The Inside Story Of PACE

July 16, 2010

Ten months ago, PACE looked like a sure thing. Now Property Assess Clean Home financing is fighting for its life.

What explains this turn of fortune? Certainly lobbying played a role. So did regulatory cold feet. The question now is whether Congress, which filed its first pro-PACE bill on Thursday, will come to the rescue. Or will PACE‘s future be decided in court?

The tables first turned against PACE in May when Fannie Mae and Freddie Mac barred lenders from writing mortgages for PACE homes. PACE programs, which allow homeowners to borrow money for energy-efficiency improvements, raise money from government-sponsored bonds and homeowners repay the money through special assessments on property tax bills. The mortgage giant had initially been supportive of the program, but changed its mind and complained the assessments, or liens, took priority over its mortgages in the event of defaults.

With lawsuits and bills pending, states rights issues could play a role in PACE's future.

The second major blow came early this month when the mortgage regulator Federal Housing Finance Agency released a list of specific PACE concerns. The agency took issue with PACE’s first-lien priority, but also argued the program lacked standards for underwriting, consumer protection and energy remodeling.

The objections sparked lawsuits in California and from the Long Island town of Babylon after most of the PACE programs in 23 states suspended operations.

The reversal on PACE came after months of backroom negotiations failed to budge regulators. Supporters say they offered numerous concessions, including an offer from the White House to cover any PACE loses during a trial period. The offer was rejected.

Several people following the inner workings of the PACE debate says lobbying was fierce – particularly from solar-power financier SunRun, which passed around a whitepaper calling PACE loans unconstitutional. The Mortgage Bankers Association was equally active, both on the federal and state levels.

“I believe there were lobbyists involved” in the FHFA and Fannie Mae decisions, says Gary Kremen, an entrepreneur who founded Match.com and Clean Power Finance, a company developing software for solar installers.

SunRun declined to discuss its role as a lobbyist.

But not everyone is convinced. Mortgage regulators maintained an almost “ideological” disposition against ceding a priority lien position to PACE, according to several people close to the negotiations. Anything adding mortgage risk seemed anathema, especially in today’s environment of toxic mortgage assets and high foreclosures.

The issues they raised were not entirely unreasonable, concedes Alex Robinson, founder of GreenDoor, a startup developing software for PACE administrators that suspended operations after the FHFA letter against the program.

But PACE supporters argue the concerns were addressed. In one instance, they offered to put PACE through a 24-month trial period with a cap of up to 270,000 homes. The test would allow administrators to collect information on the program and prove its worth.

The White House also made efforts to limit investments to homes with the greatest potential for energy-efficiency gains. And it proposed guidelines requiring qualified auditors, contactors and quality-assurance inspectors. The inspectors were to examine a home once work is completed.

Fannie Mae and the FHFA “raised real issues,” says Cisco DeVries, president of Renewable Funding, an Oakland company that administers PACE programs across the country. “But these issues were addressed.”

Instead regulators appeared unwilling to find a middle ground.

The future of PACE now rests with a federal court or with Congress. In California, Attorney General Edmond Brown Jr. filed suit this week claiming Fannie Mae, Freddie Mac and the FHFA are taking away municipal rights to raising money through special tax assessments.

It’s a state versus federal issue with broad ramifications. A decision against California could hinder special assessments, such as PACE, in the future, says environmental attorney Sanjay Ranchod at Paul Hastings Janofsky & Walker in San Francisco. A decision for the state could do the opposite – open the PACE flood gates.

Congress also wants in on the act. On Thursday, Rep. Mike Thompson (D-CA) introduced the first federal legislation require lenders to work with PACE. Twenty-nine other House members joined him. With Congress set to recess in August, expect a lot more inside baseball to take place.

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Posted by Mark Boslet

SeaMicro’s Minor Revolution In The Data Center

June 14, 2010

Not since the advent of virtualization has the data center faced such an opportunity for change.

Low-cost, ultra-low-power servers – sometimes called microservers – may finally get a jolt of legitimacy.

On Monday, secretive Santa Clara start-up SeaMicro formally launched its long-awaited remake of the x86 server: a 512-processor box that doesn’t use Intel’s ubiquitous Xeon chips but low-power Atoms instead. Atoms are the processors sold in $300 netbooks – giving rise to the observation that SeaMicro’s SM10000 is really just a collection of netbooks stuffed in a one box.

Expect vendors such as Dell to begin making microservers. SeaMicro claims it will cut power use by 75 percent.

It’s an observation that is essentially true. The result is a server that uses one-quarter the power and takes up one-quarter the space while performing the same amount of work. CEO Andrew Feldman says Atom is three times more efficient in performance per watt than Xeon. The reason is it can better power down when not in use and doesn’t waste energy trying to anticipate future workloads, as Xeon does.

That is why the SeaMicro box is better suited to the Internet, where traffic is bursty and generally only places lightweight demands on a server.

The SM10000 is the brainchild of Gary Lauterback, a former AMD fellow and Sun Microsystems engineer, and “is an enormous transformation of the data center,” claims Feldman.

He may not be exaggerating. Zeus Kerravala, a long-time tracker of the server industry at Yankee Group, says: “As an analyst I am often skeptical of technologies people tout as revolutionary, but this one I was really impress with.” If Dell and other top tier vendors aren’t already thinking about microservers “I’d be surprised,” he says.

In truth, SeaMicro isn’t the first company to conceive of low-power servers or ones running Atom. Super Micro Computer launched a rack-mounted Atom blade last year, and Hewlett-Packard markets a $400 MediaSmart home-server with Atom. In Austin, TX, Smooth Stone is working on technology to bring even lower-powered ARM processors, those in many cell phones, to the server market.

Improved efficiency is what motivated cloud-computing vendor Rackable Systems to make use of small servers with modest power to handle fluctuating Internet workloads.

However, SeaMicro hopes to take Atom boxes a step further. The company built into the SM10000 a 1.28-terabit communications fabric powerful enough for a super computer and installed a custom ASICs to handle the complex load balancing for 512 processors. A single box can replace 40 dual-socket, quad-core servers, two Ethernet switches and two terminal servers, says Feldman.

It also shrank the size of processor motherboards to the size of a credit card, taking off unnecessary components and reducing the power draw.

According to IDC, the package may catch on with Web 2.0 companies. Companies spend $27 billion globally a year buying energy to run their servers, the research firm says. Most would die to reduce the bill.

“I think it is a radical approach” that Web 2.0 companies will quickly adopt for their public clouds, says research analyst Katherine Broderick.

The SeaMicro, which raised $25 million from backers including Khosla Ventures, Draper Fisher Jurvetson and Crosslink Capital and received a $9.3 million Department of Energy grant, will make the box available in July. Selling for $139,000, it is likely to begin earning its investors a return.

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Posted by Mark Boslet

Will EPA Energy Star Label For Data Centers Spark New Debate?

June 7, 2010

The Environmental Protection Agency released its long awaited Energy Star label for data centers on Monday, likely sparking a new round of data-center energy-efficiency improvements.

The initiative should be well received by IT managers, who have long awaited a standard benchmark for energy consumption. “The industry will be happy with some forward movement,” acknowledges Coy Stine, director of data-center services at the engineering firm Bluestone Energy Services of Norwell, MA.

New Energy Star label could spark a new round of efficiency improvements at data centers

However, the decision will focus attention on the failings of the selected benchmark: the Power Usage Effectiveness, and will trigger a debate over how best to calculate efficiency.

The EPA decision has been expected for almost a year, and some data center improvements languished in anticipation. “The industry needed a little bit of a catalyst,” concedes Mark Harris, vice president of product marketing at San Francisco data-center software supplier Modius.

With the Energy Star label now a corporate goal, centers will compete with one another. The EPA’s plan is to award the label only to the top quarter of centers in a particular industry. It also put into place safeguards against gaming. PUE calculations need to be verified by licensed professionals and examined by the agency before accepted.

Data center experts say the EPA will need six to nine months to develop industry-by-industry benchmarks. The EPA didn’t immediately respond with a schedule.

The trouble is the PUE is not the only, or necessarily the best, method for calculating data-center energy use. The metric is a measure of how much data-center power goes directly to computing equipment, thereby a gauge of how much work is done. It is presented as a ratio of total power to compute power.

While it is relatively simple and easily understood, it falls short in a key area. It doesn’t assure that the energy accomplishes useful work – such as processing transaction volume. A server might be idling, not handling a request, and its energy would still be counted as effective power.

A more targeted benchmark under development – the DCeP – compares useful work to total power consumption, but has proved a difficult formula to derive. It is likely several years away.

The PUE, “is a good first step,” says Harris. “The issue is that five years ago we had nothing.” Now there is something.

But the debate is sure to continue. And it will spread publicly, instead of remain confined to the Green Grid, which proposed the use of the PUE. Now that companies have an incentive, they will take an interest in how the calculation is performed. The EPA also may find itself under pressure to come up with best practices.

Without detailed guidelines, the PUE can be gamed, asserts Stine. Every center needs to report total power in the same way, for instance.

Clearly, the new Energy Star label has broad consequences. Data centers are significant consumers of energy and together account for 1.5 percent of U.S. electricity use. Energy consumption, already $4.5 billion, is expected to nearly double over the next five years.

Up to now, data centers have been addressing energy efficiency piecemeal. Blade servers might replace dedicated boxes and old routers swapped out for new ones. IT managers may choose to slow fan speeds in their chillers. But many did not calculate their PUE rating – despite the attention Google brought to the measure by publicizing its own rating. (Google claims its PUE is 1.21. A rating of 1 is perfectly efficient.)

Now there is an incentive to view data-center energy management more holistically. It comes not a moment too soon.

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Norway’s Bid For World’s Greenest Data Center

April 28, 2010

Local Host’s data-center cooling technology siphons icy water from 984 feet below the surface of Norway’s Nordfjord.

Now the start-up hopes the system will power the world’s largest green data center, which it wants to build in an abandoned mine.

The company already attracted the attention of IBM and Tandberg. Next it plans to reach out to Google and Microsoft for the $100 million it needs to complete the project.

Local Host CEO Sindre Kvalheim's goal is the world's largest high security green data center

Local Host CEO Sindre Kvalheim says his goal is to build “the world’s largest, high security green data center.” There are reasons to think he might succeed. The central coast Sogn og Fjordane region of Norway has an abundance of cheap hydro-electric and wind power to run racks of energy-hungry servers.

It also has an endless supply of freezing water in the 66-mile-long fjord, Norway’s sixth longest. “We can cool a data center more efficiently that any where else in the world,” said Kvalheim, who disclosed details of the project for the first time outside of Norway at the Nordic Green II conference. “We know it’s not only doable, it’s feasible.”

The company has been testing its cooling system for two years at a small, 20-rack data center it runs in Maloy, Norway. “We have reduced our power costs by 50 percent” by eliminating the need for an electric chiller to cool the servers, says Kvalheim. The salt water brought from the depths of the fjord is 45 degrees and cools less corrosive fresh water, which circulates among the computers. The fjord water remains pressurized and requires little energy to pump.

Local Host began studying the underground site in October and expects to complete a feasibility study in June. Kvalheim is convinced the findings will be encouraging.

But the challenges facing the project are significant. IBM has funded 10 percent of the feasibility study and the Norwegian government kicked in 50 percent. Finding $100 million in construction costs are beyond the means of the tiny company. That has Kvalheim eager to approach Internet giants Google and Microsoft.

He says the 1.4 million square foot center will have six stories with tunnels and roads for customers to haul in trailer-truck sized portable data centers. The abandoned olivine mine could fit between 2,000 and 3,000 of the portable units, which Kvalheim says he will build, even though vendors such as Hewlett-Packard and Sun offer commercial models.

Construction could start in 2011, with the demand for data intensive Internet services only expected to increase in the years to follow. As the world learns to cope with the need for greater energy efficiency, green centers are likely to draw increasing interest from the online titans of the coming decade. In Kvalheim’s view, that means harnessing the frigid water of a Norwegian fjord.

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Energy Efficiency To Be Top Clean Tech Venture Capital Investment Theme

March 24, 2010

Move aside solar and electric cars. Energy efficiency will be the top investment theme for venture capitalists this year.

This prediction comes from the Cleantech Group, which said it conducted interviews with venture capitalists, early-stage companies and industry pundits.

Solar to be overtaken as top venture investment category with big opportunities for energy efficiency in commercial buildings

“Our analysis shows that energy efficiency is poised to overtake solar as a top investment category in 2010, and commercial buildings represent a prime target,” according to group President Sheeraz Haji.

The explanation is that venture capitalists are looking for faster paybacks for their clean-tech dollars and places where they can put smaller amounts of money to work. An energy-efficiency company might use computers and software to analyze energy use data instead of build a factory to make solar panels. This means it needed less money to get started.

The biggest opportunity for energy-efficiency innovations is likely to be commercial buildings. Buildings, both commercial and residential, consume about 40 percent of the nation’s energy and 72 percent of its electricity. Commercial buildings make a more immediate target because administrators are eager to save money.

Among the products most like to get funding are those that will use information technology and communications to permit greater visibility into and control over energy use. But low-power Wi-Fi sensors, building automation systems, smart lighting and energy-efficient windows have bright futures.

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Sony Vows To Cut The Energy Use Of Every Product By 30%

January 7, 2010

Sony raised the stakes for environmentally friendly electronics.

Sony's new Dash Internet viewer, like all its products, need to be an energy miser

The Japanese television, camera and computer maker said at the Consumer Electronics Show it would reduce the power use of every one of its products by 30 percent. The goal is to be achieved by mid 2016.

Sony chose for its announcement CES, one of the world’s largest gatherings of electronics makers. By doing so, it obviously hoped to win the game of one upsmanship among electronics manufacturers. Then it add an even more ambitious target: It said its longer term aim is to have a zero carbon footprint (likely a plan that includes the purchase of increasingly dubious carbon offsets).

Despite its good intentions, Sony’s initiative is not solely driven by environmental responsibility.

In a survey released this week, Accenture found that 67 percent of consumers would be willing to pay a premium for a more environmentally friendly product. This was especially pronounced in emerging markets.

For instance, 98 percent of Chinese consumers were willing to shell out additional cash while only 43 percent of Americans. In other words, the trend is gong to become more important as fast growing emerging economies expand.

“We know consumers respond to responsible companies,” said one Sony executive.

For this reason, most other consumer electronics companies have their own efforts under way to cut power use. Many of those goals may now see a boost.

By the way, Sony said it power use targets would be compared to 2008 energy use levels.

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California Energy Standards For TVs Will Spur Innovation

December 4, 2009

California’s energy standards for flat-panel televisions are the toughest in the world, requiring a 33 percent efficiency improvement by 2011 and a 50 percent gain by 2013.

Critics complain they will stifle innovation and raise prices for televisions affected – those 58 inches and smaller.

Ultra thin, energy efficient LED TVs might benefit from the California standards

But manufacturers such as Samsung disagree. About three quarters of the televisions on store shelves already meet the 2011 standards and about 25 percent pass the 2013 ones.

Samsung says it produces some of them. “We’re already there today,” says Scott Birnbaum, vice president in the company’s LCD business. “We’re not intimidated by these standards.”

An array of new technologies will help manufacturers keep pace with the market changes. The result is an acceleration in innovation, says Birnbaum.

For instance, Samsung is working to further reduce the power demands of LCD backlights with fewer bulbs, more transparent optical screens and transistors with wider apertures. It also is deploying technology to dim areas of the screen that don’t need the most intensive light – such as nighttime skies. Backlights can consume as much as 60 percent of a set’s electricity.

Yet the Golden State’s market is likely to see significant changes in the next several years. Plasma screens, which use more energy than LCDs, will probably see slowing sales. At the same time, more efficient LED will capture a greater share of the market, despite their higher price.

LEDs already are a fast growing segment, says Birnbaum. The bright pictures and micro-thin designs are a powerful draws.

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Posted by Mark Boslet

California Is The Top State In Energy Efficiency Wyoming The Worst

November 11, 2009

California is the top state in requiring energy efficiency in buildings and power consumption, followed by Massachusetts, Connecticut, Oregon and New York

On the bottom of the list are Wyoming (the worst of the worst), North Dakota and Mississippi (only slightly better than Wyoming) Alabama, Nebraska, West Virginia and Alaska and Georgia. Next in line are Arkansas, Missouri and Louisiana.

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States making the biggest improvements were Maine, Colorado and Delaware

This according to the American Council for an Energy-Efficient Economy, which released a state-by-state scorecard. The rankings are based an analysis of building codes, government initiatives, appliance efficiency standards, utility programs and transportation policies.

According to the analysis, the states making the biggest gains in the past year were Maine, Colorado, Delaware, South Dakota, Tennessee and the District of Columbia.

In Delaware, new legislation requires the state to reduce energy consumption through efficiency 15 percent by 2015. Included in the effort are new building codes that make it easier to adopt solar and wind power by allowing people and businesses to sell excess power back to the grid.

Investments in energy efficiency create jobs and steer dollars away from wasted energy to more constructive uses, says Governor Jack Markell.

What I want to know is why so many southern states are at the bottom of the list when air conditioning is such a sizeable chunk of their energy bills? Is global warming not happening down there?

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Posted by Mark Boslet

Data Center Battles Global Warming With Extreme Measures

September 24, 2009

Contracting ceilings. Liquid-cooled racks of servers. Oxygen levels so low employees need frequent breaks.

The test center makes use of a smoke machine to trace the flow of cool air, says Claude Fiori of T-Systems

The test center makes use of a smoke machine to trace the flow of cool air, says Claude Fiori of T-Systems

These are some of the extreme measures Intel and partner T-Systems, a division of Deutsche Telekom, are employing to lower the power consumption of a prototype data center in Munich.

The companies discussed the test center at the Intel Developer Forum in San Francisco on Wednesday afternoon and expect to publish results of their experiment later this year.

Data centers in the U.S. consume about 1.2 percent of the nation’s electricity – about as much as all color TVs – making greater efficiency a useful exercise in the battle against global warming.

The aim of the experiment is to look at the efficiency of the facility as a whole rather than at each of its piece parts individually. That is reason for the 15 percent oxygen level – a security and cost saving measure.

A fire that breaks out won’t be able to burn on its own, saving the center the cost of installing water and gas fire protection systems, says T-Systems’ Claude Fiori, head of GDU-IAS Workers can stay in the room for four hours before needing a break.

The center also makes use of smoke machine to trace the flow of cool air and pumps chilled liquid into racks of servers. Its 7-ton ceiling rises and falls with the push of a button, allowing administrators to adjust it between 8 and 14 feet high for optimum center cooling.

Also to better control temperature and humidity, the walls are coated with an aluminum-backed paper for insulation.

With the U.S. government preparing to release data center energy-use benchmarks, centers may have no choice but to improve efficiency, says Fiori. “We have to look at green IT.”

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Energy Star Comes To Networking Gear, Storage On Fast Track

September 24, 2009

The EPA is looking closely at establishing Energy Star ratings for networking gear, the kind made by companies such as Cisco Systems.

Ratings for storage gear could be release during the first half of 2010

Ratings for storage gear could be release during the first half of 2010

Speaking at the Intel Developer Forum in San Francisco, EPA Program Manager Andrew Fanara said ratings for networking equipment could be ready late next year.

He also said ratings for storage gear could be released during the first half of 2010, earlier than some industry observers expected. The ratings had been anticipated later in the year.

The Energy Star program, established 17 years ago, develops voluntary guidelines for comparing the energy efficiency of consumer products. It has been broadened recently to commercial equipment. Servers were added in May and a data center benchmark is under development for early next year.

Revised server specifications are possible by late next year and ratings for uninterruptible power supplies are under consideration.

The new standards come as governments around the world show increased interest in energy efficiency labeling. Manufacturers worry that conflicting standards could complicate their efforts to develop products that can be used widely, country to country.

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