New economy?

Michael Perelman michael at
Tue Jan 30 16:31:25 MST 2001

The people who are pushing the Internet/power theme are funded by the "Greening
Institute," flacks for the coal industry.

Louis Proyect wrote:

> 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
> electricity.
> 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
> centers.
> 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
> installations.
> 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
> Marxism mailing list:


Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at

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