Not Your Father’s Data Center - Why Water Use Can Be As Important As Energy Consumption For Data Centers

Episode Date: May 22, 2020

When choosing a location, data centers often look for a location close to their end customers and one where there’s cheap electricity. Water was an afterthought, said Pedro Sancha, Senior Vice President and General Manager of Nalco Water, but that’s beginning to change. With water needed to cool the data center, companies were bringing in Nalco after realizing they didn’t have the right permits or hadn’t worked out a way to bring in water effectively at all. Now it’s a main consideration when constructing the data center in the first place. “They’re more proactive. They’re starting to engage us early in the process before they even decide where they’re going to build a data canter,” Sancha said. Some are thinking big, like the Nalco client taking water from nature, utilizing it, cleaning it and putting it back into the world. Others are simply looking to be a bit more environmentally friendly or better understand how to lower costs. Many data centers are still using potable water, competing with average citizens for the general water supply. “We do have technologies that help you optimize your cooling systems. Beyond choosing the right locations and the right cooling technology, there are ways existing data centers already can significantly reduce their water use,” Sancha said. “The irony is we need a lot of water to cool those data centers and support the technology revolution, but we also can use that technology to manage water in a smart way. That’s the full circle.” Like the water cycle that brings us the precious resource to earth, it’s possible technology will help us create a positive loop, as well. For now, we can take heart that data centers are beginning to consider the implications of their setup on the aquatic world.

Welcome to Not Your Father's Data Center podcast, brought to you by Compass Data Centers. We build for what's next. Now here's your host, Raymond Hawkins. Wherever you're listening to us today, we're grateful that you tuned in. Today we are recording it It is May 20th. We are still gripped in a global pandemic around COVID-19. And this is another edition of Not Your Father's Data Center. Today, Nalco's Pedro Sancha has joined us to talk about water and water use in the data center specifically. Pedro, thank you for joining us today. We'd love to hear before we get going a little bit of your background. Where's home? Where'd you go to

school? And how did you get in the water planning and water conservation business? Thank you, Raymond. A pleasure to be here. And I hope everybody who's hearing us today are safe and in good spirits. So about myself, I've got a background in energy. Before I joined the water world, I worked for Shell for 15 years in different continents around the world. I'm an engineer, civil engineer by background, and I came and did an MBA here in the U.S. And I joined Ecolab about three years ago. So for those of you who don't know Ecolab, we are a B2B company, but we work with most of the major brands across, you know, most of the industries, whether it's food and beverage, health care, hospitality. And we have kind of two big areas of activity. One is hygiene and prevention, disinfection and sanitation, which, as you can imagine, it's it's you know we're very busy at the

moment and then we have a water management business called naku water that is headquartered here near chicago and that's what i work in i know the last couple of years i've been leading a business that looks at helping customers in a number of industries optimize the water use and improve their production efficiencies. As part of that effort, we started to work with data centers about five to 10 years ago as they started to realize the importance of water in their operations.

And what we've basically been able to do is take all the learnings and all the technology and innovation that Not Your Father and Ecolab have been developing over the years for other industries into the data center space. Pedro, thank you for that. As we talk about why here on the Not Your Father's Data Center podcast, why we at Compass would be talking about water. Most of our facilities are designed water-free, but we like to say at Compass, we build for what's next. We

build for what's the future. And we definitely see what Nalco and what you're doing with the data center industry and advising on water use and how it fits in your planning and how it's as important as electricity. It's a vital utility. We see that as important for our industry, and we're grateful to have you with us to talk about that today. Well, Pedro, I know that I said we'd talk about water, but I think it's important that maybe we should spend a few minutes talking about that the Spanish League went back to practicing today, or this week, actually.

Both Madrid and Barcelona are both practicing. Yeah, the thing is they're trying to figure out how to make it safe, but it's been one of the biggest concerns we had in Spain. So I hope my team, Real Madrid, will kind of emerge strong from COVID. And the only other thing, I don't know how much time we should spend on it today, but is Rekitic going to be forced out, or is he going to stick with the team, the Croatian star? Yeah, well, there's a lot of talks about that, you know.

I'm guessing with all what's going on, the clubs will be starting to make a few phone calls. So we might see a few surprises this summer. Might see a few surprising transfers if I had to guess. Yeah. But we'll see. Indeed. Well, enough about football.

As much as I would enjoy you and I getting to spend 30 minutes talking nothing but football, let's switch to our day jobs, since that's probably what most folks are dialing in for. Pedro, if you don't mind, could you give us a couple of minutes on NowCo, where you guys fit in the industry, what you guys have done with customers in the industry, and then we'll get into talking about water specifically around the data center space. Yeah, so Nalco Water is a water management company of Ecolab. We work with industries around the world, helping them adopt smart water management strategies using advanced technologies. So we work for all industries from food and beverage to manufacturing, power, but also

institutional customers like hospitals, restaurants, et cetera. And in the last five to 10 years, we've been working a lot with data centers as the industry realized the importance of water to cool those data centers, and they realize that is one of the things that really need to get right. So we've been helping them all the way through the cycle, from helping them, advising them where to build a data center, different cooling technologies, to actually implementing smart circular water management strategies and using technology to optimize the water use, energy use in the data centers. So I'm happy to provide a few examples as we talk through.

Pedro, that's interesting to me that Nalco's expertise in the water space started with other industries and is really coming into the data center space. Is that a reasonable way to describe it? That's a good way to put it, Raymond. As other industries have been grappling with issues around water availability, water quality for many years. So I would say food and beverage companies are probably at the forefront of this. If you think about companies like Coca-Cola, Nestle, Unilever, they've been thinking about this now for 20 years.

And we've been partnering with these companies to develop pretty sophisticated strategies, to the point where some of them are thinking about becoming net zero water positive companies. Now, data centers are a little bit late to this. I remember a few years ago when we started to work with them and we saw data centers operators starting to expand around the world when they were choosing where to put a data center, they were mostly thinking

about two things. So being close to the end consumers and choosing a place where there's available and cheap electricity. And water was sort of an afterthought. And that's how you ended up having so many data centers clustered around Quincy, Washington, for example. They thought there's cheap electricity from hydropower and relatively close to all the West Coast consumers. What they realized when they started to operate these data centers is actually they need a lot of water for cooling.

And in many of these places where they're building those data centers, there's not a lot of water. They haven't gotten the permits anyway in the first place, both to take water in or to discharge the water. And that's why they started to call us in. And we started to work with them on strategies to deal with that. Now I would say the conversation has turned a little bit.

They're more proactive, so they started to engage us early in the process before they even decide whether they're going to build a data center. And one of the first things we do with them is help them assess the real price of water. For many, many years, if you're a data center manager and you're using the meter price of water to make decisions, you probably didn't think water was a big deal. But when you start to look at the

risk-adjusted price of water, which is something we help companies with. We have developed a tool we call the Water Risk Monetizer that is free and available on the web. We use that for customers, like, for example, with Microsoft, close to where you are in San Antonio, Texas, they have a big data center. And a few years back, you know, we started to look with them at the water footprint and what alternative types of water they can use to cool the data center. And we use the water risk monetizer to find out what should be the actual price they use in their economic decisions when you factor in physical risk associated with water, so availability but also quality of the water, together with reputational

risks and regulatory pressures in that particular basin. We found out the actual water premium was about 11 times greater than the current water bill. Now armed with that information, we start to look at options to reuse recycled water, use gray water, using smart technologies. And all of a sudden, the return on investment look completely different. So now they're implementing different ways to using recycled water. They're saving $540,000 just in water costs, and then they're reducing their consumption by 60 million gallons a year.

So as data centers start to think more about water strategically, building water residency plans, I think they're going to jump pretty quickly into the vegan and be probably leading in terms of many other industries in this space. Well, Pedro, thank you for that background and that insight. A couple of questions that come to mind. You started down the path of when data centers decide where to locate, that they view the utility world from a cost of power. Clearly, in the ongoing operation of a data center, what you pay for that utility bill every month is a significant portion of the operating cost and in comparison the water bill is dramatically lower but what I think I hear you saying is that we're just looking at the water bill entirely wrong

that we're looking at it as a bill only instead of as a sustainability issue and as a as an impact on our community where we've located the facility and what the real cost of the water is. Is that a fair way to describe it, Pedro? That's a good way to put it, Raymond. As you said, they were traditionally looking at, obsessed with PUE, trying to solve that, given that energy is probably half of their OPEX. And water was underpriced. Now they understand that actually even water is a small percentage of the operational expenses. When you actually look at the risks in terms of reliability of their operations, it's a

huge deal. Think about, for example, there's 800 data centers in California. And in 2014, the state passed this law around groundwater management act that starts to be in effect this year so all of a sudden that's gonna put restrictions on how companies can use aquifer water so if you have not built that into your business plan you know you can be in trouble the same goes in other places where you're competing for water with other users in the watershed.

And if you are not done a proper assessment, you might find out that actually the basing manager starts making different allocations as population grows and you start competing with municipalities or agriculture. So beyond the actual bill cost, you know, water has definitely become one of the biggest strategic considerations for data centers. Pedro, as we at Compass, being real estate developers and real estate developers in the data center space, we take the jurisdictions and the power and the tax incentives and the zoning. We take all those

things into account and definitely water is part of it. I do not want this to be a commercial about Compass. Early on, we thought that sustainability was important in our industry as the globe continues to digitize and as the network and the infrastructure that we build in the data center space becomes more and more vital to our everyday lives, we wanted to have as little impact as possible. So we, not exclusively, but largely cool our data centers using air-to-air economizers and not using water. But I think the majority of the data centers today are cooled with water. And thinking about what that does to the environment, what it means from a sustainability perspective, I think is so important because I don't think the data center business is going away. I think the Internet fad seems to be here to stay. important, the infrastructure that we provide, that the data center provides, is to not only

solving the problem of COVID, right, the compute resources that are being used to model and to test and to develop, hopefully, a vaccine, but also to allow people who can't get in a car or go get in a plane or get on a bus or train to go to work to be able to still work because they can connect virtually. So we take this super serious. You made mention earlier, Pedro, you talked about a net zero water impact, and I'm not sure I used the right term, but could you talk with me a little bit about what that means? Because if my data center, if I'm cooling my data center with a chilled water loop, I'm using a bunch of water. How do I get to make that be less of an impact on sustainability?

Yeah, so first, Raymond, just a comment on what you mentioned. There's different ways, obviously, to cool data centers. The reason water is so prevalent in cooling, not just in data centers, but across industries, like from power plants to food plants to buildings, hospitals, is because it's really good. It's a very efficient cooling method. I mean, water is to cooling. Like Michael Jordan is to basketball. If I want to, you know, maybe for you is Don Chick if you're a Mavericks fan.

The volumetric heat capacity of water is like 3,300 times that of air. So that means that to achieve the same cooling, you need to move a lot of aeronetics energy and with energy comes other complications like CO2. So there is, there are pros and cons some of these cooling technologies. What we see are the big hyperscalers and the big collocation. They're kind of expanding, looking at this holistically, at a sort of triangle that I think we talked the other day. So you have, on one hand, energy usage, which I'll call energy slash CO2.

You have water usage. And then, of course, you have capex and total cost of operation implications from some of the technologies you use and the design that you build. So they look at this and they look at location specific, right, based on energy that is available in this specific location, what kind of energy you have available, and then what are the water sources that you have in that watershed and they think about how do we achieve my 100% reliability right because we talk a lot about water and energy but

that's kind of the table stake nobody wants to that internet connection to go off while they're watching the last episode of tiger king right on netflix or when you're about to check out from Amazon that last toilet paper roll. So with that 100% reliability in mind, how do they achieve the best optimum between the energy and water use? And that trade-off looks different in one location, whether in Israel, Singapore, or California. So if you have, for example, a lot of energy that is clean energy, low CO2, and relatively affordable, then your energy consumption, your POE, is almost irrelevant, to make an exaggeration, because you can save a lot of water

with that clean energy. But in other places where your energy is expensive or come from dirtier sources, but you have, say, a lot of gray water, reclaimed water available, then you might, you know, want to put more focus on your PUE and use a little bit more water. So that's kind of how we see them thinking. What they're moving to is net zero carbon and net zero water. That net zero potable water, actually to be specific. Each of those words are important. So why the potable water means they're really trying to make sure that data centers do not

compete with water that is used for human consumption. So that's why they're backing out of potable water and looking at options to use gray water or reclaimed water in the first place. And then the word net means they're trying to find creative ways to recycle, reuse that water. We work a lot with them on that front. How can you reduce evaporative losses, do more recycles so that you use less water and then they also created ways uh raymond where they're looking at actually offsetting some of

the water use so we worked with one of the big fights for example in the us as they were designing a new data center they realized it was a pretty uh an area with a lot of rain and even snow in the winter. And working with them, you know, we designed the actual, what they did is they built an artificial lake that was harvesting the rainwater and the snow. And then they were circulating that water into the data center. They designed the data center in a way that the water, the blowdown water, was treated so it can be actually thrown back into the lake.

And they were achieving basically a self-sustaining water cycle where they didn't need any fresh water into the data center. So these are some of the ideas out there to how companies are thinking about producing fresh water consumption. And then of course you have all these new technologies that you mentioned. Air cooling, free cooling is popular with smaller single tenant data centers where you have clean electricity available. There's people doing testing more exotic technologies like immersive

technologies, oceanic cooling. And then, of course, they keep expanding the range of acceptable operating temperatures. And I think we will see that happening more and more, getting those racks denser, hotter, and data centers trying to expand a little bit the boundaries there. Pedro, can I go back to the harvesting? I just want to make sure that I understand it properly. So I remember in fourth or fifth grade when I took earth science and we talked about the water cycle, that the water, the global water system is largely self-contained.

Water evaporates, goes into the clouds, rains, comes back down, and the water moves around the planet, droughts some places and floods in some places. But globally that we have this recycled water. What I think I heard you say is that you worked with a large cloud provider, and they built a system where they could collect water from rainfall and snowfall, use that water in their data center, and then put it back in that repository and essentially create their own water cycle for their own data center? Is that accurate?

Is that my describing that the right way? Exactly. That's how we're actually going back to Mother Nature, right? And that's a lot of the things that NACA water do. We call it the three R's, reduce, reuse, recycle, is based on that exactly water cycle that we all learn in elementary school. In this case, they're catching that area, that water coming from rain or snow, they're putting that into the data center. And then the way the data center is designed, it takes the water that comes out, the liquid, the

discharge water is treated to take some of the sediments out and then it's put it back in the lake. So that's a creative example, I would say an extreme example where you can get full recycle of water, of course. But in any location, you can do versions of this. You can, for example, invest in pre-treating water so you can actually expand the types of water that you can use so you can avoid using municipal water, for example. And then you can use different technologies to recycle, retreat the water. And when there are many data centers in the same area,

you can actually pull the investments together. You can build a water recycle plant between different data centers, which we've seen as well happening in terms of collaboration. And these systems, not even you talked about, and I'm sure I'm not going to use the right words, Pedro, but I'm not using water that the municipality has prepared for me to be able to put in my system, my water system for my residents to drink. I'm getting it before it ever gets in that system and redirecting it for my data center use. Is that accurate?

That's right, Raymond. There's many types of water in a watershed. Potable water is the one that we all drink, you and I, that's been treated already. That is still being used by so many data centers. And that's the first priority for them is getting away from that water that is competing straight away with the water that you and I get from the tap. And expanding the range of qualities they can use outside of that. So it could be the gray water that is taking straight and it's not been yet treated. Or it could be using wastewater.

There's a lot of wastewater plants in the Midwest, for example. So if you can use that, you're preserving the precious potable water for humans. You know, the people who claim, you know, ultimately we've got to find ways to even reduce the reclaimed water because the gray water of today could be the drinking water of tomorrow, right? As many of these, particularly in water scarcity areas, they're trying to recycle more and more of the water but Raymond even when you're using water we do have technologies that help you optimize your cooling systems so beyond choosing the right location the right cooling technology there's ways existing data centers are built today can already

significantly reduce the water and the irony is that we need a lot of water to cool those data centers and support the technology revolution but we also can use that technology to manage water in a smart way so that's the full circle and I'll give you an example. So we're currently using a series of technology we call 2D Tracer, which is basically the IoT of water. These are controllers that are measuring all the parameters in the water system. They have 40,000 of these installed around the world. And we're taking that billions of data every day and putting that in a cloud-based platform that allows us to use

artificial intelligence, machine learning to understand how that water behaves inside the data center and what can we do to optimize, reduce the use of water. So as an example, the, you know, machine learning might tell us that they're seeing a pattern where scaling is going to happen in the chiller, right? So you're going to have a film, you know, whether it's caused by bacteria or some sediments that are going to increase the water consumption or the energy consumption by 10%. And in order to avoid that, the system will start dosing certain chemistry, whether it's a biocide or an antiscalant that's going to prevent that layer to form around the chillers.

So as a result of that, we might have customers already save 10, 15% of the water they use. So it's a combination of optimizing with technology your current footprint versus being really smart about where you build your new data center and which technology you choose within that particular location. Pedro can I get you to give me so you called it the IoT of water what's that project called? 3D Tracer. 3D Tracer. Yeah, think about it like a MIR, you know, that kind of reads all the parameters, the flow, water, the pH, et cetera. And is that a data center-specific project, or are you doing that in other industries as well?

No, this has been something that Nalco Water has launched, you know, 20 years ago. We continue to upgrade with new capabilities and we started to use that in paper mills, in food plants, in power plants, and now we're taking it to the data centers. I got you. So this is Nalco's collective wisdom of helping multiple industries think about how to efficiently use water in their cooling and all the lessons learned and analyzing that information. And that information is now being shared in the data center space. I got it. 3D tracer. I love the phrase the IOT of water.

And so often I think that my folks, the people that come from the data center industry, we want to be conscious of the environment. We want to be conscious of our impact. We did a podcast on energy use. It's a big deal as computers grow. And as we digitize more of the global economy, there's concern about our data centers disproportionately using more energy than other industries. But I also think that this is a whole nother part of the sustainability question. How are we doing with water? And the fact that we've got somebody like Nalco and your history in water use across all industries and letting that inform what we do in the data center business is super valuable to us. I liked your comment to Pedro about, let's think about where to put the facility.

Then once we figure out the right place to put it, let's think about how to supply it with water, whether we're coming up with our own closed sort of recycling loop of our own, whether we're able to get water out of different sources, not just the potable water, but gray water or something that before it even gets in the system. And then let's be as efficient as we can about the systems and the preventative measures that we can take in the facility once we have water in the facility. All ways for us to be better stewards of this vital resource, I think, when I think of the things that we have water in the facility. All ways for us to be better stewards of this vital resource. I think when I think of the things that we need in life, sports, food, and water being three of the most important,

that this is crucial that we figure out how to be good stewards of water. You're right to say this looming water crisis is becoming more and more obvious to the public. And these technology companies, you take the big fiber, are actually today's biggest public companies by market cap. So they feel the responsibility to lead in the water conservation effort and in the sustainability effort in general. You heard Satya Nadella earlier this year putting a big stick on the ground in terms of Microsoft getting to the negative carbon footprint in the next 20 years.

So I do anticipate these companies to adopt a similar stand in terms of getting to net zero portable water use because they realize it's not just good for business, it's just a license to operate. And as the world, water scarcity in the world becomes more and more obvious, I think the consumers and the regulators and all of us will like to know that they're leading this effort. Yeah, Pedro, our industry is there when it comes to electricity and PUE and carbon credits and sustainable sources of energy. But I think you're 100 percent right that the water usage is coming and how we get to where we're not competing with our neighbors. We're not competing with society. We're not competing with municipalities for that potable water is going to be a major consideration and get figured and factored into where and how we do things in the future.

And having the wisdom of Nalco and your experience with doing this in so many other industries for so long is going to be important to developers like us at Compass and our customers who we develop for, like the big cloud operators. Fascinating stuff. Pedro, it's clear at the beginning we've got a whole other show we could do on football. And you brought up Tiger King. I also think we could do an in-depth analysis of did Carol Baskin kill her husband?

So I think there's at least two or three more follow-on episodes that you and I could do together just out of this one subject and how to best plan our water for our data centers in the future. But I think we got to have you back at least for one more show, if not two, as we dig into did Carol Baskin kill her? I'd love to. I'd love to. Thank you for the invitation. Good stuff. Pedro, thank you so much, sir. Take care. Thank you, Raymond. Have a good rest of your week. Thank you, sir. Bye now.