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Emerging and Growth Industries Zero In On Energy Availability & Costs

Rising energy costs, limited availability, and new awareness of energy security issues are among the reasons this factor received a high ranking from the 2007 Corporate Survey respondents.

Apr/May 08
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An hour of lost time can cost millions of dollars in lost production wafers. While control and emergency systems can be backed up to ensure safe shutdowns and control of hazardous materials, production power is reliant on the grid. Electricity price is not a priority, as it is a tiny fraction of the costs of finished product. However, a facility design that incorporates energy-saving technology is attractive nonetheless because it still represents the ability to achieve savings - savings that drop straight to the bottom line over a facility's entire operational life.

Data center site selection is driven by energy more than any other sector. While risk analysis and distance to backup facilities or related institutions are important criteria, energy (right next to telecom) is the primary concern. Electricity represents the entire operating cost (excluding depreciation), and some data centers simply cannot ever afford to "go down" due to power problems. That's why reliable, cheap power will make or break site selection decisions in this market sector. Depending on the tier level, data centers use redundancy and backup power to guard against outages, but every client insists that activation of these systems is a rare occurrence. Using multiple feeds and typically falling in the 10-30 MW range, data center clients typically want to stay away from heavy industry and even transportation hubs to minimize risk. Paradoxically, this preference can place data centers further from the ready electrical supplies they so critically need.

Changing Dynamics

Fifty years ago, chemicals, metals, pulp and paper, and other industrial operations were sited near cheap power or water because that was the only economically feasible option. For today's growing industrial groups, things are different. Better infrastructure, new technologies, and a different business environment are opening up new siting options that would have been considered impractical not too many years ago.

This changing dynamic adds a higher level of importance to site selection processes as they experience increasing pressure to include sustainability, renewable energy, and carbon footprint information in decision-making. Generally applauded, the growth of renewable power sources can make grid management more difficult. The consistency of a wind farm, for example, is not its selling point. As alternative energy sources become more widespread, renewable infrastructure will learn to adapt to industrial needs, but for now it is a concern. On-site generation is also an option for mission-critical or very large-scale processes, or where co-generation opportunities can provide access to necessary facility heat and/or cooling. If high power demand, high price of grid power, cheap land, and a sunny region intersect, options like onsite solar PV or solar thermal become potentially viable.

Scenarios such as these are exciting because they reflect the kind of challenges and opportunities that the rapidly evolving energy dynamic are bringing to bear on the site selection process. The focus on energy won't be a passing fancy. It's here to stay as energy security increasingly drives economic success for companies in many markets. More than ever it will be up to site selection professionals to carefully weigh the growing significance of energy criteria against the full range of other site selection factors to produce the most prudent location decisions.

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