Data Center

Data Center Cost per Megawatt – Buyer Beware

It’s common in the data center industry to hear people talk about the cost per megawatt of data center capacity. To this I say – buyer beware. It is too easy to throw out seemingly low numbers that get people all excited.

Let’s assume two companies (Company A and Company B) quote a cost per megawatt to build a Tier 3 data center. Company A indicates its cost is $6.5 million per megawatt and Company B indicates it is building for a cost of $8 million per megawatt. On the surface it looks like Company A is delivering a similar product that is significantly cheaper than Company B. Before you jump to that conclusion, I recommend that you first seek to understand what is behind the numbers. Let’s look at a few examples that illustrate my point.

Example #1 – Company A quoted a Cost/MW that reflects the MEP (mechanical, electrical and plumbing) build. Company B quoted a Cost/MW that reflects the total cost of the facility shell and core plus the MEP build.

Example #2 – Company A quoted a Cost/MW of the MEP system to include generators, switchgear, UPS, PDUs, chillers and CRAC units but, it excludes sales tax, permits, and freight. Company B quoted a Cost/MW that was an all-in MEP cost inclusive of sales tax, permits and freight. It also includes the cost to install the raised floor, pre-action sprinkler system and cross zone sprinkler system within the data hall.

Example #3 – Company A quoted a Cost/MW for a Tier 3 design that included an N+1 generator plant, an N+1 UPS system and, an N+1 HVAC system. Company B quoted a Cost/MW for a 2N UPS system, 2N generator plant and an N+1 HVAC plant. Both are touted as Tier 3 data centers but, one is clearly more robust.

I could go on with more examples, but the point is you need to educate yourself about what is – and is not – included in the number before you get all excited. In each of the examples above, it’s clear that more information is needed before one jumps to the conclusion that Company A is delivering a similar product at a compelling cost difference.

We are not at a point where data centers have been commoditized and that is not likely to occur anytime in the near future. The design of most every data center today is unique and they come in as many variations as there are builders and end users. It’s wise to remember that you get what you pay for.

For another perspective on this topic, please see the post, “Wanted: A Better Way to Quantify Data Center Risk” by Joe Reele. This post suggests that there can be much variation in the design and cost within a given data center tier classification and it’s wise to understand the risk profile you are buying.


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