Energy and Water Use - Compass Datacenters

Man: Welcome to “Not Your Father’s Data Center Podcast,” brought to you by Compass Datacenters. We build for what’s next. Now, here’s your host, Raymond Hawkins.

Raymond: Wherever you’re listening to us today, we’re grateful that you’re tuned in. Today we are recording, it’s May 20th. We’re 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 did you go to school and how did you get in the water planning and water conservation business?

Pedro: 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 did 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, healthcare, hospitality. And we have kind of two big areas of activity, one is hygiene and disinfection and sanitation, which as you can imagine, you know, we’re very busy at the moment. And then we have a water management business called Nalco Water that is headquartered here near Chicago. And that’s where I work in. I know the last couple of years I’ve been beating a business that looks at helping customers in a number of industries, optimize their water use and improve their production efficiencies. As part of that effort, we started to work with data centers about 5 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 Nalco Water and Ecolab have been developing over the years for other industries into the data center space.

Raymond: Pedro, thank you for that. As we talk about why here on “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 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 the 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 it is 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 we 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?

Pedro: Yeah, the thing is they’re trying to figure out how to make it safe, but in that it has been one of the biggest concerns they had in Spain. So I hope my team, Real Madrid will kind of emerge strong from COVID.

Raymond: The only other thing I don’t know how much time we should spend on it today, but is Rakitić going to be forced out, or is he gonna stick with the team, the Croatian star?

Pedro: Yeah, well, there’s a lot of talks about that, you know. I’m guessing with all that’s going on, the clubs will be starting to make a few phone calls, so we might see a few surprises this summer.

Raymond: Might see a few surprising transfers if I had to guess.

Pedro: Yeah.

Raymond: But we’ll see.

Pedro: Indeed.

Raymond: 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 probably what most folks are dialing in for. Pedro, if you don’t mind, could you give us a couple of minutes on Nalco, 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.

Pedro: Yes, 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, manufacturing power, but also institutional customers like hospitals, restaurants, etc. And in the last 5 to 10 years, we’ve been working a lot with data centers as the industry realizes the importance of water, you know, to cool those data centers and they realize that is one of the things that we need to get right. So we’ve been helping them all the way through the cycle, from helping them where to build…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 used in the data centers. So I’m happy to provide a few examples, as we talk through.

Raymond: Pedro, it’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?

Pedro: 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 what 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 the 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 realize 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 when 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 gonna be on the data center. And one of the first things we do with them is to help them assess the real price of water. Right? 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 or their 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’re using their economic decisions when you factor in physical risk associated with water, so availability, but also the quality of their water, together with reputational risks and regulatory pressures in that particular basin. We find 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, recycle water, use grade water, using smart technologies, and all of a sudden, the return on investment looks completely different. So now they’re implementing different ways. They’re using recycled water, they’re saving around $40,000 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 wider resiliency plans, I think they’re gonna jump pretty quickly into the wagon and be probably leading into many other industries in this space.

Raymond: Well, Pedro, thank you for that, that background and the insight. A couple of questions that come to mind. You started down the path of when data centers decide where to locate… 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 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?

Pedro: That’s a good way to put it, Raymond. As you said, there were traditionally looking at…obsessed with POE 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 the reliability of their operations, it’s a huge deal. Think about, for example, there are 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 all the users in the watershed, and if you have not done a proper assessment, you know, you might find out that, actually, the basing manager starts making different allocations as the population grows, and you start competing with municipalities or agriculture. So beyond the actual bill costs, you know, water has definitely become one of the biggest strategic considerations for data centers.

Raymond: Pedro, as we at Compass in 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 will not exclusively but largely cool our data centers using air to air economizers and not using water. But there are… 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. And our current crisis is only highlighting how important the infrastructure that we provide, that the data center she provides is to not only solving the problem of COVID, right, the compute resources that are being used to model, and to test, and develop, hopefully, a vaccine, but also to allow people who can’t get in a car, get on a plane, or get on a bus, or a train to go to work to be able to still work because they can connect virtually. So we take this super serious. You may have mentioned 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?

Pedro: Yeah, so first, Raymond, just to comment on what you mentioned, there are different ways, obviously, to cool data centers. The reason water is so prevalent in cooling, not just in data centers, but across industries, like, you know, from power plants to food plants to buildings hospitals, is because it’s a very efficient cooling method. I mean, water is to cooling like Michael Jordan is to basketball. You know, maybe for you, it’s Doncic, if you’re a Maverick’s 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 air and that takes energy. And with energy comes other complications like co2. So, there are pros and cons, some of these cooling technologies. What we see are the big hyper scalars and the big collocation, they’re kind of expanding, looking at this holistically, other sorts of a triangle that I think we talked the other day. So you have on one hand, energy usage, which are called energy/co2, you have water usage, and then, of course, you have CapEx and total cost of operation implications, right, from some of the ways the technologies you use and the design that you build. So they look at this and look at a 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 hundred percent reliability?”

Right? Because we talk a lot about water and energy, but that’s kind of the table stakes. Nobody wants their 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 Soylent paper roll. So, with that hundred percent 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, you know, California. So if you have, for example, a lot of energy that is clean energy, low co2 and relatively affordable, then your energy consumption and your POE is almost irrelevant, you know, 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, wanna put more focus on your POE and use it a bit more water, so that’s kind of how we see them thinking. Where they’re moving to is net-zero carbon and net-zero water, and that net-zero potable water, actually to be specific. So each of those ports are important, so why the potable water means they’re really China’s, make sure the 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’re also creative ways, Raymond, where they’re looking at actually offsetting some of their water use. So we’ve worked with one of the big 5s, for example, in the U.S. as they were designing a new data center, they realized it was an area with a lot of rain and even snow in the winter. And working with them, you know, we designed, actually 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 freshwater into the data center. So, these are some of the ideas out there to, you know, how companies are thinking about producing freshwater consumption. And then, of course, you have all these new technologies, you know, that you mentioned that free cooling is popular with smaller, single-tenant data centers where you have clean electricity available. There are 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 of boundaries there.

Raymond: Pedro, can I go back to the harvesting? I just wanna 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 global water system is largely self-contained, water evaporates, goes into the cloud, rains comes back down and the water moves around the planet, droughts some places and floods in someplace 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? Am I describing that the right way?

Pedro: Yeah. Exactly. That’s how we’re actually going back to Mother Nature, right? And there’s a lot of things that Nalco Water do, we call about the three R’s, reduce, reuse, recycle is based on that, exactly what a cycle that, you know, we all learn in elementary school. In this case, the catching that water coming from rain or snow, that putting that into the data center. And then the way the data center is designed, it takes the water that comes out, the liquid discharge water is treated, to take some of the sediments out, and then to 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’s many data centers in the same area, you can actually pull the investments together, you can build a recycle, a water recycle plant between different data centers, which we’ve seen as well happening in terms of collaboration.

Raymond: And these systems you talked about, and I’m sure I’m not gonna 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 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?

Pedro: 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 has been treated already. That is still being used by 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 strain 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, you know, if you can use that, you’re preserving the precious potable water for humans. You know, there are people who claim, you know, ultimately, we 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, what is car city 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 that 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 3D TRASAR, which is basically the IoT of water, is our 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 into 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, you know, machine learning might tell us that they’ve seen a pattern where scaling is gonna happen in the chiller, right? So you’re gonna have a film, you know, whether it’s caused by bacteria or some sediments that are gonna 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 help 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.

Raymond: Pedro, can I get you to give me…? So you call it the IoT of water. What’s that project called?

Pedro: 3D TRASAR. That’s how we…

Raymond: 3D TRASAR.

Pedro: Yeah, think about it like this MIR, you know, that kind of reads all the power meters, the flow water, the pH, etc.

Raymond: And is that a data center-specific project? Are you doing that in other industries as well?

Pedro: 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 meals, in food plants, and power plants, and now we’re taking it to the data centers.

Raymond: I gotcha. 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 TRASAR. I love the phrase, the IoT of water. And so often I think that my folks, the people who come from the data center industry, we wanna 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 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 too, 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 for gray water, 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.” 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.

Pedro: Your right to say this looming water crisis is becoming more and more obvious to the public. And these technology companies, you take the big 5… 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, you know, 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 standard in terms of getting to net-zero potable water use because they realize, it’s not just good for business, it’s just a license to operate. And as water scarcity in the world becomes more and more obvious, I think the consumers and the regulators and all of us would like to know that they’re leading this effort.

Raymond: Yeah, Pedro, our industry is there when it comes to electricity and POE, and carbon credits, and sustainable sources of energy. But I think you’re 100% 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 gonna be a major consideration, and get figured and factored into where and how we do things in the future. Having the wisdom of Nalco and your experience with doing this in so many other industries for so long, it’s gonna be important to developers like us at Compass and our customers who we developed for, like, the big cloud operators. Fascinating stuff. Pedro, it’s clear at the beginning we’ve got a whole nother show we could do on football. And you brought up “Tiger King.” I also think we could do an in-depth analysis of did Carole 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 Carole Baskin kill her husband?

Pedro: I’d love to. I’d love to. Thank you for the invitation.

Raymond: Good stuff. Pedro, thank you so much, sir. Take care.

Pedro: Thank you, Raymond. Have a good rest of your week.

Raymond: Thank you, sir. Bye now.

Man: Welcome to “Not Your Father’s Data Center Podcast,” brought to you by Compass Datacenters. We build for what’s next. Now, here’s your host, Raymond Hawkins.Raymond: Wherever you’re listening to us today, we’re grateful that you’re tuned in. Today we are recording, it’s May 20th. We’re 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 did you go to school and how did you get in the water planning and water conservation business?Pedro: 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 did 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, healthcare, hospitality. And we have kind of two big areas of activity, one is hygiene and disinfection and sanitation, which as you can imagine, you know, we’re very busy at the moment. And then we have a water management business called Nalco Water that is headquartered here near Chicago. And that’s where I work in. I know the last couple of years I’ve been beating a business that looks at helping customers in a number of industries, optimize their water use and improve their production efficiencies. As part of that effort, we started to work with data centers about 5 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 Nalco Water and Ecolab have been developing over the years for other industries into the data center space.Raymond: Pedro, thank you for that. As we talk about why here on “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 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 the 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 it is 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 we 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?Pedro: Yeah, the thing is they’re trying to figure out how to make it safe, but in that it has been one of the biggest concerns they had in Spain. So I hope my team, Real Madrid will kind of emerge strong from COVID.Raymond: The only other thing I don’t know how much time we should spend on it today, but is Rakitić going to be forced out, or is he gonna stick with the team, the Croatian star?Pedro: Yeah, well, there’s a lot of talks about that, you know. I’m guessing with all that’s going on, the clubs will be starting to make a few phone calls, so we might see a few surprises this summer.Raymond: Might see a few surprising transfers if I had to guess.Pedro: Yeah.Raymond: But we’ll see.Pedro: Indeed.Raymond: 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 probably what most folks are dialing in for. Pedro, if you don’t mind, could you give us a couple of minutes on Nalco, 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.Pedro: Yes, 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, manufacturing power, but also institutional customers like hospitals, restaurants, etc. And in the last 5 to 10 years, we’ve been working a lot with data centers as the industry realizes the importance of water, you know, to cool those data centers and they realize that is one of the things that we need to get right. So we’ve been helping them all the way through the cycle, from helping them where to build…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 used in the data centers. So I’m happy to provide a few examples, as we talk through.Raymond: Pedro, it’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?Pedro: 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 what 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 the 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 realize 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 when 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 gonna be on the data center. And one of the first things we do with them is to help them assess the real price of water. Right? 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 or their 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’re using their economic decisions when you factor in physical risk associated with water, so availability, but also the quality of their water, together with reputational risks and regulatory pressures in that particular basin. We find 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, recycle water, use grade water, using smart technologies, and all of a sudden, the return on investment looks completely different. So now they’re implementing different ways. They’re using recycled water, they’re saving around $40,000 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 wider resiliency plans, I think they’re gonna jump pretty quickly into the wagon and be probably leading into many other industries in this space.Raymond: Well, Pedro, thank you for that, that background and the insight. A couple of questions that come to mind. You started down the path of when data centers decide where to locate… 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 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?Pedro: That’s a good way to put it, Raymond. As you said, there were traditionally looking at…obsessed with POE 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 the reliability of their operations, it’s a huge deal. Think about, for example, there are 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 all the users in the watershed, and if you have not done a proper assessment, you know, you might find out that, actually, the basing manager starts making different allocations as the population grows, and you start competing with municipalities or agriculture. So beyond the actual bill costs, you know, water has definitely become one of the biggest strategic considerations for data centers.Raymond: Pedro, as we at Compass in 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 will not exclusively but largely cool our data centers using air to air economizers and not using water. But there are… 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. And our current crisis is only highlighting how important the infrastructure that we provide, that the data center she provides is to not only solving the problem of COVID, right, the compute resources that are being used to model, and to test, and develop, hopefully, a vaccine, but also to allow people who can’t get in a car, get on a plane, or get on a bus, or a train to go to work to be able to still work because they can connect virtually. So we take this super serious. You may have mentioned 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?Pedro: Yeah, so first, Raymond, just to comment on what you mentioned, there are different ways, obviously, to cool data centers. The reason water is so prevalent in cooling, not just in data centers, but across industries, like, you know, from power plants to food plants to buildings hospitals, is because it’s a very efficient cooling method. I mean, water is to cooling like Michael Jordan is to basketball. You know, maybe for you, it’s Doncic, if you’re a Maverick’s 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 air and that takes energy. And with energy comes other complications like co2. So, there are pros and cons, some of these cooling technologies. What we see are the big hyper scalars and the big collocation, they’re kind of expanding, looking at this holistically, other sorts of a triangle that I think we talked the other day. So you have on one hand, energy usage, which are called energy/co2, you have water usage, and then, of course, you have CapEx and total cost of operation implications, right, from some of the ways the technologies you use and the design that you build. So they look at this and look at a 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 hundred percent reliability?”Right? Because we talk a lot about water and energy, but that’s kind of the table stakes. Nobody wants their 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 Soylent paper roll. So, with that hundred percent 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, you know, California. So if you have, for example, a lot of energy that is clean energy, low co2 and relatively affordable, then your energy consumption and your POE is almost irrelevant, you know, 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, wanna put more focus on your POE and use it a bit more water, so that’s kind of how we see them thinking. Where they’re moving to is net-zero carbon and net-zero water, and that net-zero potable water, actually to be specific. So each of those ports are important, so why the potable water means they’re really China’s, make sure the 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’re also creative ways, Raymond, where they’re looking at actually offsetting some of their water use. So we’ve worked with one of the big 5s, for example, in the U.S. as they were designing a new data center, they realized it was an area with a lot of rain and even snow in the winter. And working with them, you know, we designed, actually 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 freshwater into the data center. So, these are some of the ideas out there to, you know, how companies are thinking about producing freshwater consumption. And then, of course, you have all these new technologies, you know, that you mentioned that free cooling is popular with smaller, single-tenant data centers where you have clean electricity available. There are 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 of boundaries there.Raymond: Pedro, can I go back to the harvesting? I just wanna 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 global water system is largely self-contained, water evaporates, goes into the cloud, rains comes back down and the water moves around the planet, droughts some places and floods in someplace 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? Am I describing that the right way?Pedro: Yeah. Exactly. That’s how we’re actually going back to Mother Nature, right? And there’s a lot of things that Nalco Water do, we call about the three R’s, reduce, reuse, recycle is based on that, exactly what a cycle that, you know, we all learn in elementary school. In this case, the catching that water coming from rain or snow, that putting that into the data center. And then the way the data center is designed, it takes the water that comes out, the liquid discharge water is treated, to take some of the sediments out, and then to 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’s many data centers in the same area, you can actually pull the investments together, you can build a recycle, a water recycle plant between different data centers, which we’ve seen as well happening in terms of collaboration.Raymond: And these systems you talked about, and I’m sure I’m not gonna 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 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?Pedro: 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 has been treated already. That is still being used by 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 strain 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, you know, if you can use that, you’re preserving the precious potable water for humans. You know, there are people who claim, you know, ultimately, we 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, what is car city 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 that 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 3D TRASAR, which is basically the IoT of water, is our 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 into 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, you know, machine learning might tell us that they’ve seen a pattern where scaling is gonna happen in the chiller, right? So you’re gonna have a film, you know, whether it’s caused by bacteria or some sediments that are gonna 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 help 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.Raymond: Pedro, can I get you to give me…? So you call it the IoT of water. What’s that project called?Pedro: 3D TRASAR. That’s how we…Raymond: 3D TRASAR.Pedro: Yeah, think about it like this MIR, you know, that kind of reads all the power meters, the flow water, the pH, etc.Raymond: And is that a data center-specific project? Are you doing that in other industries as well?Pedro: 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 meals, in food plants, and power plants, and now we’re taking it to the data centers.Raymond: I gotcha. 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 TRASAR. I love the phrase, the IoT of water. And so often I think that my folks, the people who come from the data center industry, we wanna 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 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 too, 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 for gray water, 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.” 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.Pedro: Your right to say this looming water crisis is becoming more and more obvious to the public. And these technology companies, you take the big 5… 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, you know, 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 standard in terms of getting to net-zero potable water use because they realize, it’s not just good for business, it’s just a license to operate. And as water scarcity in the world becomes more and more obvious, I think the consumers and the regulators and all of us would like to know that they’re leading this effort.Raymond: Yeah, Pedro, our industry is there when it comes to electricity and POE, and carbon credits, and sustainable sources of energy. But I think you’re 100% 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 gonna be a major consideration, and get figured and factored into where and how we do things in the future. Having the wisdom of Nalco and your experience with doing this in so many other industries for so long, it’s gonna be important to developers like us at Compass and our customers who we developed for, like, the big cloud operators. Fascinating stuff. Pedro, it’s clear at the beginning we’ve got a whole nother show we could do on football. And you brought up “Tiger King.” I also think we could do an in-depth analysis of did Carole 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 Carole Baskin kill her husband?Pedro: I’d love to. I’d love to. Thank you for the invitation.Raymond: Good stuff. Pedro, thank you so much, sir. Take care.Pedro: Thank you, Raymond. Have a good rest of your week.Raymond: Thank you, sir. Bye now.