Is there an alternative to financing options for critical infrastructure, which also avoids the need for capital outlay? A new approach has piqued the interest of large users of critical power and cooling, seeking to ‘liberate their budgets’, according to Burland Energy. Louise Frampton reports.
In 2015, a group of individuals from infrastructure, finance and insurance industries identified a market need for delivering mission critical power on a ‘pay-per-use’ basis to help data centres improve their power infrastructures’ efficiencies and costs – reflecting a move to an ‘on demand’ economy.
This vision culminated in the development of a disruptive approach to the specification of critical infrastructure – avoiding capital investment and asset depreciation, while focusing attention on energy usage. At the end of the millennium, there was a move away from the ‘comparison of products and features’, to discussion of ‘total cost of ownership and value’.
More recently, a number of vendors – including Google, Microsoft, Oracle and Hewlett Packard – have driven demand for the ‘everything-as-a-service’ trend and data centres are very accustomed to this business model. While this has been software driven, the markets’ demand to include other solutions is also growing at a rapid pace.
There is a special focus on various ‘support systems’ which represent a massive share of annual IT budgets (80% according to research firm IDC. [https://tinyurl.com/m6eozwr]) By replicating this approach for mission critical applications, Geneva-based Burland Energy SA, is aiming to move data centre customers from ‘owning’ infrastructure, such as UPS systems and cooling systems, to becoming ‘users’.
End to TCO?
Risto Thurén, the company’s president, explains that the company’s ‘Facilitate’ concept aims to ‘liberate budgets’ from capital investments by selling the output of the assets, instead of assets themselves. This is different from a ‘leasing’ option, he points out. Rather than paying fixed monthly payments (as is the case for traditional renting solutions), monthly billing is based upon a fixed rate per kWh consumed – just like any other utility provider. Selling ‘Total Cost of Ownership’ (TCO) belongs to the past, in his view.
The kWh price includes everything – the required products, transportation, installation, maintenance, service, spare parts and batteries for the entire duration of the contract. Furthermore, this concept moves all related costs from CAPEX (capital expenditure) to OPEX (operating expense) – which is a significant benefit, since these expenses differ in their respective treatment for tax purposes.
“Why buy the cow just to have some milk?” asks Thurén. “We are transferring customers from being passive owners to efficient users.”
The first offering to the market, under the ‘Facilitate’ concept, included the power conditioning (UPSaaS) services, followed by heat extraction (COOLaaS) services, more recently in February 2017. While the business model has focused initially on data centres, all mission critical facilities have the potential to adopt this approach.
Burland Energy partners with a variety of manufacturers – including Active Power, AEG Power Solutions, Stulz along with four other, still undisclosed, world-class manufacturers – with the aim of providing a pay-per-use, one-stop-shop for mission critical infrastructure. The solutions may incorporate power conditioning, generators, power distribution, monitoring and management, as well as heat extraction.
Customers need to know the initial current load, anticipated growth in load requirement and the time period (to support that growth). These parameters enable the company to provide a cost per unit kWh. However, future growth in capacity may also be supported, with solutions such as modular UPS, for example.
After due diligence and contractual obligations are completed, the OEM partners will install and commission the equipment required to provide power conditioning (UPSaaS), heat extraction (COOLaaS), or the entire infrastructure (Facilitate).
Burland Energy only invoices the user for their consumption and retains ownership of the assets at all time. There is a minimum consumption stipulated as part of the contract and once this has been exceeded the user can choose to either continue with the service or return the equipment. However, purchasing of the asset is not an option.
There has already been significant interest from the market and this has included banks, chemical companies, as well as food and beverage industries, according to Jonas Enström, director at Burland Energy.
“These are large corporations that have a lot of money, but see the benefit of liberating their budgets from assets that do not directly add value,” he comments.
“The decision is no longer being made by the purchasing manager – we see it increasingly becoming a financial decision made higher up within the organisation.”