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:
SPACE COST = BASE RATE X KW
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.
OR:
(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 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.