directly to the power generation source and enter into a custom power purchase agreement. Large hyperscalers are increasingly seeking permission from the Federal Energy Regulatory Commission to buy and sell their own electricity in energy markets.
Engineer for success
A data center building is a unique entity. Beyond zoning restrictions, there are design and engineering considerations. The sheer weight and size of all the equipment that goes into a data center means that building vertically is more challenging than it is for an office or residential tower. Higher density is also a trend in data center construction. Current designs in Santa Clara include data centers that accommodate rack densities in excess of 15kW, up to 35kW.
Build for the future
With sustainability at the forefront for construction projects, it’s important when building a data center to strike that crucial balance between data center resiliency and environmental sustainability.
Data centers need backup electric power, for example, and many data centers have historically used diesel-fueled backup generators. The challenges the data center industry faces are really no different than the central challenge facing grid operators and power utilities. The trick is how to ditch fossil fuels without sacrificing reliability.
One consideration is to seek out partnerships with sustainability leaders. For example, Macquarie, a pioneer and global market leader in the infrastructure sector, is known for its commitment to sustainability and has a portfolio of partners committed to climate tech. Finding ways to collaborate with partners such as Macquarie and its network on renewable power supply, sustainable construction materials and techniques, sustainable water use, and perhaps even grid services, is a solid plan toward sustainability.
Partner to build
Because there are so many unique intricacies to building in California, many data center operators look for a building partner when seeking to enter the market.
Established in the California ecosystem, Prime Data Centers offers large enterprises access to immediate campus capacity and land in sought-after areas of California. We can also provide immediate access to the physical materials and talent required to build.
While building world-class data centers in California has its challenges, it can be done. It’s really just about knowing the rules of the game or partnering with a company that does. We expect California to continue to lead in many ways.
Nicholas Laag is the CEO of Prime Data Centers, a next-generation data center developer and operator delivering build-to-suit, powered shell and turnkey solutions to retail colocation providers, hyperscalers and large enterprises. Through its unique Partnership-as-a-Service model, Prime redefines the traditional corporate partnership by offering strategic, flexible ownership options and dynamic leasing structures.