IBM Sees Green in Energy Certification

IBM has unveiled a program that will give users of its System z mainframes and System p servers access to third-party certification they can use to get energy credit from their state government or other trading partners.

The program, called Efficiency Certificates, is part of Big Blue'sgreen IT initiative announced earlier this year. It is offered as part of IBM's data center services.

To benefit, though, you'll need new IBM equipment and a fat wallet. This service isn't for the SMB. It will also help if you're a utility provider.

Here's how it works:

IBM says it plans to extend the certification program to upgrades of other data center equipment, including its storage wares, sometime in 2008, though no date's specified.At least one prospective customer thinks the setup's a good one. "We think verification is critical to ensure that businesses are achieving real energy reductions," said Rebecca Craft, director of energy efficiency programs at New York's Con Edison electric utility, in a prepared statement. An existing IBM customer, Con Ed won't say whether it's using the service specifically, but it definitely "supports IBM in its efforts on this front."

Neuwing says utilities have good reason to get on board. In three states Connecticut, Nevada, and Pennsylvania – the state government is mandating that energy utilities draw at least 1 percent of their annual retail revenue from energy conservation. Certificates of the kind issued by Neuwing can go toward this obligation. Also, utilities can buy energy certificates from other Neuwing clients to meet their percentage requirement.

"There's also a significant voluntary market," says Thomas Flynn, Neuwing president and co-CEO with Al Forte. While some nascent energy exchanges, such as the Chicago Climate Exchanage, are only starting to get going on the basis of carbon units traded, Neuwing's clients can barter among themselves for the EECs, and Neuwing can deal with utilities or state governments on behalf of groups of companies or utilities.

It's all part of an emerging market for new energy resources that Neuwing's been involved with for a couple of years, Flynn says.

Caveats? Extra service costs, for one thing. And more importantly, only customers who upgrade their equipment or replace existing hardware with IBM can tap the certificate program. And customers can't use the EECs to pay for their upgrades. But some of the proceeds -- $2.50 per megawatt hour to be exact – go to paying Neuwing's fees. And if that's not enough to cover it, Neuwing will take 25 percent of all the EECs a company gets as its compensation.How much can a company expect to save? There's no set rate. An EEC's value will vary with the amount a local or regional utility charges, adjusted for how much the EEC is worth to that utility in terms of what it would have to pay out in compliance fees. "A ballpartk? Ha! EECs can range anywhere from several dollars per megawatt hour to several tens of dollars," says Paul MacGregor, CTO and EVP operations for Neuwing.

At least one analyst thinks the EEC approach makes a lot of sense. "What separates this from a greenwash story like carbon offsets is that in order to get the certificate, you have to show some improvement in energy efficiency, which could mean doing more with the power you have, or reducing the power to do a given amount of work," states Greg Schulz of the StorageIO Group. "The carbon trading schemes basically allow you to buy your way out of... a greenhouse gas emission scenario."

Schulz thinks the strong point of IBM's plan is that it allows companies to build on what they already have, instead of replacing it. "Up to now, most stories and messages center around energy conservation and avoidance, which can result in good improvements. However, there is the other side of the equation, which is... doing more work with the energy that you have available."Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.