What Does 1 Megawatt of Data Center Space Cost?

1 Megawatt of space isn’t the norm for most organizations. Hyperscalers, SaaS providers, online streaming providers , and social media have changed that substantially. With the advent of Artificial Intelligence (AI) and Machine Learning (ML), this is becoming more commonplace, even for a day 1 requirement. I thought it would be helpful to share the formula that data centers use to charge for a full 1 megawatt of data center space.

There isn’t a single model, but this is a model that I see frequently when working with clients. It consists of 2 separate components to give you a total monthly cost:

Component 1 is a Base charge for the space and the accommodation it needs for power.
Component 2 is a pass-through of expected power and cooling costs.

Let’s break out the 2 components to see how they are calculated.

Component 1 – Base Charge for Space and Power Accommodation

The base charge for space would look like this:

BASE RATE: This is a price set by the data center space. It can range from $125 to $170 for wholesale data center quotes that are 1 Megawatt or above .
KW: The amount of Kilowatts you’ve requested from the facility. (for our example we are using 1000 kW or 1 Megawatt)

Said differently:
SPACE COST = (some predetermined rate they are charging for space per KW) multiplied by (the actual Kilowatts you need)

A real world example of this formula using 1MW or 1000KW

$150 per KW x 1000KW = $150,000

Component 2 – Power Pass-Through

The power pass through would be computed like this:

(kWh x Price) * PUE

kWh = kilowatt hours. For 1 Megawatt, this would be 720,000 in the course of a month assuming full utilization over 30 days. You can see the calculation here.

Price = There’s usually a published rate for kWh in by each utility company. Some locales sell power for as low as $ 0.05 per kWh and in other areas it’s $ 0.14. This has been on an upward trend lately. You can check out your areas power costs here.

PUE = This stands for Power usage effectiveness and it’s a measure of efficiency. It’s not easily explained in a single sentence so you’d like to learn more about it, check out the full definition here. I’ve seen this range from 1.4 – 1.5 but they vary. The lower this number, the more efficient the data center is.

Said differently:
POWER PASSTHROUGH COST = (What you will use in kilowatt hours multiplied the price per Kilowatt Hour) this result is then multiplied by PUE, which is a measurement of the efficiency of the facility.


(kWh x Price) x PUE = (720,000 x .14) * 1.5 = $151,200

Adding the 2 Components Together

Now we need to combine both components to get total costs:
Space Cost + Power Passthrough Cost= Total Monthly Cost

$150,000+$151,200 = $301,200 monthly.

If you’d like to see a calculator that can help you compute this, I’ve created a google spreadsheet that is shared publicly. Copy the Google sheet to your own Google drive and edit the fields in yellow to figure out costs. You can use this spreadsheet to compute things outside of 1MW of Data Center Space by adjusting cells K2 and C2. Power pricing is rising so please note this as you look for data center space. If you are new to data centers and would like to understand the power typically delivered to a single cabinet of servers, check out our article about colocation pricing.

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