New economy?

Louis Proyect lnp3 at
Tue Jan 30 11:34:25 MST 2001

THE world is in the midst of what will come to be called the third
industrial revolution, according to an eminent American economist.

Lester Thurow, who is Professor of Management and Economics at the
Massachusetts Institute of Technology, said in an e-mail interview with BT
that the new technologies being spawned in the areas of electronics,
telecommunications, computers, biotechnology, material sciences and
robotics will be at least as far-reaching in their impact as the previous
industrial revolutions catalysed by the invention of steam engine and

Prof Thurow, who will be speaking at a conference on Monday, said the US
will be the epicentre of this third industrial revolution.

"The US is simply very good at shutting down the old and opening up the
new," he said.

One of the big losers in the "new economy" could be Japan, he suggested.
Japan "is very good at pushing new technologies forward, but horrible at
pioneering new technologies". (Singapore News; March 16, 2000)


Net blamed as crisis roils California (

BY MARK HALL  (January 15, 2001) The high cost of deregulation may be
bringing California's two largest electric utilities to the brink of
bankruptcy, but the growth of the Internet is also to blame for the rapid
destabilization of the nation's electric power infrastructure.

So concluded a premier agency of the electric power industry and officials
at some utilities, who cited a huge increase in demand in areas where
Internet hubs and data centers have come online in the past few years. In
the heart of Silicon Valley, for example, power demands skyrocketed by 12%
last year, while the rest of the state saw an overall increase of 2% to 3%,
said John Roukeme, a spokesman for Silicon Valley Power, the municipal
utility for the city of Santa Clara, Calif.

"A single [Internet] data center - and we have many in the area - can
easily consume more power than the largest manufacturing plant we serve,"
Roukeme said.

Southern California Edison, a division of Edison International in Rosemead,
Calif., and Pacific Gas and Electric Co., a subsidiary of PG&E Corp. in San
Francisco, have been forced to buy power normally priced at $30 to $50 per
megawatt for as much as $1,000 per megawatt on the spot market. Both
companies, especially PG&E, are in a financial crisis.

But PG&E spokesman Scott Blakey said the state's power need is more dire.
"If we don't get juice in here and the ability to move it around, we're
going to be in trouble," he said.

The situation has become so desperate in the region that Intel Corp. CEO
Craig Barrett said last week that his company wouldn't build another
semiconductor plant in the state until it's resolved.

Utilities have cut power to consumers and businesses on short notice in
predetermined areas. One such so-called rolling blackout affected Digital
Think, an application service provider in San Francisco, last week, but its
IT equipment wasn't affected because it's hosted by Exodus Communications,
said Kevin Cornish, IT director.

Internet data centers contacted for this story said they haven't been
affected so far. The reason, said Chris Hardin, director of Santa Clara
operations at Exodus Communications Inc., is that companies sign contracts
that call for power companies to deliver electricity that the customer must
pay for even if it doesn't use it.

"It's like a lunch. If you order it and don't like it, you're going to pay
for it anyway," Hardin said. But he noted that to ensure power for its
customers, Exodus is looking at options such as local power generation.

Preparing for data center power demands is unlike anything utilities have
faced. "Internet data centers are a blueprint for 60 megawatts of power
coming [into] service in 60 days. That's the equivalent of a steel plant,
which you can see coming a year in advance," said William M. Smith, manager
of market-driven load management at EPRI, the electric utility industry's
research arm.

However, that demand could "disappear in three or four years," Smith said.
Palo Alto, Calif.-based EPRI estimated that it takes 20 years for a power
company to amortize the costs of building power plants.

Roukeme said Silicon Valley Power's load could double in the next two or
three years, with 80% of those new requests coming from Internet data

Old Ways Wearing Out

Before the current crisis, California slaked its thirst for power by buying
excess electricity from areas like Nevada and the Pacific Northwest.

According to Smith, Las Vegas-based Nevada Power Co. and the Bonneville
Power Administration in Portland, Ore., have had to cut back sales to serve
the phenomenal growth in demand from Las Vegas and because of environmental
restrictions on the Columbia River that cut hydroelectric power output.

Some disagree with those who attribute the crisis to data center expansion
and other demand growth.

"We think that the crisis stems from poorly planned deregulation
legislation, not from a supply shortage," said Susannah Churchill, an
energy associate at the California Public Interest Research Group in
Sacramento. Similarly, Gov. Gray Davis last week blamed deregulation in his
State of the State speech.

Yet others said they agree that the Internet is a contributing factor. Bob
Hepple, president of Calpine cPower Inc. in Pleasanton, Calif., said
Internet data centers are the fastest-growing market segment for electric
load demands among commercial industries.

"They're expanding at 13% to 14% vs. the normal 2% growth," he said. His
company, which was launched last May, builds and operates on-site power and
cooling plants for data centers.

California, which uses more than 260,000 gigawatts of power per year,
consumes more energy than Italy and is the first state to feel the crunch,
according to Smith.

"There is no safe haven," he said. Regions most at risk are those that have
an optical network hub for the Internet, such as Seattle and Phoenix, where
population pressures are increasing with the number of data center

Power companies in the Northeast and Midwest are somewhat better prepared,
said Michelle Schofield, vice president of corporate marketing at Silicon
Energy Corp. in Alameda, Calif. That's because they have better load
management tools than California suppliers, which, until the recent burst
of Internet data center growth, were protected by the relatively mild
climate and didn't need to accommodate power-intensive air conditioning and
heating systems.

Louis Proyect
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