Cloud Computing — Net Loss or Gain for IT Energy Efficiency?

We’ve discussed how the rise of cloud computing could add lots of new energy demand in the already power-hungry IT sector. But cloud vendor Microsoft is fighting back that perception, with a new study showing that enterprise clients can cut their IT carbon footprint — in other words, energy use — by 30 to 90 percent by moving it to the cloud. As I explained it in my weekly update on GigaOm Pro (subscription required), however, translating those savings to a more environmentally attractive — and lower-cost — cloud offering yields a much more complicated picture.

Microsoft, Accenture and WSP Environment and Energy modeled the energy savings from cloud features including dynamic provisioning, server multi-tenancy and improved server utilization, and compared them to on-premise IT costs for companies ranging from 100 to 10,000 people. The smaller the company, the bigger the potential savings, the report found — from 30 percent for the biggest, up to 60 percent for mid-sized and a whopping 90 percent for small businesses.

Not only does cloud computing make IT more efficient, it gets more efficient the larger it gets, according to Andri Kofmehl, a manager with Accenture Management Consulting who worked on the cloud computing study. That’s because adding more customers, all with different IT needs at different times of the day, actually helps smooth out load across the peaks and troughs of daily electricity supply and demand, he said.

It’s important to note that not everyone will agree with Microsoft’s findings. Researchers at University of Melbourne in Australia plan to release a report soon showing that cloud computing’s energy draw can exceed in-office computing at times, more or less based on how much energy is used to transport data from one location to another. High volumes of data storage, for example, required lots of data moving, and thus was less efficient at high volumes in the cloud. Still, tasks such as consolidating workloads from multiple clients onto fewer servers — and using the latest, most efficient servers in the most up-to-date data center environments — are still net efficiency gains, the Australian report found. See Katie’s indepth report on the Melbourne research on GigaOM Pro.

No doubt cloud providers such as Amazon, Google and a host of others will be looking to Microsoft’s report to justify similar energy efficiency and carbon reduction claims for their own services. But underlying disputes over energy efficiency is a key question — what role does energy consumption play in cloud providers’ business models? Indeed, trying to measure cloud power use gets complicated quickly.  Customers will have already reduced IT energy burden to zero, more or less, by shifting their IT assets and power bills to the cloud provider — unless it’s a private cloud, of course. But measuring energy use only in data centers might miss energy costs incurred by others in the chain, such as the communications providers that link clouds and their users.

Josh Henretig, Microsoft’s director of sustainability, declined to get into just what share of the price Microsoft puts on its cloud computing services is made up of energy costs. But we all know that data centers are a major energy draw in this country, as well as a major focus of energy efficiency technology, both for IT assets and facility cooling systems, power systems and other building energy draws.

What about the carbon footprint associated with cloud computing? That brings renewable and clean power into the mix, and is outside the scope of the Microsoft study, Henretig said. But with Facebook facing increased pressure to green its data center power supply — and Google getting into wind power and electricity trading as a way to bring clean power to their own data centers — it could play an important role in whatever benefits customers may see from claiming the carbon-reduction cred that could come along with making the switch to the cloud.