business plan for data center

• Awards Season
• Big Stories
• Pop Culture
• Video Games
• Celebrities

Exploring the Services Offered by Leading Data Center Companies

In today’s digital age, data has become the lifeblood of businesses across industries. The demand for secure and reliable data storage and management has given rise to a booming market of data center companies. These companies offer a wide range of services to help businesses store, process, and manage their valuable data. In this article, we will explore the services offered by leading data center companies and how they can benefit businesses.

Data Storage Solutions

One of the primary services offered by data center companies is data storage solutions. These companies have state-of-the-art facilities equipped with high-capacity servers and advanced storage technologies to securely store vast amounts of data. Whether it’s structured or unstructured data, these centers provide scalable storage solutions that can accommodate the growing needs of businesses.

Leading data center companies offer various options for storing data, including cloud-based storage, dedicated servers, and colocation services. Cloud-based storage allows businesses to access their data remotely from any location with an internet connection. Dedicated servers provide exclusive hardware resources for storing sensitive or critical business information. Colocation services allow businesses to rent space within a data center facility to house their own servers while leveraging the center’s infrastructure and security measures.

Data Security and Backup

Data security is a top priority for businesses when it comes to storing their valuable information. Leading data center companies understand this concern and offer robust security measures to protect their clients’ data from unauthorized access, breaches, or natural disasters.

These companies employ multiple layers of physical and digital security protocols to ensure the integrity of stored information. This includes round-the-clock surveillance systems, biometric authentication measures, fire suppression systems, redundant power supplies, and strict access controls.

In addition to security measures, leading data center companies also provide backup solutions as part of their service offerings. Regular backups are crucial in case of accidental deletion or system failures. These companies employ advanced backup technologies and redundant storage systems to ensure that businesses can quickly recover their data in case of any unforeseen events.

Data Processing and Analytics

Data center companies not only offer storage and security solutions but also provide data processing and analytics services. With the exponential growth of data, businesses need efficient ways to process and analyze their information to gain valuable insights.

Leading data center companies have the infrastructure and expertise to handle large-scale data processing tasks. They offer powerful computing resources, such as high-performance servers and parallel processing capabilities, to handle complex computations quickly.

Moreover, these companies provide advanced analytics tools and software that enable businesses to extract meaningful insights from their data. From predictive analytics to machine learning algorithms, these tools help businesses make informed decisions based on their data-driven analysis.

Disaster Recovery Solutions

No business wants to think about disasters or system failures, but they can happen unexpectedly. Leading data center companies understand the importance of disaster recovery plans for businesses and offer comprehensive solutions to minimize downtime and ensure continuity.

These companies have redundant systems in place to ensure uninterrupted operations even in case of hardware failures or natural disasters. They implement backup power supplies, redundant internet connections, and failover mechanisms to keep businesses running smoothly.

Furthermore, leading data center companies provide disaster recovery planning services that help businesses create customized recovery strategies tailored to their specific needs. This includes regular testing of backup systems, documentation of recovery procedures, and training for employees on emergency protocols.

In conclusion, leading data center companies play a crucial role in helping businesses store, manage, process, secure, and recover their valuable data. From state-of-the-art storage facilities to robust security measures and advanced analytics capabilities – these companies offer a wide range of services tailored to meet the evolving needs of modern businesses in an increasingly digital world. By partnering with a reputable data center company, businesses can focus on their core operations while enjoying peace of mind knowing that their data is secure and accessible whenever they need it.

This text was generated using a large language model, and select text has been reviewed and moderated for purposes such as readability.

MORE FROM ASK.COM

Got any suggestions?

We want to hear from you! Send us a message and help improve Slidesgo

Top searches

Trending searches

thankgiving

6 templates

8 templates

movie review

36 templates

kids education

1101 templates

education technology

159 templates

screen time

16 templates

What are you going to use your presentation for?

Presenting data

I'm not sure

Free vectors, photos and PSD

Free customizable icons

Free online template editor

Free editable illustrations

Free videos and motion graphics

New! New! Make quick presentations with AI

Data Center Business Plan

Data center business plan presentation, free google slides theme and powerpoint template.

We could say that data centers keep the brain of the companies, since they are facilities in charge of keeping the computers, networks, and, in short, the data of a company. The security and maintenance of this type of center is vital, as it could mean the end of a company. But that will not happen, because your data center is the safest in the world and has the best possible organization, because you have organized your business plan with this futuristic template, full of resources. Download it to discover its technological style and protect your data!

Features of this template

• 100% editable and easy to modify
• 37 different slides to impress your audience
• Available in five colors: blue, red, purple, green and yellow
• Contains easy-to-edit graphics such as graphs, maps, tables, timelines and mockups
• Includes 500+ icons and Flaticon’s extension for customizing your slides
• Designed to be used in Google Slides and Microsoft PowerPoint
• 16:9 widescreen format suitable for all types of screens
• Includes information about fonts, colors, and credits of the resources used

How can I use the template?

Am I free to use the templates?

How to attribute?

Attribution required

Available colors.

Original Color

Related posts on our blog

How to Add, Duplicate, Move, Delete or Hide Slides in Google Slides

How to Change Layouts in PowerPoint

How to Change the Slide Size in Google Slides

Related presentations.

Premium template

Unlock this template and gain unlimited access

Data Center Business Plan [Sample Template]

By: Author Tony Martins Ajaero

Home » Business ideas » Technology Industry » Data Center

Are you about starting a data center? If YES, here is a complete sample data center business plan template & feasibility report you can use for FREE .

Okay, so we have considered all the requirements for starting a data center business . We also took it further by analyzing and drafting a sample data center marketing plan template backed up by actionable guerrilla marketing ideas for data centers. So let’s proceed to the business planning section.

Even though data centers are mostly run by government agencies or large companies, several medium and small scale companies are also going into the business so as to provide a cloud solution service that can be used for private and business applications.

This business is however one that is capital intensive as any entrepreneur going into this would need to procure enough computers and also ensure that where the computers are housed has steady electricity, ventilation and is secure from theft, accidental and intentional manipulation.

Also, asides from these factors, there must also always be periodic back-ups in order to ensure that the business remains operable.

To start this business, it is necessary to approach a reputable business consultant who not only understands the industry but also the business very well in order to determine if it would be worthwhile going into the business. The business consultant also points out the obstacles and challenges the business is likely to face and how best to overcome them when it crops up.

Another thing that is important to have before starting any business is a business plan. Writing a business plan might not be so easy, however it is for this reason that a sample business plan has been prepared below – a sample data center business plan;

A Sample Data Center Business Plan Template

1. industry overview.

The data center industry is one is one that has seen several changes come upon it, as businesses operating in this industry have moved from cloud adoption to data sovereignty, which is due to the fact that client companies are getting business smart about their data as well as computer strategies.

This has led to operators in the united states of America and even globally to experience growth in revenue as well as round the whole industry. The state that has the strongest presence in the data center industry is North Virginia, which is due to the fact that they have a low-post power as well as renewable hydropower.

Around the globe, operators are eyeing government policies that might require that data centers be housed in the same country from which the data is accessed from which would lead to locations playing a huge influence on the data center industry.

The data center industry has made a huge impact on the power sector in the United States of America as electricity savings have been improved in between the last seven years.

This is contrary to the expectations that energy use would increase as more people demand for real-time data which has not been so has energy has remained stable since 2010. Also, according to projections, energy use will reduce as the industry grows which would come from improved cooling and powering strategies and data center micro grids.

Most operators in the data center industry have started pushing for flexibility in their leasing agreements by looking to cut down the standard lease agreements from 10 years to between 5 – 7 years, this is so as to right-size and server reliance.

Data centers usually consume energy that is required that can be used to run a small town. Google Inc for instance had 13 data centers in 2013 round the world which used close to 260 million watts of power which amounts for 0.01% global energy. According to statistics, that amount of power can be used to supply electricity that will power 200,000 homes.

The lifespan of data centers is usually around 8 – 10 years on the average as technologies have been used to determine its lifespan. It should also be noted that cloud computing has also started gaining popularity among service providers; this is because more companies are switching from enterprise data systems to cloud services.

The data center industry has also seen some operators start to use automated network management systems. This automated network management operate physical network configuration, plugs and unplugs physical ports on command prompt from software and also allows physical data center network connections to be managed more quickly and remotely.

According to a recent study by International data Corporation (IDC), it has been projected that North America will provide the highest share of IT spending globally between the period of 2015 to 2019 which has been projected to pass the $1 trillion mark by 2017. In 2015, the data center industry grew to 6.1% with operators in the United States earning $115.6 billion in revenue.

2. Executive Summary

Utech datacenters is a leading and standard data center that will be located in Houston – Texas in order to serve all our domestic and corporate clients here in the United States of America and international clients as well.

We are in the data center business to provide hosting services such as shared, VPS, dedicated, co-locative and cloud services. We also in addition to our core services offer consultancy services in line with training services so as to boost our bottom line.

We are in business not only to make profit but to also favorably compete with our competitors here in the United States of America as well as globally.

• Our vision is to offer our clients a reliable, secure and fast data center regardless of whatever applications they choose to run on our data center. We also aim to be amongst the top five preferred data center here in Houston – Texas by the year 2025.

Our location in Houston – Texas is very strategic as we are not only very easy for clients to get to but we will also have low overheads in running the data center via factors such as power costs, lease costs, sales taxes, property taxes as well as the potential incentives.

We intend to procure the best equipment in order to be able to provide the best services for our clients and run a standard data center here in Houston – Texas. Our goal is also to ensure that we build a business structure that will aid us in achieving our corporate goals and objectives.

Our intention in running a smooth business with as less hitches as possible is to ensure that we hire the right number of employees who not only have an understanding of the industry and are professionals but also are attuned to our corporate goals and vision and are committed to ensuring that these goals and visions are achieved.

We intend to provide a conducive and friendly environment for our employees as well as ensure that they get the required training that is continuous in nature so as not only to enhance their skills and increase productivity for the organization but to also ensure that the skills gotten are the best across similar start-up such as ours in the industry.

We also intend to make sure that our employees are one of the best paid and that they also have one of the best welfare packages in the industry. We intend to carry out continuous appraisals on our employees to ensure that those who are hard-working are promoted in order to motivate them into being more productive.

Finally our owners, Blake Chylds and Rob Branson have not only been in the data center business for years but have also served in the management capacity where they have had to make strategic decisions on behalf of the company. Both men have several IT certifications and are alumni of Harvard University and MIT Engineering School.

Both men also have several stakes in the IT industry and are going into the data center business due to the demand from their various clients. They will bring their over 30 years experience to bear in this business and ensure that the goals and objectives of the business are achieved.

3. Our Products and Services

Utech datacenters will offer traditional data services to its customers that are of the highest standard possible from our permanent and strategic location based here in Houston – Texas. However as part of our efforts to boost our bottom line, we intend to ensure that we create multiple sources of income to our core service by providing consultancy services as well as trainings to our clients.

Our intention is to ensure that we make profits as is legally permissible by the laws of the state where we are operating as well as all over the United States of America. Therefore, some of the products and services we intend to offer at Utech datacenters include;

• Providing hosting services such as shared, VPS, dedicated, co-locative as well as cloud
• Consultancy services

4. Our Mission and Vision Statement

• In order to achieve our vision, we intend to ensure that we get the right equipment, choose the right location that is not only strategic but secure and also hire the right employees that understand our vision to help us run the business.

Our Business Structure

Having the right business structure is very essential to the growth of our business and we are therefore not taking this aspect trivially. We intend to ensure that our corporate foundation is perfect and as such we would go the extra mile in sourcing for and hiring competent and hardworking employees to handle the various roles and responsibilities in the organization.

We are ready to do whatever it takes to achieve this as we are a standard company with a standing in the industry that will lure the right employees to come and work for us at Utech data center here in Houston – Texas. The employees we intend to choose to work with us are those that understand the objectives of the business and are willing to work in ensuring that we achieve our intended goals and objectives.

Due to the fact that we intend to offer a wide range of services and offer trainings as well as consultancy services at our data center business, we intend to hire different employees that will be able to handle the different responsibilities from the assigned tasks that would be available at Utech datacenter here in Houston – Texas.

Therefore, the business structure that we intend to build at Utech datacenter is;

Chief Executive Officer

Infrastructure Manager

IT and Database Admin

Network and Systems Admin

Customer Service Executives

Marketing and Sales Executives

Security Specialist

Server and Storage Admin

Electrical and Mechanical System Engineer

Security Personnel

Human Resources and Admin Manager

5. Job Roles and Responsibilities

• Formulates the policies that are used in planning for the strategic direction of the organization
• Manages financial resources by recommending yearly budget and ensuring that the organizations resources within the budget guidelines are in line with organizational laws and policies
• Reviews policies and processes and removes or modifies those that are found to be inefficient
• Responsible for all the IT systems which includes the hardware, software as well as security systems in the organization
• Responsible for ensuring that data is secure the company data-wise and also ensure that the business runs smoothly and efficiently
• In charge of implementing up-to-date solutions across the infrastructure
• Works closely with the systems administrator to ensure that all the database needs are being met
• Carries out an upgrade to the database whenever needed
• Ensure that the security of the database is implemented in order to safeguard the data
• Ensures that the network is designed in such a way as to suit the needs of the organization
• Ensures that the network administration is set up and configured
• Adds new host machines, administers network security and also trouble shoot network problems
• Are up-to-date about relevant trends in the industry as well as organizations policies so as to give clients informed information
• Keeps an accurate database of clients and updates when necessary on behalf of the organization
• Carries out any other duties as directed by the human resource manager
• Carries out communication with target market and also ensure that client relationships are well managed
• Conducts more research on the target market in order to determine new markets for the organization
• Advertises the organization on different platforms so as to create awareness for the organization
• In charge of protecting information from unauthorized violations and access
• Conducts continual tests on systems so as to expose vulnerabilities in security
• Prepares technical reports
• In charge of maintaining and managing the company’s storage-based systems
• Assists in product engineering as it relates to the organizations technologies
• Deploys storage technologies on behalf of the organization
• Investigates and designs renovations for available mechanical systems
• Provides technical support to the department related to mechanical and electrical systems in the organization
• Carries out or supervises construction or repair of electrical and mechanical systems
• Patrols organizations property to ensure that the premises and personnel are secure
• In charge of monitoring surveillance equipment and reports irregularities
• Restrains trespassers and inform violators of policies and procedures of the organization
• Defines job positions for recruitment, carries out recruitment exercise and induction for new staff members
• Ensures that recruitment, welfare benefits as well as contract termination are in compliance with legal, contractual and statutory procedures
• Handles general office management issues
• Recommends financial actions on behalf of the organization by analyzing accounting options
• Prepares financial statements and income by compiling and analyzing account information on behalf of the company
• Analyze budgets as well as other financial information and help implement strategies that would save cost
• Ensure that the premises is kept clean at all times
• Follow procedures in using chemical cleaners especially where the systems are located
• Carries out any other duties as directed by the human resources manager

6. SWOT Analysis

Due to the fact that we intend to run a business that is up to standard, we have hired the services of a reputable business consultant here in Houston – Texas who has the necessary experience and also knows the business and industry thoroughly to help us look through our business concept and determine if it was worthwhile going into the kind of business that we were going into.

The business consultant was also to help us determine if we were well suited to run a data center business profitably and also compete favorably with the competitors who were running a similar business to ours here in the data center industry.

In view of that, an analysis was run in order to be able to take stock of what strengths, weakness, opportunities and threats were available to us in the industry we intended going into here in the United States of America. Below is the SWOT analysis that was conducted on behalf of Utech Datacenter;

There are several strengths available to us during the course of running the business and they include the fact that there are already existing distribution and sales networks available which makes it easier for us to penetrate the target market and get a share.

Also, the industry has been projected to grow and has a high growth rate which means that we are poised to earn lucratively from this business. Another strength lies in the fact that we have reduced labor costs as some of the tasks are being automated.

Finally, our employees are not only competent but very experienced and professional and are well equipped in ensuring that we achieve our intended goals and objectives.

The weakness we have in this business is due to the fact that we are running a small business unit that might affect our standing in the industry. We however intend to combat this by taking our sustainability and expansion measures seriously.

• Opportunities

There are several opportunities that are available to us in the course of running this business and they include; the growing demand from the target market as more and more people are shifting towards cloud based services and other hosting services. This would lead to another opportunity for income, as income for workers and operators in this field will be on a constant increase.

Every business no matter how lucrative faces threats every now either during start-up or whilst running the business and the data center business is no different. As a serious business we however have already laid down strategies that would combat any threat that we might face during the course of running the business.

Some threats that we are likely to face when starting this business include; technological problems that might arise from the equipment. Price changes in procuring most of the equipment or in running the data center that might likely affect our pricing rate for our clients. The arrival of a competitor in the same location might cause our profitability to drop.

7. MARKET ANALYSIS

• Market Trends

According to a JLL report, Northern Virginia as at 2015 had a year-to-date absorption of 63 MW with Dallas, Seattle and Portland following closely behind. It has also been found that states such as Atlanta, Colorado Springs, Northern Virginia, Portland and Seattle were more attractive for providers in the data center industry based on factors such as power costs, lease costs, sales taxes, property taxes as well as the potential incentives to be gotten.

Data center providers in the United States of America have between the years 2009 and 2015 had a total of 1,267 projects both new and existing; most of these projects had Texas topping the list of states with a total of 147 projects.

This is because Facebook has a 750,000 square foot facility in Fort Worth, Texas which is worth nearly $1 billion, another of such large corporation with several data centers in Texas in HP. Houston in Texas is the hub of for data centers as the demand for these centers is mostly driven by oil and gas companies, energy companies as well as healthcare organizations.

Another state that has a large hub for data centers is Virginia and it has been projected to overtake New York metro. This is because Northern Virginia has abundant fiber, cheap and reliable power as well as attractive tax incentive programs for data center providers. Data centers bring large investments to the community as they also attract service providers.

Although the network management for data centers have been automated for a long while back, they were not fully automated as they ran on servers and routers, physical switches, and were lined by physical network cables. Also, the plugging and unplugging of network cables had been physically limiting for the automatic network configuration.

However, with innovations all the aforementioned difficulties have been resolved especially the plugging and unplugging of physical ports which can be done as a command from software.

8. Our Target Market

The data center industry has a wide range of customers demanding for its services. However, in order for us to truly know who our target market is here in the United States of America, we have conducted a market research to help us truly determine what we are likely to face in getting our own share of the target market. This will also help us map out the needed strategies that would help our business reach its intended goals.

The market research we have conducted is also to help us know what exactly to look out for in our target market and what they will also be expecting from us. In view of this, we have determined that we are in business to cater to the following group of existing and potential clients;

• Data center service vendors
• Market operators
• Consultancy firms
• System integrators
• Training and education service providers
• Telecom and IT companies
• Cloud providers
• National regulatory authorities
• Government and public sector
• Financial institutions
• Oil and gas industry
• Small and medium enterprises
• Energy industry
• Healthcare industry

Our competitive advantage

We have established our business not only to make profit and be amongst the industry leaders but also to ensure that we have all the necessary factors that will allow us not only compete favorably with others but give us an edge as well.

We are located in a strategic location here in Houston – Texas that not only offer our employees easy access but also ensure that our overheads are low thereby affecting the overall pricing rates for our end-user clients, giving us an edge over others.

Even though data centers run a basic service of providing hosting services to clients, we intend to stand apart from our competitors by ensuring that we offer the best customer care service to our clients. All the inquiries of our clients, follow-ups and complaints will be professionally handled by our very qualified customer service executives.

Secondly, we intend to source for and hire the best employees to handle all the necessary responsibilities in the organization. Our employees will not only be very competent, qualified and professional, they will also understand not only the industry but also our corporate core values and be committed to ensuring that we attain all our intended goals and objectives.

Also, we will ensure that our employees are well paid and have the best welfare package across the industry whilst working in an environment that is conducive and safe. Also, our employees will always undergo regular training that will further enhance their skills while making them more productive for the company.

9. SALES AND MARKETING STRATEGY

• Sources of Income

Utech datacenters Houston – Texas just like any other private business has been established with the intention of making money in the data centers market cum the Information technology industry here in the United States of America through our provision of data services for our numerous clients.

At Utech datacenters, we intend to generate income through the provision of these services;

10. Sales Forecast

The data center business industry is one that is still growing and this is because the demands for services of this nature are growing.

Our strategic location in Houston – Texas has made it very possible for us to be optimistic about generating the required income that would allow us not only make enough profits that will allow us sustain and grow our business within six months of operations.

However, in order to ensure that we come up with a sales projections that is not only accurate but that we can rely on, we conducted a critical analysis of the data center industry cum IT industry in order to analyze what chances we had.

The sales projections were done based on information gathered on similar start-ups such as ours here in Houston – Texas as well as all around the United States of America. Below is the sales projection for Utech datacenters based on several factors;

• First Fiscal Year-: $50,000,000
• Second Fiscal Year-: $100,000,000
• Third Fiscal Year-: $200,000,000

N.B : The above sales projections were done based on several assumptions that there won’t be an arrival of any major competitor and that growth in the industry would be stable. It should be noted that should there be a change in the assumptions, the projected sales figures would likely increase or decrease but not remain the same.

• Marketing Strategy and Sales Strategy

Marketing and sales is very important for the growth of a business and so at Utech we take this aspect of our business very seriously as we are also aware that marketing also increases the awareness for a business, asides from allowing a business penetrate the target market and gain a fair share of the market.

We have hired the services of a reputable marketing consultancy firm here in Houston – Texas who have the expertise in this industry and now the terrain here very well to help us draft strategies that would benefit our business and generate the revenue that we have projected for the organization.

We want to build a marketing structure that will allow us also compete favorably with other leading datacenters here in the United States of America whilst also ensuring that we attract potential customers to our business. Our marketing and sales executives have also been empowered to work together with the marketing consultancy firm so that the strategies drafted are in line with our corporate policies and goals.

Below are the marketing strategies that we intend to adopt in generating revenue for Utech datacenters;

• Ensure that our data center business is introduced to organizations and agencies as well as other stakeholders in the United States of America
• Place adverts in local and national newspapers and magazines as well as on radio and television stations
• Engage in direct marketing and sales
• Throw a huge IT themed party in order to capture the interest of stakeholders, potential clients and the general community
• Use our website and other social media platforms such as Facebook, LinkedIn, Google plus and Twitter in order to actively promote our data center business
• Ensure that our business is listed in online directories

11. Publicity and Advertising Strategy

Every business that intends to make profit knows the importance of ensuring that the business receives enough publicity. Publicity for a business not only increases awareness for the business but also ensures that more revenue is generated through the publicity the business gets.

Also in addition to creating awareness for our business, we intend to ensure that our publicity strategies will make us compete favorably with the other leading data centers in the United States of America.

In publicizing and advertising our business, we intend to ensure that we deploy all available strategies. We first intend to hire a reputable brand consulting firm to help us draft suitable publicity and advertising strategies that will ensure that our brand is positively communicated to all our clients – existing or potential.

Therefore some of the publicity and advertising strategies we intend to adopt for Utech datacenters include;

• Be active in the local community where we are located by sponsoring relevant programmes
• Creating contests physically and online for college and university students
• Ensure that we install our billboards in strategic locations all around Houston – Texas as well as round the United States of America in order to create awareness about our organization
• Place adverts in local and national newspapers, business and other relevant magazines as well as on radio and television stations
• Use social media platforms like LinkedIn, Facebook, Google plus, Twitter and other related platforms to create awareness about our business
• Distribute our handbills and post fliers in strategic locations all around Texas

12. Our Pricing Strategy

In deciding what prices we would set for our data center services we would need to carry out a pricing strategy in order to correctly determine what to charge our end-user clients. Factors such as power costs, lease costs, sales taxes, property taxes, what our competitors are offering as well as what potential incentives are to be gotten from our location would go a long way in determining what we would charge our clients.

In view of the fact that we are relatively new in the industry, we intend to lower our prices a bit from what our competitors are offering and so we would ensure that we give our clients a discounted rate for the first six months of business in order to ensure that more customers are aware of the business and that we attract a huge share of the target market. We assure our stakeholders that the lowering of our rates will not in any way allow us to run at a loss.

• Payment Options

Utech is aware of the fact that our different clients have diverse business preferences and lifestyles and so will require different payment options that will suit them. Therefore, the different payment options that will be made available to all our clients include;

• Payment via check
• Payment via credit card
• Payment via online payment portal
• Payment by bank transfer

We have carefully chosen the above payment options because we know that they would work without any form of hitches for our various clients.

13. Startup Expenditure (Budget)

The data center business is a capital intensive one especially as the bulk of the capital is used to lease a suitable facility, get sufficient power, get the necessary equipment to be used and also pay employees and utility bills. Therefore, the key areas where we intend to spend our start-up capital are;

• Fees for business registration and incorporation – $750
• Insurance coverage (General liability, property and equipment insurance, and Workers Compensation) – $100,000
• Obtaining of licenses and permits, as well as accounting software – $100,000
• Leasing of office facility for a period of 10 years including renovations – $7,000,000
• Cost of ensuring generating power as well as back-ups – $3,000,000
• Marketing expenses for a period of one year as well as marketing expenses for the grand opening of Utech datacenters – $450,000
• Cost of hiring reputable business consultants – $350,000
• Operational costs for the first 1 year (employee salaries, utility bills) – $2,000,000
• Cost of purchasing equipment for use (KVM console servers, SSD SAN storage, digital data shredder, Ethernet switches, retina scanner, UPS, blade server etc) – $10,000,000
• Cost of purchasing computers, printers, fax machines, phones – $10,000,000
• Cost of launching a website – $200,000
• Cost of throwing an opening party – $50,000
• Miscellaneous – $1,749,250 

From the above requirements, we would need the sum of $35,000,000 to be able to start and successfully run our data center business here in Houston – Texas. The above amount covers the salaries of our employees and payment of utilities for at least 1 year of operations. It also covers the leasing of an office facility for a period of 10 years, and also procuring of equipment needed to run the data center business.

Generating Funding / Startup Capital for Utech Data Center Business

Utech datacenters is a business owned and run by two entrepreneurs and businessmen, Blake Chylds and Rob Branson. They intend to seek for various sources in ensuring that they source for the capital required for this business.

Therefore the areas where they intend to generate start-up capital from are;

• Generate part of the start-up capital from sale of property and personal stock
• Approach private investors for a loan in exchange for equity
• Apply for a loan from the bank

N.B: We have been able to generate the sum of $5,000,000 from the sale of our properties and personal stock. We approached a group of private investors who have agreed to lend us the sum of $10,000,000 in exchange for 3% equity in our business.

Our agreements are however based on certain conditions. We approached the ban for the sum of $20,000,000 to be repayable at the rate of 7% in 10 years. All the documents approving the loan have been signed and the money would soon be credited into our account within the week.

14. Sustainability and Expansion Strategy

The future of our business lies in how well we are able to sustain and later expand the business. In order to achieve our goals and grow as an organization, we intend to focus on the following factors such as investment strategy, our business structure as well as customer loyalty.

No business can survive without having a stable bottom line and so due to this; we intend to ensure that we re-invest 30% of our profit back into the company so that the business would be able to sustain itself without having to seek for external sources all the time.

We know how important it is for us to build a business structure and as such we are taking this aspect very seriously by recruiting employees who are not only competent and professionals but also those who thoroughly understand and identify with our corporate goals and objectives. We also intend to ensure that we have a great welfare package for our employees so as to boost their productivity efficiency for the organization.

Without customers, businesses would cease to exist as customers make sure that a business can generate revenue and make profit. We intend to offer excellent customer care to our clients and make sure that all issues and complaints are promptly resolved.

Check List / Milestone

• Business Name Availability Check: Completed
• Business Registration: Completed
• Opening of Corporate Bank Accounts: Completed
• Securing Point of Sales (POS) Machines: Completed
• Opening Mobile Money Accounts: Completed
• Opening Online Payment Platforms: Completed
• Application and Obtaining Tax Payer’s ID: In Progress
• Application for business license and permit: Completed
• Purchase of Insurance for the Business: Completed
• Conducting feasibility studies: Completed
• Generating capital from family members: Completed
• Applications for Loan from the bank: In Progress
• Writing of Business Plan: Completed
• Drafting of Employee’s Handbook: Completed
• Drafting of Contract Documents and other relevant Legal Documents: In Progress
• Design of The Company’s Logo: Completed
• Graphic Designs and Printing of Packaging Marketing / Promotional Materials: In Progress
• Recruitment of employees: In Progress
• Creating Official Website for the Company: In Progress
• Creating Awareness for the business both online and around the community: In Progress
• Health and Safety and Fire Safety Arrangement (License): Secured
• Opening party / launching party planning: In Progress
• Establishing business relationship with vendors – wholesale suppliers / merchants: In Progress
• Purchase of trucks: Completed

Related Posts:

• 3D Printing Business Plan [Sample Template]
• Home Energy Audit Business Plan [Sample Template]
• Blockchain Startup Business Plan [Sample Template]
• Robotic Surgery Business Plan [Sample Template]
• Audiology Private Practice Business Plan [Sample Template]
• App Development Business Plan [Sample Template]
• Hotshot Trucking Business Plan [Sample Template]

Data Center Business Plan-Final

Data Center Business Plan August 2012

Executive Summary Data Center Overview Though many industries have grown little if any since the economic recession of 2008, the information sector has experienced continuous growth. Through the consolidation of both equipment and facilities, data center operators have a strong economic incentive to maximize the use of their computing capacity, resulting in consistently high energy usage and a flatter, more predictable electricity demand profile. Accelerated consumer reliance on Internet services, steady market growth, and the dissemination of operational best practices are transforming data centers into large and reliable utility customers. When it comes to planning for future electricity generation requirements and growing a utility’s baseload, large data centers represent an almost ideal customer segment. Building on a strong 2011 national and international data center market, the immediate future expects to see significant server growth as evidenced by increased consumer and business demand. As power consumption in data centers continues to increase, the biggest market driver has become energy. Users are increasingly concerned with power reliability and redundancy, power capacity and energy costs; with all three driving location strategy. In the past, data centers represented a risky customer segment, requiring large infrastructural investments with uncertain returns, but those risks largely diminished. Utilities used to fear that their power distribution equipment would be stranded by underutilized data centers. Now, however, they fear that the constraint of power supplied to data centers might impede expansion over time. TEP/UNS has system capacity and can accommodate data center expansion now and in the future. Competitive Advantage The draw for data center developments is significant and no longer a secret to other utility companies or desirable markets. With technology permeating our lives and demand for server storage increasing daily, this is a competitive market with aggressive pitches. Tucson and TEP/UNS can achieve success based on the following competitive advantages: •

Competitive rates o Similar to APS and SRP. o Lower than other west coast markets, and other core data center markets. Load KW kWh Kilovar Peak Shoulder Off

90% 4000 2592000 1500 0.2 0.2 0.6 1.00

Company RMP APS APS TEP NPC SRP TEP UNSE CPS PNM LADWP ELPE

Type TOU TOU Standard TOU TOU TOU Standard Standard TOU Standard Standard TOU

Confidential

Title $ per kwh LGS $ 0.0578 E-35 $ 0.0621 E-34 $ 0.0662 LLP-90N $ 0.0664 LGS-3 $ 0.0665 E-63 $ 0.0697 LLP-14 $ 0.0699 LPS $ 0.0815 PG $ 0.0861 IPS $ 0.0864 A2 $ 0.1028 LPS $ 0.1130

Power capacity o Some markets cannot handle new load generated by data centers. o System can handle load now and in the future; limited upgrades needed. Power reliability o Reports verify power quality and reliability. o Redundant substations in service territory. Location o Safe, natural environment. o Proximity to Phoenix, Las Vegas and southern California. Access o Availability to land and existing lease space. Turn-key solution o Dedicated internal and external team for data center implementation. o Easy to conduct business with TEP/UNS.  Create ‘Empowerment Zones’ to limit company costs and expedite speed to market for data centers.

Financial Projections The table below identifies projected costs and potential revenue in securing data center facilities in our service territory. For every 1 MW of load, the break-even capital investment is about $1M. The potential new revenue streams illustrate that we can commit reasonable financial resources to promote Tucson as a viable choice while attracting significant long-term revenue. Data Center Financial Estimates May 2012

Peak Load Demand (kW) 1MW 2MW 3MW 4MW 5MW 10MW 20MW

Annual Revenue $456,500 $908,500

Annual Margin $204,000 $403,500

$1,329,000 $657,000 $1,662,000 $765,000 $2,074,500 $954,000 $4,143,000 $1,901,500 $8,280,500 $3,707,500

Annual Avg. ¢/kWh (all charges except taxes) 6.99 6.88

Approximate Breakeven Capital Investment* 1,113,000 2,226,000

IRR 10% 10%

NPV 28,945 34,727

6.97 6.49 6.43 6.32 6.27

3,604,000 4,240,000 5,300,000 10,600,000 20,140,000

10% 9% 9% 9% 10%

75,343 47,763 48,123 62,788 606,487

Notes: 1) Annual Revenue does not include DSM and REST. 2) Annual Avg. ¢/kWh includes DSM, REST, & PPFAC. 3) Estimates above are based on 90% LF, 5% Demand Spread Per Month, 5.5 Mil PPFAC, 1.249 Mill DSM, & Primary Metering. * Capital investment breakeven analysis does not include rate recovery of capital investment.

Strategy Identify ‘Empowerment Zones,’ mutually beneficial sites for TEP/UNS and prospective data centers, to demonstrate a keen understanding of data center needs while limiting system upgrades and maximizing

revenue. By essentially conducting the site selection process, TEP/UNS can pitch optimal locations and competitive advantages to data centers, thus maximizing their speed-to-market. Tactics to support this strategy include developing a presence for Tucson and TEP/UNS across the data center industry through paid advertising, direct response campaigns, event sponsorship and speaking engagements at industry conferences. Recommendations The following recommendations are made to move forward with this project: •

Work hand-in-hand with Involta to demonstrate sincere relationship and commitment to expedite their operations to full capacity (3MW). o Benchmark process to create case study for industry publication. o Create industry advocates through Involta executive leadership. Explore additional incentives through the Arizona Commerce Authority and TREO. o In working with TelAxis (site locator) and Involta they commented on data center incentives do not compete with other cities and states. Formalize internal and external data center team, then identify core working group. o Host kick-off meeting in September or early October. Monitor data center industry for trends, and keep pulse on nine core data center markets. o Monitor Phoenix closely as energy demand exceeds energy capacity, and competition for tenant space. o Continued interest from enterprise users in sourcing third-party COLO options.  Attract excess to Involta. Identify relevant green energy programs and energy-efficient opportunities for data centers. o Position TEP/UNS as expert in this arena.

Proposed Resources and Costs Labor and Promotion • Phase 1 - Use existing labor and non-labor resources to attract data centers. Continue to evaluate and learn more about the market. • Phase 2 - If we are not successful with Phase 1 then (pending approvals), we will become more aggressive with the marketing. o Initial campaign cost is approximately $73,700. o Dedicate up to $200,000 annually in promotion, sponsorship and industry events.  Annual fees represent 5% of potential base profit from an operational 4MW data center. o Secure internal staff at .5 FTE to support program. Risk External Risk • Lack of awareness for Tucson as a viable data center market. • Highly competitive market for data center growth. o Phoenix and Las Vegas are very aggressive and sophisticated with this market. • Political realities of state, county and city not reaching consensus to support data center acquisition to Tucson. • Limited/restricted incentives compared to other markets.

Involta may feel slighted if TEP/UNS does not help drive business their way before it launches a campaign to attract competition to the market.

Internal Risk • Commitment of labor and financial resources to drive acquisition of data centers. • Commitment of long-term strategy to secure data centers in Tucson; patience needed. • Ability to expedite existing system upgrades or other projects within ‘Empowerment Zones.’ Timeline Once approved, the Phase 1 initial acquisition materials would take 2 months to complete and then rollout to market in late Fall 2012 or early 2013. Team meetings would be scheduled in September with internal and external teams. Regular meetings would be scheduled with Involta, beginning in September, to strategize and provide assistance to ramp-up their operations.

Table of Contents Company Description ………………………………………………………………………………………………………………………… 6 Data Center Acquisition Team …………………………………………………………………………………………………………… 8 Data Center Overview ………………………………………………………………………………………………………………………. 10 Market Analysis ……………………………………………………………………………………………………………………………….. 19 TEP Analysis …………………………………………………………………………………………………………………………………….. 50 Data Center Energy Efficiency …………………………………………………………………………………………………………. 52 Positioning and Target Market …………………………………………………………………………………………………………. 58 Acquisition Plan ……………………………………………………………………………………………………………………………….. 61 Operations Plan .………………………………………………………………………………………………………………………………. 73 Financial Plan …………………………………………………………………………………………………………………………………… 76 Risk Analysis ………………………………………………………………………………………………………………………….………… 81 Recommendations ………………………………………………………………………………………………………………………….. 82 Appendix …………………………………………………………………………………………………………………………………………. 83

Company Description Company Overview TEP is the second-largest investor-owned utility in Arizona and the largest corporation headquartered in Southern Arizona. Tucson Electric Power provides the energy behind Tucson's economy. We deliver safe, reliable power to more than 400,000 customers in the Tucson metropolitan area. The company also is a local leader in community service, volunteerism and economic development efforts. TEP offers comprehensive energy services through reliable, traditional resources and cutting-edge "green power" projects. We also provide significant incentives to help customers invest in renewable energy projects. TEP is the principal subsidiary of UniSource Energy Corporation (UNS), the largest public company based in Tucson. UniSource Energy's stock is traded on the New York Stock Exchange under the ticker symbol UNS. TEP's sister company, UniSource Energy Services, provides natural gas and electric service to more than 235,000 customers in northern and southern Arizona. Today, UniSource Energy is home to a growing family of energy companies serving more than 1.5 million Arizona residents. As TEP enters its third century of operations, the company continues to find innovative ways to provide reliability, service and value to customers and the community. Mission and Goals TEP would like to become a preferred and trusted energy partner and advisor with our customers. We want to be a leader in all that we do including economic development and supporting community organizations & initiatives. We want to offer a clean, safe, affordable, and reliable product that exceeds customer expectations. TEP Commercial Segments and Revenues Segment Customers Annual Usage in kWh Revenue per kWh Residential 366,217 10,580 9.8 c Commercial 35,877 54,754 11.1 c Industrial 635 3,378,750 7.5 c Mining 2 539,663,500 5.5 c Other 62 3,882,306 *9.3 c * Defined as All Retail Customers Source: UniSource Energy Corporation, Fast Facts, 2011.

TEP Energy Capacity and Peak Demand Total TEP Capacity (2): Hours Per Year: Total System Capability:

2,262 8,760 19,815,120

MW Hours MWh

Remote Generation:

Local Tucson Generation: Total System Generation: System Capacity Factor: Peak Demand – Net One Hour:

906,496 10,911,623

55.07% 2.333

Source: TEP 10K

Data Center Acquisition Team Internal Task Force Key Accounts • Dave Couture – Manager, Key Accounts • Joey Cruz – Key Account Manager, Senior • Art Fregoso – Manager, Technical Services • Kelly Hanson – Director, Business Development Pricing/Finance • Dallas Dukes – Senior Director, Rates and Revenue Requirements • Craig Jones – Manager, Pricing • Nick Gilbert – Intern • Steve Sims – Manager, BP&A Customer Programs and Services • Larry Lucero – Senior Director, Customer Programs and Services • Art McDonald – Director, Marketing & Communications • John Brown – Manager, Marketing & Communications Strategic Services • Steven Hutson – Web, Technical Lead • Barbara Beyer – Administrative Support Specialist Engineering • Donovan Sandoval – Lead Distribution Planning Associate Engineer • Steve Metzger – Supervisor, Engineering • Jeremiah Rios – Distribution Planning Engineer III IT • • Land • • •

Morgan Stoll – Manager, IT Operations Tyler Kilian – Supervisor, Network & Telephony

Cheryl Eamick – Sr. Environmental and Land Use Planner Steven Eddy – Environmental and Land Use Planner Cory Pintor – Senior Right-of-Way Agent

Renewables and Energy Efficiency • Ted Burhans – Program Manager, II • Mike Baruch – Program Manager, II • Chris Lindsey – Distribution Planning and Engineering • Tom Mills – Supervisor, T & D Control Transmission and Distribution • Roberto Guevara – T & D Supervisor II • Ana Bustamante – T & D Superintendent

Eileen Dickerson – T & D Supervisor II Mike Kaiser - Designer Susan Gray – Director, Design and Construction Services

Executive Sponsor Dave Hutchens – President, UniSource Energy Corporation

External Partners and Roles • •

• • • • • •

Arizona Commerce Authority (ACA) o Incentives Tucson Regional Economic Opportunities (TREO) o Acquisition-Focused  Incentives  Business Support Tucson Chamber of Commerce o Retention-Focused  Business Support City of Tucson o Incentives o Business Support Pima County o Incentives o Business Support Century Link o Fiber Routing and Network Access Commercial Real Estate – CBRE o Land and Building Identification o Access to Data Center Decision Makers in other Markets TelAxis o Involta Relationship o Access to Data Center Decision Makers in other Markets

Data Center Overview and Opportunity History During the boom of the microcomputer industry, and especially during the 1980s, computers started to be deployed everywhere, in many cases with little or no care about operating requirements. However, as information technology (IT) operations started to grow in complexity, companies grew aware of the need to control IT resources. With the advent of client-server computing, during the 1990s, microcomputers (now called "servers") started to find their places in the old computer rooms. The availability of inexpensive networking equipment, coupled with new standards for network structured cabling, made it possible to use a hierarchical design that put the servers in a specific room inside the company. The use of the term "data center," as applied to specially designed computer rooms, started to gain popular recognition about this time. The boom of data centers came during the dot-com bubble. Companies needed fast Internet connectivity and nonstop operation to deploy systems and establish a presence on the Internet. Installing such equipment was not viable for many smaller companies. Many companies started building very large facilities, called Internet data centers (IDCs), which provide businesses with a range of solutions for systems deployment and operation. New technologies and practices were designed to handle the scale and the operational requirements of such large-scale operations. These practices eventually migrated toward the private data centers, and were adopted largely because of their practical results. With an increase in the uptake of cloud computing, business and government organizations are scrutinizing data centers to a higher degree in areas such as security, availability, environmental impact and adherence to standards. Standard Documents from accredited professional groups, such as the Telecommunications Industry Association, specify the requirements for data center design. Well-known operational metrics for data center availability can be used to evaluate the business impact of a disruption. There is still a lot of development being done in operation practice, and also in environmentally-friendly data center design. Data centers are typically very expensive to build and maintain. Requirements IT operations are a crucial aspect of most organizational operations. One of the main concerns is business continuity; companies rely on their information systems to run their operations. If a system becomes unavailable, company operations may be impaired or stopped completely. It is necessary to provide a reliable infrastructure for IT operations, in order to minimize any chance of disruption. Information security is also a concern, and for this reason a data center has to offer a secure environment which minimizes the chances of a security breach. A data center must therefore keep high standards for assuring the integrity and functionality of its hosted computer environment. This is accomplished through redundancy of both fiber optic cables and power, which includes emergency backup power generation. Effective data center operation requires a balanced investment in both the facility and the housed equipment. The first step is to establish a baseline facility environment suitable for equipment

installation. Standardization and modularity can yield savings and efficiencies in the design and construction of telecommunications data centers. Standardization means integrated building and equipment engineering. Modularity has the benefits of scalability and easier growth, even when planning forecasts are less than optimal. For these reasons, telecommunications data centers should be planned in repetitive building blocks of equipment, and associated power and support (conditioning) equipment when practical. The use of dedicated centralized systems requires more accurate forecasts of future needs to prevent expensive over construction, or perhaps worse — under construction that fails to meet future needs. The "lights-out" data center, also known as a darkened or a dark data center, is a data center that, ideally, has all but eliminated the need for direct access by personnel, except under extraordinary circumstances. Because of the lack of need for staff to enter the data center, it can be operated without lighting. All of the devices are accessed and managed by remote systems, with automation programs used to perform unattended operations. In addition to the energy savings, reduction in staffing costs and the ability to locate the site further from population centers, implementing a lights-out data center reduces the threat of malicious attacks upon the infrastructure. Sources: Kasacavage, Victor (2002). Complete book of remote access: connectivity and security. The Auerbach Best Practices Series. CRC Press. p. 227. Burkey, Roxanne E.; Breakfield, Charles V. (2000). Designing a total data solution: technology, implementation and deployment. Auerbach Best Practices. CRC Press. p. 24.

There is a trend to modernize data centers in order to take advantage of the performance and energy efficiency increases of newer IT equipment and capabilities, such as cloud computing. This process is also known as data center transformation. Source: Mukhar, Nicholas. "HP Updates Data Center Transformation Solutions," August 17, 2011.

Organizations are experiencing rapid IT growth but their data centers are aging. Industry research company International Data Corporation (IDC) puts the average age of a data center at nine-years-old. Gartner, another research company says data centers older than seven years are obsolete. Sources: Mukhar, Nicholas. "HP Updates Data Center Transformation Solutions," August 17, 2011. Sperling, Ed. "Next-Generation Data Centers," Forbes, March 15. 2010.

In May 2011, data center research organization Uptime Institute, reported that 36 percent of the large companies it surveyed expect to exhaust IT capacity within the next 18 months. Source: Niccolai, James. "Data Centers Turn to Outsourcing to Meet Capacity Needs," CIO.com, May 10, 2011.

Four Tier Classification The Telecommunications Industry Association is a trade association accredited by ANSI (American National Standards Institute). In 2005 it published ANSI/TIA-942, Telecommunications Infrastructure Standard for Data Centers, which defined four levels (called tiers) of data centers in a thorough, quantifiable manner. TIA-942 was amended in 2008 and again in 2010. The simplest is a Tier 1 data center, which is basically a server room, following basic guidelines for the installation of computer systems. Tucson currently has four Tier 2 data centers, while the Involta

opportunity represents a Tier 3 colocation data center. A closer look at current data center operations, rate plans and revenue in our service territory is described in the Table 1. Table 1: Data Center Snapshot in TEP Service Territory Data Center

2011 Revenue

Rate 90AF & Rate 13

Largest Data Center in TEP service territory. Symantec has two services, thus the two rates. The Peak kW is the combined peaks of both services. TEP's only Data Center that is a Key Account. Symantec is a large maker of security software for computers, best known for its Norton Brand.

Rate 13 & Rate 10

$166,017.65

Small Data Center providing online information and database-driven software solutions to law enforcement agencies.

$117,285.45

Small Data Center providing business class managed voice, internet and data network services. Specializes in Ethernet and transport data networking, Internet access, local and long distance, VoIP and security, to enterprise organizations.

Simply Bits

Two Rate 10's

Very Small Data Center with two service points. Delivers internet access, voice, fax and other broadband applications. Services residences, commercial, educational and government agencies throughout Tucson.

The most stringent level is a Tier 4 data center, which is designed to host mission critical computer systems, with fully redundant subsystems and compartmentalized security zones controlled by biometric access controls methods. Another consideration is the placement of the data center in a subterranean context, for data security as well as environmental considerations such as cooling requirements. Table 2 defines basic requirements for each Tier. Table 2: Data Center Requirements Tier Data Center Level Requirements 1 Single non-redundant distribution path serving the IT equipment Non-redundant capacity components Basic site infrastructure guaranteeing 99.671% availability 2 Meets or exceeds all Tier 1 requirements Redundant site infrastructure capacity components guaranteeing 99.741% availability 3 Meets or exceeds all Tier 1 and Tier 2 requirements Multiple independent distribution paths serving the IT equipment All IT equipment must be dual-powered and fully compatible with the topology of a site's architecture Concurrently maintainable site infrastructure guaranteeing 99.982% availability 4 Meets or exceeds all Tier 1, Tier 2 and Tier 3 requirements

All cooling equipment is independently dual-powered, including chillers and heating, ventilating and air-conditioning (HVAC) systems Fault-tolerant site infrastructure with electrical power storage and distribution facilities guaranteeing 99.995% availability Source: A ConnectKentucky article mentioning Stone Mountain Data Center Complex "Global Data Corp. to Use Old Mine for Ultra-Secure Data Storage Facility" (PDF). ConnectKentucky. 2007-11-01.

Data Center Energy Use Energy use is a central issue for data centers. Power draw for data centers ranges from a few kW for a rack of servers in a closet to several tens of MW for large facilities. Some facilities have power densities more than 100 times that of a typical office building. For higher power density facilities, electricity costs are a dominant operating expense and account for over 10% of the total cost of ownership (TCO) of a data center. By 2012 the cost of power for the data center is expected to exceed the cost of the original capital investment. Sources: "Data Center Energy Consumption Trends". U.S. Department of Energy. 2010. J Koomey, C. Belady, M. Patterson, A. Santos, K.D. Lange. Assessing Trends over Time in Performance, Costs, and Energy Use for Servers Released on the web August 17th, 2009.

Diagram 1: Breakdown of Energy Delivered to a Typical Data Center (E Source)

While the main objective of power utilization within a data center is to operate IT equipment, the above figure shows that 47% of the total power entering a data center directly powers the server. Within each server, an even smaller fraction of energy is actually used to provide valuable computing services. The primary power consumption in a data center is used for cooling (source). Greenhouse Gas Emissions In 2007, the entire information and communication technologies or ICT sector was estimated to be responsible for roughly 2% of global carbon emissions with data centers accounting for 14% of the ICT

footprint. The US EPA estimates that servers and data centers are responsible for up to 1.5% of the total US electricity consumption, or roughly .5% of US GHG emissions, for 2007. Given a business as usual scenario greenhouse gas emissions from data centers is projected to more than double from 2007 levels by 2020. Site selection is one of the factors that affect the energy consumption and environmental effects of a data center. In areas where climate favors cooling and lots of renewable electricity is available the environmental effects will be more moderate. Thus, countries with favorable conditions, such as: Canada, Finland, Sweden and Switzerland are trying to attract cloud computing data centers. In an 18-month investigation by scholars at Rice University’s Baker Institute for Public Policy in Houston and the Institute for Sustainable and Applied Infodynamics in Singapore, data center-related emissions will more than triple by 2020. Sources: "Smart 2020: Enabling the low carbon economy in the information age". The Climate Group for the Global e-Sustainability Initiative. 2011. "Report to Congress on Server and Data Center Energy Efficiency". U.S. Environmental Protection Agency ENERGY STAR Program. A calculation of data center electricity burden cited in the Report to Congress on Server and Data Center Energy Efficiency and electricity generation contributions to greenhouse gas emissions published by the EPA in the Greenhouse Gas Emissions Inventory Report. 2010. Canada Called Prime Real Estate for Massive Data Computers. 2011.

Energy Efficiency The most commonly used metric to determine the energy efficiency of a data center is power usage effectiveness, or PUE. This simple ratio is the total power entering the data center divided by the power used by the IT equipment [PUE = Total Facility Power/IT Equipment Power]. Power used by support equipment, often referred to as overhead load, mainly consists of cooling systems, power delivery, and other facility infrastructure like lighting. The average data center in the US has a PUE of 2.0, meaning that the facility uses one Watt of overhead power for every Watt delivered to IT equipment. State-of-the-art data center energy efficiency is estimated to be roughly 1.2. Some large data center operators like Microsoft and Yahoo! have published projections of PUE for facilities in development; Google publishes quarterly actual efficiency performance from data centers in operation. The U.S. Environmental Protection Agency has an Energy Star rating for standalone or large data centers. To qualify for the ecolabel, a data center must be within the top quartile of energy efficiency of all reported facilities. Sources: "Report to Congress on Server and Data Center Energy Efficiency". U.S. Environmental Protection Agency ENERGY STAR Program. "Data Center Energy Forecast". Silicon Valley Leadership Group (see PDF). "Google Efficiency Update". Data Center Knowledge. 2008. Commentary on introduction of Energy Star for Data Centers "Introducing EPA ENERGY STARÂŽ for Data Centers" (Web site). Jack Pouchet. 2010-09-27.

Green Data Centers Datacenters are using a lot of power which is consumed by two main usages: the power required to run the actual equipment (CPU's, memory, etc.) and then the power required to cool the equipment. The

first category is addressed by designing computers and storage systems that are more and more powerefficient. And to bring down the cooling costs datacenter designers try to use natural ways to cool the equipment. Many datacenters have to be located near people-concentrations to manage the equipment, but there are also many circumstances where the datacenter can be miles away from the users and don't need a lot of local management. Examples of this are the 'mass' datacenters like Google or Facebook: these DC's are built around many standardized servers and storage-arrays and the actual users of the systems are located all around the world. After the initial build of a datacenter there is not much staff required to keep it running: especially datacenters that provide mass-storage or computing power don't need to be near population centers. Datacenters in arctic locations where outside air provides all cooling are getting more popular as cooling and electricity are the two main variable cost components. Source: Gizmag Fjord-cooled DC in Norway claims to be greenest. December, 2011.

Due to the significance of energy efficiency and green issues/incentives, a separate section appears in this plan beginning on page 52. Data Center Projects and Opportunities Data centers have evolved quickly over time and now face a variety of fronts for expansion. According to a recent study, about one third of the nation’s data centers are more than 20 years old and half are more than 16 years old. These facilities were built before the advent of higher density rack systems, and high efficiency-cooling systems. In fact, many predate the internet itself. Many organizations have outgrown their data centers or their data centers are not designed with the reliability and energy efficiency that enterprises demand today; reliability and cost are drivers in this market (Bruce Lehrman, CEO, Involta, 3/28/12). The following information is a guide that illustrates types of projects occurring in the data center market today. Data center transformation takes a step-by-step approach through integrated projects carried out over time. This differs from a traditional method of data center upgrades that takes a serial and siloed approach. The typical projects within a data center transformation initiative include standardization/consolidation, virtualization, automation and security. Source: Tang, Helen. "Three Signs it's time to transform your data center," August 3, 2010, Data Center Knowledge.

Standardization/consolidation: The purpose of this project is to reduce the number of data centers a large organization may have. This project also helps to reduce the number of hardware, software platforms, tools and processes within a data center. Organizations replace aging data center equipment with newer ones that provide increased capacity and performance. Computing, networking and management platforms are standardized so they are easier to manage. Source: Miller, Rich. "Complexity: Growing Data Center Challenge," Data Center Knowledge, May 16, 2007.

Virtualize: There is a trend to use IT virtualization technologies to replace or consolidate multiple data center equipment, such as servers. Virtualization helps to lower capital and operational expenses, and reduce energy consumption. Data released by investment bank Lazard Capital Markets reports that 48 percent of enterprise operations will be virtualized by 2012. Gartner views virtualization as a catalyst for modernization.

Sources: Sims, David. "Carousel's Expert Walks Through Major Benefits of Virtualization," TMC Net, July 6, 2010. Delahunty, Stephen. "The New urgency for Server Virtualization," InformationWeek, August 15, 2011. Miller, Rich. "Gartner: Virtualization Disrupts Server Vendors," Data Center Knowledge, December 2, 2008.

Automating: Data center automation involves automating tasks such as provisioning, configuration, patching, release management and compliance. As enterprises suffer from few skilled IT workers, automating tasks make data centers run more efficiently. Source: Miller, Rich. "Complexity: Growing Data Center Challenge," Data Center Knowledge, May 16, 2007.

Securing: In modern data centers, the security of data on virtual systems is integrated with existing security of physical infrastructures. The security of a modern data center must take into account physical security, network security, and data and user security. Source: Ritter, Ted. Nemertes Research, "Securing the Data-Center Transformation Aligning Security and Data-Center Dynamics," in Miller, Rich 2007.

For example, by applying consistent governance and processes through data center consolidation projects —and continually closing the loop by evaluating results against the decision model and strategy—IBM has been able to fully leverage the opportunities presented by optimization (IBM, 2012). Diagram 2: IBM Data Center Decision Model

Data Center Needs and Wants Tucson represents an attractive market for data centers. According to Bruce Lerhman, CEO of Involta, data center selection criteria is based on the following attributes (March 28th Presentation and Project Snowbird): • •

Competitive analysis o Reflects ability to achieve success in market  Location matters Good sites o Existing facility of 15,000 to 25,000 square feet, with ability to expand o Land available to build above if not already existing o Safe from natural disasters and from potential disasters by air, rail or highway  Not in flight path  1 mile from rail or highway o Efficiency (LEED certified) is an advantage o Access to fiber (neutral carriers)  Identify network latency issues Anchor tenants o Ability to attract local data users while also hosting existing local client data  Economies of scale benefits from multi-tenant usage Support from electric utility o Positive working relationships and communications o Access to dual 2500kva transformers (480v) o Power quality and reliability o Dual substation feeds  Loop-fed with fail over from primary is also acceptable o Define timing of supplying redundant/dual feeds (i.e. any extraordinary substation, ROW, distribution work, etc.) o Power costs are key to business success Business community o Innovators o Entrepreneurial State and local support o Available sales tax credits o TIF financing to reduce property taxes

Closely aligned to Involta’s statements regarding market selection, DataCenter Dynamics identified the following criteria in their Data Center Development Index and Market Profiles Report (9/11): •

Sector Scope & Influence o Scope of influence of datacenter sector & vendors/suppliers o Net import/export profile

Sector Activity o Number of projects o Investment base

Levels of technology Consideration

Resource Base o People (experience, qualification, pay) o Energy vulnerability o Vendor & supplier base

Facility Profile o Size (facilities, space, racks) o Resource usage (power, people) o Technology Adoption

Sector Context o Size of economy o Business & population basis o Balance of economy o Levels of IT Dependence

Industry Colocation Data Center Facts (CBRE) • 67% said they want more capacity now or in the next 24 months • 88% of all colocation data center users occupy 10,000 SF or less • Total annual spending on data centers will grow from $87 billion in 2010 to $126 billion in 2015 • 41% of colocation facilities are at 80% capacity or greater. Overall, Tucson appears to be a realistic market based on the above selection criteria and market conditions. In addition, drivers for data center decision making include operating cost and power reliability; both of which are shouldered by the Utility. The above criteria are essential to formulating a data center acquisition strategy and articulating a competitive advantage to prospects. TEP/UNS can define ‘empowerment zones’ that identify available space served with reliable power, thus conducting initial site selection for a data center that demonstrates an understanding of their business needs. Note: A data center site selection guide from Rath Consulting is available for an in-depth look at all criteria mentioned above.

Market Analysis Potential Factors Influencing Industry Growth Datacenter Dynamics (http://www.datacenterdynamics.com/research/market-growth-2011-2012) conducted a recent study of data center operations that indicates: • • • •

Sample size operates almost 100,000 facilities – projected increase of 7% into 2012. Sample operates 7.7 million racks – projected increase of 15% into 2012. Sample consumes 31 GW of energy – projected increase of 19% into 2012 (where 1GW is power used by 750,000 to 1 million homes). 2010-11 investment about $US30 BN – expected to rise to $US35 BN in next 12 months (i.e. equivalent to nominal GDP of Kenya, Costa Rica, Lithuania).

In addition, Datacenter Dynamics obtained primary research from individuals regarding the profile of their organization’s data center infrastructure, including the number of data centers they operated of over 20 racks and the total area of floorspace dedicated to ICT (information communication technology) activities. This provides a regional profile to each Market that tracks closely to the economic profile or activity of each market (DCD Industry Census 2011: Market Profiles.) Key findings from research include: Eastern Seaboard (56.4 rating): A major and global market whose data center profile is spread evenly across all industry sectors and based around the financial center of the New York area, the Government sector in Washington DC and the growth regions of New Jersey, North Carolina, Atlanta and Philadelphia. Growth here slowed during 2007 to 2009 and now the region indicates a sense of making up for lost time. Significant concerns related to costs remain and because of this there is a high level of anticipation for vendors to produce more energy efficient technologies. Industry sectors represented by sample: Telecommunications Internet ICT Other

11.8% 20.4% 17.1% 50.7%

Facility type where primary data center is housed: Within an office building: Standalone/purpose-built facility:

50.0% 50.0%

Anticipated growth for next 12 months: Number of data centers Number of racks Total power

7.6% 13.2% 13.9%

West Coast (64.6 rating): California is the dominant market although the strongest growth is indicated in the Pacific North West. The market has a considerable facility profile, global reach and a high level of sophistication in facility operation. Operators are now beginning to invest post-recession in order to get

existing facilities up to the best current standards. Significant concerns about budgets and capital costs remain and the cost of energy is of high concern in California. The cloud and virtualization are the key areas of interest for these operators going forward. Industry sectors represented by sample: Internet ICT Other

14.9% 21.4% 63.7%

36.8% 63.2%

2.0% 3.0% 2.4%

Central (41.4 rating): The regions of the United States between the Appalachians and the Rockies include major metropolitan markets, some of the US’s fastest growing regions and States which have actively cultivated inward data center investment. These account for the very high growth profile of the region and the high levels of technology adoption as the region looks to upgrade existing facilities. Industry sectors represented by sample: Telecommunications Banking/Financial ICT Other

13.1% 17.6% 21.3% 48.0%

38.2% 61.8%

5.4% 9.3% 12.9%

Mexico (11.3 rating): Mexico occupies a strange place in the data center landscape with pronounced characteristics of both a developed and a developing market. The workforce profile is both experienced and educated. The facility profile is the largest in Latin America outside Brazil but growth is moderate in comparison to other regional markets and limited by concerns to energy availability and cost and the capability of many existing facilities to meet increased IT needs. The reason for Mexico’s unusual position can perhaps be seen by the limited profile of local market vendors suggesting a strong influence from the US market to the north (see appendix for table). Considerable growth projected in number of racks (+15.6%) and total power used (+18%).

Current U.S. Data Center Locations There are approximately 1,011 colocation data centers located in the continental United States. The map and link below show details on each data center. Current interactive map link available at: http://www.datacentermap.com/

Source: Map retrieved from http://www.datacentermap.com/ on April 17, 2012.

A closer look at colocation data centers identifies primary geographic markets across the US:

Table 3: Data Center Size Comparison (E Source)

While the vast majority of server facilities in the U.S. (Approximately 96%) are small, as shown above, they take up less than 500 square feet of floor space. Despite being the most prevalent, small data centers are more difficult to identify and typically operate less efficiently than larger, commercial-type facilities. Identifying smaller data centers is difficult but can be segmented by industrial codes described in Table 4. Note that because three SIC codes are used here, there will be variance when compared to the total numbers identified by DataCenterMap due to their classification. Table 4: US Data Center Database By Sic Codes (7374/481302/7375) Physical State State Total Data Abbreviation Number Processing & Preparation [SIC 7374] AK AL AR AZ CA CO CT DC DE FL GA HI IA ID IL

Alaska Alabama Arkansas Arizona California Colorado Connecticut District of Columbia Delaware Florida Georgia Hawaii Iowa Idaho Illinois

4 28 15 67 732 123 44 18 15 220 197 15 35 10 147

2 14 9 37 250 57 25 7 7 92 111 10 14 3 80

Online Service Providers [SIC 481302]

Information Retrieval Systems [SIC7375]

2 11 5 26 391 42 14 6 7 96 58 4 18 7 52

0 3 1 4 91 24 5 5 1 32 28 1 3 0 15

IN KS KY LA MA MD ME MI MN MO MS MT NC ND NE NH NJ NM NV NY OH OK OR PA RI SC SD TN TX UT VA VT WA WI WV WY TOTAL

Indiana Kansas Kentucky Louisiana Massachusetts Maryland Maine Michigan Minnesota Missouri Mississippi Montana North Carolina North Dakota Nebraska New Hampshire New Jersey New Mexico Nevada New York Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Virginia Vermont Washington Wisconsin West Virginia Wyoming

55 22 33 28 130 107 8 79 93 57 11 8 68 9 21 11 110 15 32 330 99 25 48 137 10 34 5 47 266 48 151 6 120 52 11 11 3967

27 10 17 13 56 50 4 45 46 27 6 6 26 7 13 3 62 5 14 127 53 13 15 70 5 21 3 24 127 21 75 5 38 21 4 3 1780

20 9 13 12 49 40 3 29 31 22 5 1 31 2 6 5 41 10 16 150 36 8 24 53 4 10 2 16 102 24 45 1 59 24 6 7 1655

8 3 3 3 25 17 1 5 16 8 0 1 11 0 2 3 7 0 2 53 10 4 9 14 1 3 0 7 37 3 31 0 23 7 1 1 532

Source: Accudata, May 2012.

Colocation Data Center Summary Breakdown in Western Region – 375 Total California – 146 data centers in 23 areas: • Los Angeles 45 • San Francisco 22 • Santa Clara 15 • San Jose 14 • San Diego 11 Texas – 96 data centers in 11 areas: • Dallas 44 • Houston 30 • Austin 11 Washington – 44 data centers in six areas: • Seattle 30 • Spokane 5 • Walla Walla 3 Colorado – 24 data centers in two areas: • Denver 22 • Colorado Springs 2 Arizona – 23 data centers in two areas: • Phoenix 19 • Tucson 4 Utah – 15 data centers in 3 areas: • Salt Lake City 9 • Orem 5 Oregon – 13 data centers in two areas: • Portland 12 • Medford 1 Nevada – 9 data centers in one area: • Las Vegas 9 Idaho – 6 data centers in two areas: • Boise 5 • Coeur D Alene 1 The remaining western states have limited data centers, including New Mexico with 4, Wyoming with 3 and Montana 2.

It is important to recognize that there are currently five data centers in Mexico; three in Mexico City and one in Monterrey and one in Queretaro. A need may exist for redundancy and back-up for data centers located in Mexico; confirmed by comments from Data Center Dynamics media team. Industry Opportunities, Threats and Trends Opportunities • Data center locations are dependent on costs, connectivity, reliability, client demands, convenience and available space (energy costs and connectivity are primary drivers). o Possible Actions  Action 1: Conduct in-depth analysis of regional energy costs, direct flights to Tucson, available commercial space near airport, data needs of Tucson market and opportunities to serve hazardous markets with redundancy; overlay with data centers to define primary and secondary market; complete, see Land pictures.  Action 2: Develop ‘go-to market’ strategy and team to launch expansion and acquisition efforts; complete.  Action 3: Research connectivity infrastructure in Tucson market; in process. • Consistent data center growth is projected in 2012 and beyond (Data Center Dynamics, 9/11): o 100,000 facilities with 7% growth expected in 2012 o 7.7 million racks in use with increase of 15% in 2012 o 31 GW of energy used with increase of 19% in 2012  Note – 1 GW of power can serve 750,000 to 1M homes o 2011-12 investment of about $30B and expected to increase to $35B in next 12 months. • Arizona and Tucson are insulated from many natural disasters common in other data center markets and could be seen as an ideal redundant/back-up hosted location. • Close proximity to data center hubs in region may provide opportunity for secure back-up facilities and data recovery centers: o CA 144 data centers o TX 93 data centers o WA 41 data centers o CO 25 data centers o MX 5. • Current data centers located in Tucson include tw telecom Tucson (has 2 centers in Phoenix and 1 in San Diego), Login Top-Tier Data Center and Simply Bits Vault. o Possible Actions  Action 4: Meet with each data center to explore all expansion opportunities.  Action 5: Partner with Involta, Tier III Design Certified data center, to establish top market credibility and sophistication; Tour IO in Phoenix and establish dialogue for future expansion in Tucson as well as IO being a source for modular deployment; Complete. • Data centers seek input from Utility Company when expanding, and often need 2 lines of service, upgrades and even their own substation feed (Architect & IO interview, 2/11). o Possible Action

Action 6: Due to level of interface, create in-house engineering team to address critical issues of data centers, such as main power supply, relays, auto-transfers, switches, etc.; complete. Data centers focus on mechanical equipment for efficiency and effectiveness. o Possible Action  Action 7: Provide technical/facilities expertise and rebate opportunities on cooling equipment if possible. • Specifically, rebates on condenser units and high-efficiency cooling systems. Complete. CNBC ranks Arizona among the top five friendliest states for business and Number 1 for quality and availability of workforce. HB2787 could be re-introduced in January 2013 at the state Legislature and if passed, would provide additional incentives and benefits to data centers who located in Arizona. Collaborate with APS and SRP to move this forward; in progress. AZ is a renewable energy leader, according to Business Facilities: Consistently in the Top 3 among alternative energy leaders and Number 1 in solar energy manufacturing. The Solar Electric Power Association (SEPA) has recognized Tucson Electric Power as the 2012 Investor Owned Utility of the Year for the company's leadership and continued investment in solar energy. Tucson area boasts available and affordable housing, quality lifestyle and favorable tax structure for relocation or expansion. Metro Phoenix has become one of the top-10 markets for developers of data centers because of geographic and economic factors. Proximity to major West Coast markets, relatively low taxes, a low risk of natural disasters and cheap, reliable energy are just a few of the many benefits of operating a data center in Arizona. Skilled labor force is present with respected Schools of Engineering at UA and ASU. Commercial occupancy space will likely follow a similar trend as 2011 and end with 11 percent vacancy in industrial properties (AZ Daily Star, 1/25/12). o There was a flurry of activity in mid-2011, with high-tech companies and call centers taking up big spaces. Then later, other companies packed up and moved out of large spaces. o There are some big spaces available to companies looking to locate in Tucson, see: http://picor.com/southern-arizona-commercial-properties-search-listings Data centers currently consume about 1.3 percent of all electricity used globally and 2.0 percent in the U.S., significantly lower percentages than what analysts were forecasting just a few years ago. California hosts more server facilities than any other state and was the birthplace of many data center giants; increasingly, however, new facilities are being sited where energy and land are less expensive. Data center energy costs can be more than 100 times higher than for the typical office building. Power densities can be more than 40 times higher. To date, about 30 percent of servers in data centers have been virtualized, and this number could reach 50 percent by the end of 2012. Mexico data center rankings in Top 20 of the world according to DataCenterDynamics (9/11): o 7th in % growth in facility profile at 17% o 13th in value of investment in 2012 at $1.8B (USD) o 19th in % growth in investment at 11% 

Possible Action  Action 8: Evaluate Mexico data center demand and redundancy needs for aligned opportunities. • Mexico currently has 5 data centers and may require international outreach.

Threats • Economic development group (TREO)  TREO  11 staff positions and active board.  Outdated strategic plan and website content.  Strategic direction focused on the ‘Power of Five:’ • High-skilled/High-wage jobs • Educational excellence • Urban renaissance • Livable communities • Collaborative governance and stewardship. o Note above represent attainment and goals rather than achievement or competitive advantage at this time. o GPEC-Phoenix  26 staff and active board, committees and ambassadors.  Forward thinking leadership and actionable, up-to-date strategic plan that is recognized for: • Market the region both nationally and internationally • Provide a forum for pressing public-policy issues facing economic development • Maintain committed leadership that facilitates and drives action • Effectively collaborate to help align economic development activities and investments toward the same vision/goals • Stimulate the regional economy and position ourselves as fundamental to a public-private investment strategy • Measure success and impact of programs and initiatives.  Active business development team and marketing support. o AZ Commerce Authority-Phoenix  25 staff focused on statewide growth, with accomplished board (including Paul Bonavia).  The Arizona Commerce Authority spearheads the state's efforts to attract new business and expand businesses already excelling in the state. o San Diego Regional Economic Development Corporation  12 staff and accomplished board. • Conveys innovation and success.  EDC implements strategies that set the San Diego region apart from our competitors as a thriving center of technology and entrepreneurship.  Firmly believes economic development in a competitive global economy requires a blend of aggressive business development and proactive policy initiatives.

Business development program focuses on corporate expansion through outreach to executives in high-wage, high-growth, technology-driven industries. • Through targeted attraction campaigns and a network of partners, we promote regional assets to attract corporate investment from innovation industries.  Recognizes parallel universe in Baja, Mexico (see PDF). • Example: 51 companies in the cities of Tijuana, Tecate and Mexicali turn out aerospace products. • See Action 8 above. o Nevada’s Governor’s Office of Economic Development (GOED)  10 department directors with support staff.  6 commissioners and newly formed task force of 29 business leaders.  Focused on a vibrant, innovative and sustainable economy.  Strategic plan has five core objectives.  Nevada is situated as a hub for 11 western states. Data center expansion can be driven solely by needs and demands of clients and/or conveniences. Corporate data centers and data center companies have in-house expertise for relocation, including C-level executives, facility managers, mechanical engineers, electrical engineers, IT architects and may contract specific vendors for structural architecture (new construction or retro-fits) and cabling firm (design/implementation team). Fragmented political leadership across city, county and state. o Local leadership, forward-thinking and growth poorly illustrated by Rio Nuevo project. Image issues of AZ political environment may negatively impact global or culturally diverse companies as well as higher-skilled workforce. Tucson economy and labor force leans heavy on government-focused work and service oriented positions which can be negatively impacted by fragile economic conditions. o Incentives in Tucson and Arizona are not competitive with region. o Local and state economy is weak/fragile and historically has grown in steep cycles. o Current economic development is focused on aerospace and defense, bioscience, solar and logistics. Tucson ranked #1 on Top Ten list of sickest housing markets in the U.S. (8/11). o http://www.msnbc.msn.com/id/44005383/ns/business-real_estate/t/americas-sickesthousing-markets/ Tucson, Detroit, Los Angeles, San Diego and Sacramento were picked as five least small business friendly cities by CNN Money, May 2012. Opening up a small business in a tough economy is a risky gamble. But Arizona saw more startup activity than anywhere else nationwide, according to Kauffman Index of Entrepreneurial Activity. (Note, this is Arizona). Forbes negative assessment of Tucson’s business environment, June 2012. 

Tucson may not generally be viewed as a ‘hi-tech’ center focused on innovation. o Possible Action  Action 9: Create incubator for innovation and partner with respected leaders in knowledge and technology on a local, state, national and international level. K-12 educational system throughout AZ is rated among the lowest in the nation. High unemployment, but lower than national average, as of December, 2011 (BLS.Gov): o Tucson 7.9% o AZ 8.7% o US 8.5% Access to Tucson by air is not as convenient or diverse as Phoenix, Las Vegas, San Diego, and Los Angeles. IT growth can, to a point, be coordinated through upgrading of existing facilities or increased use of outsourcing.

Trends • Recent growth activity has shown that a number of companies assemble networks of data centers in small and medium-sized cities. o Typically multi-tenant facilities that rely upon demand from local companies needing IT infrastructure. o Successful expansion drivers include need for storage, security, disaster recovery and application hosting (Datacenterknowledge.com, 3/08). • Focusing on energy-efficient data centers can reduce costs for data center operations while supporting green initiatives (Pike Research 8/10). o The IT industry is responsible for around 2% of the world’s carbon emissions and data centers are the fastest growing part of that footprint. o While energy efficiency has not traditionally been a major emphasis for IT organizations, the industry is now highly focused on implementing solutions that will reduce energy expenses and carbon emissions associated with data center operations. o The investment in greener data centers will experience rapid growth over the next five years, increasing from $7.5 billion in global revenue to $41.4 billion by 2015, representing 28% of the total data center market. o Analysis indicates that power and cooling infrastructure solutions will be the largest portion of the green data center market opportunity, representing 46% of revenue over the next five years.  Possible Action • Action 10: Position TEP & Tucson as a leader in ‘green initiatives’ and an innovator to help reduce operating expenses of traditional and modular data centers. o Research potential grants and government funding. • Additionally, Pike Research (3/30/11) forecasts that by 2015, global investment in energy efficient data center technologies will represent 28% of the $150 billion data center infrastructure market. o Taming Moore’s Law – IT managers are recognizing the energy and environmental costs of the continuing expansion of computing power, and are actively looking for ways to counteract them. o Over the next five years, data centers will move toward a totally virtualized environment that can provide computer services from both public and private cloud models.

The life cycles of power and cooling infrastructure will become more aligned with the IT assets it supports. o The relationship between the data center and the business it serves is changing. If the data center is to be part of a broader sustainability program, then its true cost must be more visible to the business. o Power usage effectiveness (PUE) ratings are a first step for new data center metrics, but PUE hides as much as it discloses and more work will be needed to define an acceptable measure for the productivity of the data center.  Possible Action • Action 12: Consider partnering with UA and/or ASU Engineering Schools, Tech Partner (IBM*, HP, etc.) and AFCOM (the leading association of data center management professionals w/4500+ professionals, see: http://www.afcom.com) to create whitepaper on data center metrics. o Also consider hosting/sponsoring AFCOM conferences & events in Tucson. o Also consider developing ‘Green Data Center’ best practices regarding how to maximize energy-efficiency. o * See IBM whitepaper on ‘Networking Smarter Data Centers.’ o Shift from Modular Design to the Green Data Factory.  Modularization in data center design will be combined with more flexible approaches to provisioning, which reflects a broader shift to an industrialized view of the data center. Purpose built modular data centers may be future and replace traditional data center environments. o IO builds modular 465 SQ/FT centers that are more robust and very energy efficient.  Traditional data center model cools about 150-200 Watts per SQ/FT.  Modular data center is cools about 1000 Watts per SQ/FT. • HP, Google, Microsoft are moving this direction. • 2500 SQ/FT data center converted to a 465 SQ/FT module (Nick, IO Data Centers, 2/12). o

Competitive Analysis Jones Lang LaSalle has a global data center solutions team that is actively working in major markets. The following variables illustrate 9 major colocation markets, including Chicago, Dallas/Ft. Worth, Los Angeles, New York/New Jersey, North Carolina, Pacific Northwest, Phoenix, Silicon Valley and Virginia. One-page overviews for each market are provided in the Appendix. Table 5, on the following page, summarizes 13 drivers for nine major markets – with Tucson also listed for comparison.

Table 5: Data Center Driver Analysis (Jones, Lang & LaSalle) LA NYNorth Pacific Phoenix Silicon Virginia Tucson CHI Dallas NJ Carolina NW Valley (CBRE) AVG 2010 6 7 13 12 4.5 4.6 7 10 5.5 .066 Power Costs Power Costs NC DOWN UP NC DOWN UP NC UP DOWN DOWN Capacity COLO UP DOWN UP UP DOWN UP NC UP UP UP Capacity ENTERP UP UP DOWN NC UP UP NC UP UP UP Absorption COLO UP UP UP UP UP UP UP UP NC NC Absorption ENTERP UP UP NC NC UP UP UP UP NC NC New UP UP UP UP UP UP UP UP UP Construction UP (SQ FT) New UP NC NC UP NC DOWN NC UP UP Construction UP (Price/SQFT) Wholesale COLO Cost 175 175 187 185 165 160 160 185 179 N/A kW/Month Powered 30 22.5 41.5 18 12 28 42.25 24.3 30 N/A Shell Cost SQFT/Year Rental Rates COLO NC NC UP NC UP NC NC NC DOWN NC Rental Rates Power/Shell UP NC UP NC NC NC NC NC DOWN N/A Incentives UP UP NC NC UP DOWN NC DOWN UP NC Market Development Trends Increased technological enhancements of blade servers, cloud offerings and virtual software solutions are driving users of data center space to rework their current data center strategies and portfolios. Both private and public sector consolidation efforts have been “top of mind� with most of the providers of these services (wholesale, retail, disaster recovery/business continuity, shared/managed/dedicated hosting, interconnection providers, etc.) in the first half of 2011. With the thawing of capital markets, there is an increasing amount of available capital for companies (providers and enterprises) to access to support white floor expansion. Through the first quarter of 2011, the data center market invokes a classic supply/demand imbalance. On the demand side, it is estimated that over half of the Fortune 1000 companies will increase IT spending in 2011. Based on research, overall IT spending will increase by at least 5%; a quarter increase from 2010. IT specific spending will come primarily from increases in data center infrastructure components, i.e. servers and software to support cloud and virtualization.

As power consumption in data centers continues to increase, the biggest market driver has become energy. Users are increasingly concerned with power redundancy, capacity and cost; with all three driving location strategy. Midwest • Demand is driving increased absorption. There is approximately 35 MW of demand remaining in the Chicago area alone. • Over 10 MW of users secured data center or colo space in 2010. • In other areas of the Midwest, approximately 15 MW of users have secured data center or colo space (i.e. Ascent Data Center, Digital Capital, et al). • Wholesale supply is limited at about 45 MW. One or two large enterprise deals could significantly impact this supply and create a supply / demand imbalance. • Two Fortune 100 companies made large investments in data centers utilizing 6+ MWs of power • Lightbound delivered an 8 MW data in Indianapolis in July. • Minneapolis (Eagan) joint venture development of a 100,000 SF data center with Five 9s Digital LLC approved in April. Northeast • The financial service industry continues to be the cornerstone of this regional market followed by the Hosting, Media, Pharmaceutical, Retail and Telecom. • DuPont Fabros Technology opened its first New Jersey facility at the end 2010. Sentinal Data Centers opens its first New Jersey facility in 2011. • In Boston, Paetec added the 42,000SF of colo space. • i/o just committed to 800,000 SF – a former NY Times printing facility. • Equnix started construction on a 320,000 SF expansion to add to its Secaucus portfolio (will be able to accommodate 2,200 server racks). Southeast • Southeast US continues to be a top location alternative for large Enterprise users with companies such as American Express, Apple and Facebook making announcements within the last 12 months. • Many East Coast companies are transitioning and moving south to take advantage of cheap, accessible power paired with strong incentive packages. West Coast • Due to the lower power costs and superior service levels of Silicon Valley Power, Santa Clara's public utility, new demand has been directed specifically to the Santa Clara; a submarket of Silicon Valley. • San Diego is experiencing significant growth and new demand has pushed for approximately 4 MW of new construction. Northwest • Demand increases as users look to take advantage of the temperate climate by utilizing outside air economization to increase efficiency and reduce costs. • Multiple landlords are actively searching for development opportunities – specifically in the Puget Sound, Eastern Washington & Portland, OR area.

Massive colocation growth in Seattle to satisfy the robust high-tech/biotech industry.

Southwest • Large telco’s (Windstream & CenturyLink) continue to acquire and finalize (Hosted Solutions, Qwest, SAVIS, etc.) target data center-centric acquisitions. • Dallas / Ft Worth has experienced growth requirements from various industries with demand projected to grow at an average rate of 13% thru 2014, placing a burden on an already constrained market. • Phoenix is experiencing significant demand and has taken approximately 25 MW of capacity from 2010 – 2011; lack sufficient MW for future growth at this pace. Trending Points and Outlook • Wide adoption of Cloud Service by SMB’s. • Worldwide Debt Crisis will negatively affect future data center development. • Multiple expansions in the top 6 US data center markets of new data center developments by many of the larger providers. • Speculative data center developments will occur by real estate developers that are new to the marketplace….look for winners and losers! • Private equity will continue to invest heavily into the marketplace. • Continued IPO interest in the sector. • Incentive packages for large data center projects are in question due to the health of current State budgets. • Further growth in the tablet/smart phone market (and associated apps) will contribute to greater data center consumption. • Increased importance on latency. • Deal velocity in Santa Clara will counter balance the growing inventory.

Southwest Power Cost Comparison TEP’s rates are competitive when compared to regional utilities, and between APS and SRP. Based on this rate comparison, TEP can compete in the state and region. Table 6A: Regional Rate Comparison (as of June 28, 2012) Load 90% Company Type Title $ per kwh KW 4000 RMP TOU LGS $ 0.0578 kWh 2592000 APS TOU E-35 $ 0.0621 Kilovar 1500 APS Standard E-34 $ 0.0662 TEP TOU LLP-90N $ 0.0664 Peak 0.2 NPC TOU LGS-3 $ 0.0665 Shoulder 0.2 SRP TOU E-63 $ 0.0697 Off 0.6 TEP Standard LLP-14 $ 0.0699 1.00 UNSE Standard LPS $ 0.0815 CPS TOU PG $ 0.0861 PNM Standard IPS $ 0.0864 LADWP Standard A2 $ 0.1028 ELPE TOU LPS $ 0.1130

Table 6B: Regional Rate Comparison (as of June 28, 2012)

Table 7A: TEP Proposed Rates in Regional Comparison Load 90% Company Type KW 4000 RMP TOU kWh 2592000 APS TOU Kilovar 1500 TEP TOU APS Standard Peak 0.2 NPC TOU Shoulder 0.2 SRP TOU Off 0.6 TEP Standard 1.00 UNSE Standard CPS TOU PNM Standard LADWP Standard ELPE TOU

Title LGS E-35 LLP-I90N E-34 LGS-3 E-63 LLP-I14 LPS PG IPS A2 LPS

$ per kwh $ 0.0578 $ 0.0621 $ 0.0658 $ 0.0662 $ 0.0665 $ 0.0697 $ 0.0741 $ 0.0815 $ 0.0861 $ 0.0864 $ 0.1028 $ 0.1130

Table 7B: TEP Proposed Rates in Regional Comparison

TEP Proposed Rates $0.1200 $0.1000 $0.0800 $0.0600 $0.0400 $0.0200 $-

Energy costs are a major driver for data centers, so available incentives and energy-efficiency opportunities would be needed to offset energy costs when looking at Tucson. TEP’s rate is less than specific California data center markets which does make it attractive, and is competitive with rates positioned between APS and SRP. Overall, existing incentives make Tucson less attractive than Phoenix and other viable data center markets.

Table 8A: APS E-34 Power Cost Analysis Load KW kWh

APS E-34 Large 90% 3000 1944000

Peak Shoulder Off

0.2 0.2 0.6 1.00

Extra Large General Service Summer 6 months

Customer Charge Demand Charge (KW) Energy Charge (kWh)

Total Monthly 6 Months 12 Month

$168.12 $16.48 0.0422

$131,638.92 $789,833.52 $1,579,667.04

Yearly PSA Yearly RES Yearly DSMAC Yearly EIS Yearly TCA Yearly SBA-1 Total Yearly Surcharges Total Yearly Average Monthy Total KW Total kWh Price per KW Price per kWh

Winter 6 months

Total Monthly 6 Months

$131,638.92 $789,833.52

($93,312.00) $5,127.96 $34,866.00 $3,732.48 $22,140.00 ($5,832.00) ($33,277.56) $1,546,389.48 $128,865.79 36,000 23,328,000 $42.96 $0.06629

Note: All surcharges except power factor adjustor included in rate

Table 8B: APS E-35 TOU Power Cost Analysis APS E-35 Extra Large General Service Time of Use Load 90% All Year KW 3000 kWh 1944000

0.3 0.7 1.00

Customer Charge Peak Demand (KW) Off Peak Demand (KW) Peak Energy Off Peak Energy

$170.28 $14.34 2.659 0.04694 0.0353

Peak Monthly Off Peak Monthly Total Monthly

$70,455.49 $50,255.44 $120,710.93

Yearly PSA Yearly RES Yearly DSMAC Yearly EIS Yearly TCA Yearly SBA-1 Total Yearly Surcharges

($93,312.00) $5,127.96 $34,866.00 $3,732.48 $22,140.00 ($5,832.00) ($33,277.56)

Total Yearly Average Monthy Total KW Total kWh Price per KW Price per kWh

$1,448,531.14 $120,710.93 36,000 23,328,000 $40.24 $0.06209

Table 9: SRP E-63 TOU Power Cost Analysis Load KW kWh

SRP E-63 90% 3000 1944000

Standard Price Plan for Primary Large General Service Summer 4 months

Summer Peak 2 months

Customer Charge Facilities Charge (KW) Peak Charge (kWh) Shoulder Charge (kWh) Off Charge (kWh)

$460.58 $2.17 0.1182 0.089 0.0444

Total Monthly 4 Months 12 Months

$139,318.10 $557,272.40 $1,626,327.60

$1,626,327.60 $135,527.30 36,000 23,328,000 $45.18 $0.06972

Total Monthly 2 Months

$460.58 $2.17 0.1632 0.0914 0.0496

$163,812.50 $327,625.00

$460.58 $2.17 0.1019 0.0759 0.0407

$123,571.70 $741,430.20

Note: No surcharges found for SRP

Table 10A: TEP LLP-14 Power Cost Analysis Load KW kWh Peak Shoulder Off

TEP LLP-14 90% 3000 1944000 0.2 0.2 0.6 1.00

Large Light and Power Service Summer 6 months

Customer Charge Demand Charge (KW) Energy Charge (kWh) Base Power Supply (kWh)

$500.00 $19.02 0.000433 0.032577

$121,743.44 $730,460.64

Yearly PPFAC Yearly REST Yearly DSM Total Yearly Surcharges

$179,532.29 $66,000.00 $29,136.67 $274,668.96

Customer Charge Demand Charge (KW) Energy Charge (kWh) Base Power Supply (kWh) Total Monthly 6 Months

$500.00 $19.02 0.000433 0.025077 $107,163.44 $642,980.64

$1,648,110.24 $137,342.52 36,000 23,328,000 $45.78 $0.07065

Table 10B: TEP LLP-90N TOU Power Cost Analysis Load KW kWh

TEP LLP-90N 90% 3000 1944000

KW Peak/Off Off Peak

Summer kWh Peak/Off Peak 0.2 Shoulder 0.2 Off 0.6 1.000 Winter kWh Peak/Off Peak 0.3 Off 0.7 1.00

Large Light and Power Service "PowerShift" Summer 6 months

Customer Charge Summer Peak Demand (KW) Summer Off Demand (KW) Summer Delivery Peak Summer Delivery Shoulder Summer Delivery Off Summer Power Peak Summer Power Shoulder Summer Power Off

$ $ $ $ $ $

$500.00 $20.03 $10.03 0.00111 0.00111 0.00072 0.04179 0.04179 0.02687

$126,126.91 $756,761.43

Winter 6 Months

Customer Charge Winter Peak Demand (KW) Winter Off Demand (KW) Winter Delivery Peak Winter Delivery Off Winter Power Peak Winter Power Off

$500.00 $15.03 $7.53 0.00072 0.00052 0.02713 0.01954

$89,133.27 $534,799.60

$1,566,230.00 $130,519.17 36,000 23,328,000 $43.51 $0.06714

Note: All surcharges except power factor adjustor included in rates

Table 11: UNS Large Power Service Power Cost Analysis UNS Electric - Large Power Service Load 90% KW 3000 kWh 1944000 Kilovar 1500 Peak 0.2 Shoulder 0.2 Off 0.6 1.00

Total Yearly

Total Monthly 12 Months

$155,975.50 $1,871,705.95

Yearly PPFAC Yearly REST Yearly DSM Total Yearly Surcharges Total Yearly Average Monthy Total KW Total kWh Price per KW Price per kWh

$372.00 $21.73 0.046509

($28,065.53) $66,000.00 $8,518.61 $46,453.08 $1,918,159.03 $159,846.59 36,000 23,328,000 $53.28 $0.08223

Based on power costs and system upgrades, the best case scenario is to attract data centers in excess of 3MW annual usage. Additionally, it is feasible to consider an even match of TEP/UNS investment at up to $1 million to each MW of generation as both cost-effective and profitable; the proposed ‘Empowerment Zones’ will reduce internal costs and improve profitability and speed to market. Thus, capital expense can be limited and possibly positioned as an incentive to prospective data centers. Arizona Incentive Summary: Arizona Commerce Authority and TREO Arizona Commerce Authority A variety of incentives are available from the Arizona Commerce Authority, however data centers are looking for specific tax credits to offset initial development costs. The material below outlines incentives available to all businesses that choose Arizona. The Arizona Competitiveness Package, HB2001, encompasses some of the most powerful economic development legislation in the country, making Arizona one of the most attractive locations in the world for companies to operate. Give your company a competitive edge with a host of programs and incentives.

Arizona Innovation Challenge - Arizona technology businesses are the state’s engine for economic transformation through wealth and job creation. The Arizona Innovation Challenge is an investment in the minds of talented entrepreneurs in Arizona and around the world. The ACA awards $3 million annually to the most promising technology ventures that participate in the Arizona Innovation Challenge (awards may range from $100,000 to $250,000). Companies in the following technology sectors may apply: advanced materials, advanced manufacturing, aerospace and defense, bio and life sciences, clean-tech and renewable energy, and information technology. Apply for the fall Arizona Innovation Challenge beginning August 15, 2012. Corporate Income Tax – Reduces the corporate income tax rate from 6.97% to below 4.9%, between FY2014 and FY2017. Arizona is ranked 5th in the nation. 100% Sales Factor – Increases the electable sales factor for multi-state corporations from 80% to 100% between 2014 and 2017. Arizona is one of 18 states to boast this factor. Angel Tax Credit/Capital Gains – Increases the eligibility criteria for the Angel Investment Tax Credit for a qualified small business from $2 million to $10 million in total assets, eliminates the capital gains tax on income derived from investments in qualified small businesses that have been certified by the ACA, and decreases long-term capital gains. R&D Tax Credit – Increases existing tax credit of 15%-24% for R&D investments in excess of expenditures over previous year by 10% if expenditures made in cooperation with an Arizona university; Arizona is one of only three states to do this. Quality Jobs Tax Credit – signed into law in 2011 as part of the Arizona Competitiveness Package, this program provides state corporate income tax credits of up to $9,000 for each qualifying new job ($3,000 per job, for three years) and is capped at 400 jobs per employer per year. The program has a total cap of 10,000 jobs per year. Credits can be carried forward for five years. The State has 15 counties, each with its own median wage. Employee’s wages must meet or exceed the county median wage where the company is located to be eligible for the Quality Jobs Tax Credit Program. Table 12: County Median Wage Comparisons

Table 13: AZ Tax Credit Programs

Arizona’s Job Training Program Administered by the Arizona Commerce Authority, this program has been ranked among the best in the nation in terms of training flexibility and ease of access to the funds. Depending on location and wage structure, the reimbursable grant program provides up to $8,000 per employee to companies creating permanent new jobs or training existing workers within the state. The program is streamlined, extremely flexible and is tailored to meet the specific needs of the company. The grant can be used to cover up to 75% of training costs for net new employees and up to 50% of the training costs for incumbents. Other general points: (1) the maximum allowable grant at any one time is $1,500,000 (2) the grant amount can never exceed the actual cost of training, and (3) the average income of all employees covered under the grant must meet or exceed the stated amount or the amount represented by the company at the time of grant application, (4) funding is subject to availability of funds at the time of approval. However once approved, funds are set aside in the name of the grantee to cover the dollar value of the grant commitment. Job Training Qualifying Wage Rates Businesses applying for a grant must pay at least 100% of this wage to qualify. The average of all employees included in the training program must meet or exceed the wage for the county in which the business is located at the end of training.

Table 14: Job Training Qualifying Wage Rates

Workforce Development Services Offering your business Growth Opportunities through customized solutions: • Immediate access to job-ready talent pools • Talent screening and skills assessment • Transition and retention services • Employer incentive assistance. Invest in the bottom line without touching your pocketbook; these and other no-charge services are made possible via funding from the Workforce Investment Act (WIA). This is delivered by the local workforce areas in 13 counties. They are called One Stops and are designated by the federal government to deliver workforce services at the local level. www.arizonaworkforceconnections.com.

Registered Apprenticeship This combines supervised, full-time, structured on-the-job learning with related classroom instruction and allows the employee to immediately be adding value to the company while acquiring the necessary skills in a systematic training program that results in a highly skilled workforce for you. Customized Training We partner with our education and training providers to create programs that build a quality workforce for businesses, industries, and community organizations now and for the future. There are also financial incentives that may help underwrite a portion of the training. Real-time industry intelligence Conduct needs assessments to gather real time industry intelligence for the workforce of today and the future. This allows us to define workforce gaps and required training and provide solutions to filling the needs of your business today and in the future. Outplacement Services Assistance to companies who are downsizing by helping the impacted employees with their transition into new employment. Our Rapid Response Team provides assessments, tools and training dollars to minimize the length and financial impact of the transition on the employee. Virtual Recruitment Connect business to talent through our virtual recruiting website. We can post your positions online to a variety of local and national websites for broadest exposure and greatest convenience to you. Customize our recruiting services to meet the business needs of today and tomorrow at no cost to the business is also available. For complete details on incentives offered, visit: http://www.azcommerce.com/incentives/aca/

Tucson Regional Economic Opportunities (TREO) Tucson Regional Economic Opportunities, Inc. (TREO) was formed in July 2005 to serve as the lead economic development agency for the greater Tucson area and its surrounding regional partners. TREO’s mission is to provide leadership, a unified business voice, and connectivity to accelerate economic prosperity throughout Southern Arizona. In 2011, Tucson was ranked the #2 Medium Metro on the list of “Best Performing Metros� by the research firm Headlight, LLC. The ranking was based on an analysis of employment trends to identify the US metro areas that experienced the highest job growth rates. TREO is committed to assisting in the continued growth of the region and understands the need for businesses to operate within a profitable, pro-business environment. TREO has a valuable promotional brochure (People. Place. Promise.) that may be a complimentary piece for external communications to target markets. Businesses locating to Arizona can take advantage of the following incentive programs offered through TREO, and/or in part through the Arizona Commerce Authority:

Empowerment Zone Those tax credit incentives are designed as a mixture of tax financing and workforce training incentives with a goal of revitalizing the inner city. Note – Expired December 31, 2011 but may be revitalized in future Legislation. Foreign Trade Zone Designed to stimulate international trade, create jobs and promote investment in the United States, companies conducting business within an activated zone or sub-zone may bring foreign and domestic product into the activated zone at lower costs. This may be attractive to data center operations in Mexico looking for a disaster recovery opportunity in the U.S. Government Property Lease Excise Tax (GPLET) A GPLET agreement option is available for negotiation with local governmental agencies. GPLET removes the business’s obligation to pay property taxes and instead negotiates an excise tax and a lease rate. Quality Job Tax Credit This program provides Arizona income tax credits for companies creating new jobs and investing in AZ. The credit is valued at up to $9,000 over a 3-year period for each new employee and offers a 4-year carry forward provision for any unused tax credits. Eligibility qualifications for Tucson are: minimum of 25 new qualified jobs and a minimum of $5 million capital investment. A qualified job is a net, new full time and permanent position that pays 100% of median county wage and with the company offering to pay 65% of health insurance costs of the employee. Arizona Job Training Program This is a job-specific reimbursable grant program that supports the design and delivery of customized training plans for employers creating new jobs or increasing the skill and wage levels of current employees. TREO staff directly assists businesses through the writing, application, and reporting aspects of these grants. Pima County One-Stop Career Center The Pima County One-Stop Career Center is nationally recognized for pioneering training initiatives and aggressive fund development that has resulted in a rich menu of services for local employers. In addition to approximately $5 million in formula Workforce Investment Act funds, the One-Stop administers $20 million in discretionary grants for Veterans, youth and other special populations, education funds and basic assistance programs. Primary Jobs Incentives The Primary Jobs Incentive Program retains and attracts companies in industries where Tucson enjoys a competitive advantage: Aerospace & Defense, Bioscience, Solar and Transportation & Logistics. Eligibility qualifications for Tucson are: Minimum of 25 new primary, non- retail jobs at required salary rate, $5 million investment in facilities and company funds, and payment of 75% of employee health costs. Electrical, plumbing, mechanical, grading permit and site review permit fees are waived. Up to 100% construction sales tax allocated to job training, off site, public infrastructure improvements and/or impact fee offsets.

Foreign Trade Zone Designed to stimulate international trade, create jobs and promote investment in the United States, companies conducting business within an activated zone or sub-zone may bring foreign and domestic product into the activated zone at lower costs. Reduction of Corporate Income Tax Rate (State) A business can benefit from a 30% reduction in Arizona’s corporate income tax rate. The corporate income tax rate from 6.97% is reduced to below 4.9% between 2014 and 2017. The reduction is to occur in equal increments over a four-year period. Increase In Personal Property Exemptions (State) A business can improve its bottom line by a 15% increase in personal property exemptions. The Personal Property Exemption increases the exemption on personal property from the current $67,000 in 2010 to $79,000 in year 2011. AZ Competes Fund (State) Arizona has taken a progressive position by offering attraction funds to companies. Utilization of the AZ Competes Fund will generate investment in business projects that stimulate and promote industries providing high-wage and stable jobs. To assure a return on investment to the state, performance safeguards are a requirement of these funds. Arizona R&D Tax Credit (State) Refundable income tax credits are available for investments in research and development activities conducted in Arizona. The tax credit starts at 22% of the qualified R&D expenses for amounts in excess of expenditures from the previous year. Recent legislation enhances the tax credit amount up to 34% if increased R&D expenditures are made in conjunction with an Arizona public university. Impact Fee Deferral (City of Tucson) Impact fees for roads, parks, and public facilities may be deferred until the certificate of occupancy is received in exchange for a negotiated contribution to the City’s Housing Trust Fund. TREO Shovel Ready and City of Tucson Fast Track Permitting Assistance Developed in response to the demand for accelerated timelines for both relocation and expansion construction needs, TREO created the “Shovel Ready” program in conjunction with local developers and government entities. Broker Community Integration and Research Assistance (TREO) TREO will work with the local broker community to assist with relocation efforts. Downtown Infill and Redevelopment Incentives (City of Tucson) These incentives allow businesses to build with more flexibility than in suburban areas. These incentives create pedestrian and transit-oriented streetscapes that benefit both businesses and residents. AZ Deal Closing Fund (State) Tap into Arizona's $25 million deal closing fund. It is to be utilized in highly competitive situations and only for projects with a substantial economic and fiscal impact to a State and community. Funds provided to projects must be performance-based and result in a net benefit to the State consistent with the statutory gift clause. An economic impact analysis by an independent third party will be conducted

on all projects to determine potential return on investment benefits to the State. All funds will be awarded with contractual provisions for performance and “claw-back” of funds for non-performing projects. Preliminary Project Review and Delta Team Process (TREO) TREO is available to conduct customized research and analysis to fit your needs. TREO has comprehensive demographics and statistics about Tucson and the Southern Arizona region including population trends and projections, employment growth rates, demographic snapshots, cost of living, workforce analysis, profiles and more. TREO's staff is available to assist businesses in determining program eligibility and to answer any questions regarding program specifics. The staff is also available to go out and meet with businesses, listen to their specific issues, and then provide a list of available resources that are available for further assistance. Soft Landing Program (TREO) TREO is committed to provide valuable information to you and your team during the stressful time of relocation. We understand the importance of a local contact with information about school systems, desirable areas to live and other Tucson specific aspects that are important to you and your employees. Environmental Site Assessment Grants (City of Tucson) The City of Tucson, Pima County and South Tucson have created districts wherein grant monies will be available for Phase I and II Environmental Site Assessments (ESA). Those properties located within the zones that have not conducted their Phase I and II ESA can apply for and receive grants to complete those studies which could cost in the range of $1800 to $3500 for Phase I and upwards of $20,000 for Phase II. (Note: An Asbestos Survey and Lead-Based Paint Survey can be conducted in conjunction with the Phase I ESA.) City of Tucson and Pima County Industrial Development Authority The Authority is empowered to issue its bonds to provide funds for the financing or refinancing of the costs of acquisitions, construction, improvement, rehabilitation or equipping of a project. Angel Tax Credit/ Capital Gains It increases the eligibility criteria for the angel Investment Tax Credit for a small business from $2 million to $10 million in total assets and eliminates the capital gains tax on income derived from investments in qualified small businesses that have been certified by the Arizona Commerce Authority. It should also be noted the State of Arizona does not levy the following taxes: • No corporate franchise tax • No business inventory tax • No income tax on dividends from out-of-state subsidiaries • No sales tax on manufacturing equipment • Aggressive accelerated depreciation schedules • 100% of net operating loss may be carried forward for 5 years. Potential Future Arizona Incentives Qualified data centers are eligible for the following tax incentives: • Sales and use tax exemption for computer server equipment.

Construction sales tax exemption for: • Construction of qualified data center • Installation of server equipment Green and Energy-Efficient Data Center Incentives – Possible Model for Future Incentives In an effort to create new, high-paying jobs, many states are putting considerable effort and money into getting companies to locate their data centers within their borders. TEP, in conjunction with the AZ Commerce Authority and/or TREO, may want to identify a sponsor to create legislation similar to the items addresses below to make Tucson and Arizona more attractive to data centers. The battle is perhaps best typified by Washington's new tax incentives for companies that build data centers in rural parts of the state. As Tax-News.com reports: Last year, the state rejected a proposed tax break, which prompted Microsoft to move its cloud computing platform Azure out of Washington State to another data center in the US. The news was distressing to the town of Quincy, where Yahoo, Microsoft and Intuit have built large server farms, drawn to Grant County's cheap and green hydropower. Since then, Facebook and Amazon.com have both chosen to build data centers in Oregon instead of Washington. The new tax exemption, introduced by Gregoire, applies to: • • • •

Sales of server equipment that will be installed in a data center; Labor and service charges for installing servers, and to sales of power infrastructure equipment; Sales of power infrastructure; and Labor and services for construction of power infrastructure.

To be eligible for the break, data centers have to be at least 100,000 square feet, and construction must begin between March 31, 2010, and July 1, 2011. Data centers can be huge economic engines, of course, especially large-scale facilities like the ones that would fall under the new Washington incentives. Facebook, the owner of one of the data centers that moved to Oregon, has used the facility as a way to reach out to the local community, as well as tout its efforts to boost the economy in Prineville, Oregon, where the facility will be located. But Washington and Oregon aren't the only states to hop on this trend. In March the state of Wyoming, seeking to siphon tech money away from neighboring states, signed into law a provision giving sales tax and use tax exemptions to data centers for equipment purchases of more than $2 million if the center has also made a $5 million capital investment in the state -- something that local data center owneroperator Green House Data has used as a draw for new customers. These new incentives don't particularly incentivize energy efficiency or any other green elements for data centers -- although energy and hardware costs obviously provide plenty of incentive for data center

owners to be as efficient as possible. But as the Facebook vs. Greenpeace Kerfluffle pointed out, nongreen data centers can be a bit of black eye, depending on who's doing the looking. For that reason, perhaps the most significant -- and greenest -- data center legislation is the one from New York, which is offering up to $5 million to upgrade existing data centers to be more energy efficient. As David Chernicoff reports on his blog: This is a pretty technology-aware program; it doesn't just focus on physical plant type upgrades, but also includes eligibility for common datacenter tasks such as virtualization, application management, and core server upgrades, as long as there will be a demonstrated improvement in the energy efficiency of the datacenter. Source: GreenBiz, 5/5/2010: http://www.greenbiz.com/news/2010/05/05/states-use-taxincentives-lure-data-centers National Incentives in Other Utility Markets A variety of economic development programs are available through Utilities across the U.S. to large commercial customers. Additionally, specific incentives are offered to data centers by Utilities. As part of our load factor rate development, which is described in this plan, we collected and analyzed current offerings by other Utilities so we could be competitive. The ‘Empowerment Zones’ that were created also minimize expenditures for TEP and prospective data centers, thus provide a competitive advantage. Please refer to the Appendix for a series of tables that present all incentives, which are labeled: •

Overview of National Economic Development Programs offered by Utilities (Page 95)

Overview of National Data Center Incentives offered by Utilities (Page 97)

TEP Analysis Strengths Operations • Manage O&M costs • Reliable T&D system • Low cost power provider • High quality infrastructure • Operations excellence Customer • Customer - oriented goals • Community leader • Community presence/reputation/brand • Green leadership/knowledge Employees • Committed employees • Safety is a high priority • Experienced personnel • Good technical expertise • Our employees work well together in a crisis • Community - oriented employees • Focus on employee development • Very adaptable culture • Embracing technology Regulatory / Government • Regulatory strategy/relations • Compliance leader Organization Culture / Structure • Compliance culture • Long - term planning perspective • Ability to react/nimble organization • Small management group • Small organization/Able to make quick decisions • Simple business model • Operations are in Arizona (one state) Financial/Economy • Location/climate/border proximity • Cash flow • We have access to capital, despite economy

Weaknesses Operations • Process challenged • We underutilize automation • Minimal influence on low performing remotes Customer • Customer focus/knowledge/info/data • We don’t know our large customers well enough • Price/rate structure/subsidies • Many of our processes are not standardized/consistent • Limited products/services/price options Employees • Limited depth of talent/expertise • Task vs. system oriented • Employee succession planning • Business literacy in operations areas • Need more focus for analysis/analytical/data • We don’t have a true marketing/sales function • Our employees are resistant to change • Limited internal development opportunities due to low turnover and lean organization Regulatory / Government • Regulated IOU • Rate freeze spending cycles • Coal heavy/generation balance (%) Organization Culture /Structure • Lean organization • Risk adverse • Need better/consistent accountability • Silo’d communications/activities • Resistance to Change • Limited focus on creativity/innovation • Strategy communications/focus needs improving • We don’t have good check and review processes • Don’t communicate well outside of a crisis • Fewer, but significant silos remain in place Financial / Economy • Focus on short-term financial goals • Below average credit ratings • Small size, limited capital access/attention • Vulnerable to economic impact during rate freezes

DATA CENTER ENERGY EFFICIENCY Background Given the rapid growth of the data center industry and the significant energy consumption footprint of the sector, 3% of all U.S power consumption 1 by 2011, and the opportunity to garner significant savings of up to 50% or greater 2, it is not surprising to find highly visible energy efficiency initiatives through the Department of Energy, public and private utilities, and industry and industry stakeholder groups. In short, while technologies are ever changing and improving, the energy efficient data center movement is rapidly growing in maturity. Therefore the question is not if a utility should engage a perspective data center client in energy efficiency programming, rather how to prepare for and structure the engagement. In order to develop an effective engagement strategy it is necessary to first survey the existing data center energy efficiency initiatives, programs and resources available in the market. The most recognizable and prevalent are: Federal, Department of Energy (DOE): the DOE under its Energy Efficiency and Renewable Energy (EERE) banner offers robust training, case studies, and tools for use in identifying and modeling energy efficiency solutions for data center owners, operators and practitioners. See: http://www1.eere.energy.gov/manufacturing/datacenters/ The DOE-EERE also serves as the hub of a coordinative effort dubbed the National Data Center Energy Efficiency Information Program which seeks to leverage best building and energy management practices from existing, related initiatives including: the Federal Energy Management Program (FEMP), Energy Star, AFCOM, American Society of Heating, Refrigeration and Air Conditioning Engineers (ASHRAE), Critical Facilities Roundtable, Information Technology Industry Council (ITIC), Silicon Valley Leadership Group, The Green Grid Association, The Uptime Institute and 7 x 24 Exchange. Federal, DOE and Environmental Protection Agency (EPA), Energy Star: EPA’s Energy Star brand is currently in transition to the Department of Energy and still maintains a separate web-page focused on case studies, benchmarking tools and design specifications. See: http://www.energystar.gov/index.cfm?c=prod_development.server_efficiency Federal, Environmental Protection Agency (EPA) and Office of Federal Environmental Executive, Federal Electronic Challenge (FEC): a partnership program that encourages federal facilities and agencies to reduce impacts of electronics during use, purchase more efficient electronics and dispose of used electronics in an environmentally safe way. See: http://www.federalelectronicschallenge.net/resources/datacenters.htm

Department of Energy Laboratories Leadership in Green IT, PowerPoint presentation, August 2011, U.S. Department of Energy

DOE Data Center Energy Efficiency Program, PowerPoint presentation , April 2009, Paul Scheihing, U.S. DOE-EERE

Federally Funded, Lawrence Berkeley National Laboratory (LBNL): LBNL hosts data center research, best practice guides and technical tools. See: http://hightech.lbl.gov/datacenters.html Non-profit, The Green Grid: a leading non-profit consortium for end-users, policy-makers, technology providers, facility architects, and utility companies focused on efficient strategies for data centers and the deployment of business information systems. See: http://www.thegreengrid.org/ Working hand-in-hand with these initiatives and resources, public and private utilities across the country are actively engaging the industry with energy efficiency incentives that vary as widely as the applicable local regulatory directives (see Appendix X, Summary of Utility EE Programs for Data Centers). Notable regional incentive offering include: Arizona Public Service (APS): through its Solutions for Businesses program incentives up to 50% of the cost of incremental energy efficiency measures for studies, commissioning, retro-commissioning and $0.11/kWh saved with caps. This program is similar to the TEP programs that currently lack funding through the 2011-2012 TEP Energy Efficiency Implementation Plan. See: http://www.aps.com/files/_files/services/busSolutions/pdf/DataCenterFactSheet.pdf Pacific Gas and Electric (PG&E): offers custom incentives as well as through High Tech and Business Computing programs including $200 per server removed through virtualization and up to $0.09/kWh capped at 50% of incremental cost on retro-commissioning. See: http://www.pge.com/hightech/ Sacramento Municipal Utility District (SMUD): new construction design assistance, on-site consultation, retro-commissioning, virtualization and desktop incentives including up to $150,000 or 20% of cost for custom virtualization and up to $50,000 or 20% on retro-commissioning. See: https://www.smud.org/en/business/save-energy/rebates-incentives-financing/datacenters/ San Diego Gas & Electric (Sempra): custom and prescriptive incentives, and low interest financing available through EE Business and High Tech Rebates programs of up to 100% of measure cost based on a variable per kWh incentive rate. See: http://sdge.com/rebates-finder/business

Opportunities for Energy Efficiency While many factors influence the disparity in the degree to which energy efficiency measures are implemented among existing data centers, the opportunities are relatively easy to classify. The opportunities to implement energy efficiency measures within a data center fall into two broad classes: data center equipment and utilization strategies, and data center facility improvements in both new construction and retrofitted applications.

Data Center Equipment and Optimization Strategies: • Uninterruptible Power Supply (UPS)- boosting the efficiency of the UPS systems and designing the UPS system to utilize more smaller UPS units operating at higher load factors. o 80 PLUS performance specification requires multi-output power supplies in computers and servers to be 80% or greater energy efficient at 20%, 50% and 100% of rated load with a true power factor of 0.9 or greater. This makes an 80 PLUS certified power supply substantially more efficient than typical power supplies. • Power Distribution Units (PDUs)- specialty PDU’s with built-in step-down transformers reduce the energy lost to heat while converting voltage down to 120V AC. • Optimization of physical server units by through strategies including: o Virtualization- a method of running multiple separate operating systems on a single server increasing server utilization versus operating more servers with lower per server utilization. o Blade-server technology- up to 14 blade-servers may share a single traditional server chassis collectively economizing through the shared use of a power supply, network cards and cooling system. Data Center Facility Improvements: • Indoor air management strategies including: o Hot-cold aisle separation and containment- the use of raised floors, curtain walls, and ceiling plenums to isolate and manage air cooling into server aisles versus heated air rising from the server racks. o Supply & return optimization- optimizing the supply and return plenums related to hotcold aisles. The plenum supply structure is commonly a raised floor but may also be an overhead system. When floor and/or ceiling plenums are used blockage and drag due to the location of structural elements and building cabling must be accounted for to avoid hot spots. o Temperature set-point management- designing high return air set points to extend the use of free outside air cooling. This strategy does not require the external air temperature to be lower than the set point, just cooler than the return air being exhausted from the room. •

HVAC system improvements including: o DX A/C units- the use direct expansion package units employing variable speed compressors, or units utilizing remote air or water-cooled condensers, often in conjunction with other options noted below. o Specialized central air handler systems- designed to utilize large motors and fans and variable-speed drives to maximize efficiency at partial loads. o Sizing systems for low pressure air delivery- utilized with overhead supply systems (versus floor plenum) involves the slight over-sizing of equipment in order to deliver maximum efficiency at slow (variable) operating speeds.

High-efficiency chilled water systems- the use of high-efficiency variable frequency drive (VFD) equipped central chillers. o Air-side and water-side economizers- the use of mild outside or nighttime air temperatures or water derived evaporative cooling to chill the water in a systems chilled water loop. o Efficient pumps- multiple opportunities exist in new and existing systems to improve the efficient operation of chilled water pumps. o Direct liquid cooling- the use of cooling coils to directly remove heat from server aisles as a more efficient mode of exhaust versus through air exchanges. Building power systems- includes thermal storage, see ONE data center’s Cryogel ice system in Phoenix 3, and combined heat and power (CH&P) systems. Building shell improvements- include high efficiency lighting, occupancy sensors, and performance sealed air and thermal barriers. o

Data center equipment and optimization strategies are typically driven by the data center ownermanager based on their particular business model and the needs of their clientele. Data center facility improvements are similarly driven and often considered more transparent to customers who may tour the facility or wish to review a detailed description of the facility. While the migration of corporate resources into a data center falls upon the information technology team to coordinate, the decisions to make such a commitment is typically made by the less technically oriented business management team. A survey of web-based news articles and white papers on data center energy efficiency suggests that much opportunity still exists to better synchronize the efforts and expenses of technology versus facility improvements. To assist in quantifying the facility side opportunities several key industry benchmarks 4 should be understood: Power Usage Effectiveness (PUE): the ratio of the total power to run the data center facility to the total power drawn by all IT equipment: PUE = Total Facility Power IT Equipment Power

Standard = 2.0 Good = 1.4 Better = 1.1

Data Center Infrastructure Efficiency (DCiE): the ratio of the total power drawn by all IT equipment to the total power to run the data center facility (inverse of PUE): DCIE = 1 = IT Equipment Power PUE Total Facility Power

Standard = 0.5 Good = 0.7 Better = 0.9

Additional benchmarking formulas exist for Energy Reuse Effectiveness (ERE), HVAC System Effectiveness, Airflow Efficiency and Cooling System Efficiency.

http://www.datacenterknowledge.com/archives/2012/04/03/google-embraces-thermal-storage-in-taiwan/

Best Practices Guide for Energy-Efficient Data Center Design, Revised March 2011, U.S. Department of Energy

Recommended Energy Efficiency Strategy With high visibility through highly visible Department of Energy programs, industry success stories, and emerging technology specific utility programs, the energy efficient data center movement is rapidly growing in maturity. Therefore, despite the negative connotations of promoting load reducing measures, offering robust energy efficiency support to data centers entering the marketplace should be seen as a requirement, in addition to an excellent opportunity to promote a business friendly environment. Because each data center may have a unique blend of resources and objectives it is important to be well versed in the energy efficiency strategies noted above in order to engage each data center client at the level of their interest, and to be seen as knowledgeable and supportive by the client and any consulting members of their technology and design-build teams. It is further recommended that a strategy be adopted to delineate and obtain corporation commission approval of data center oriented energy efficiency incentives, and that interim pathways to incentives be identified via existing commercial and industrial program prior to being requested by the client. Recommended Actions Summary: 1.

Identify and delineate a pathway for data centers to utilize commercial and industrial incentives through existing commercial and industrial program prior to being requested by the client. Identify gaps and new opportunities to propose and secure Arizona Corporation Commission (ACC) approval for data center specific measures in 2013. Identify a specific resource pathway for utility key accounts representatives to access and integrate energy efficiency offerings and knowledge into the broader location team efforts.

Bright Tucson Community Solar TEP offers customers the opportunity to cover some or all of their electrical needs by purchasing “blocks” of energy produced by utility-scale solar electric “farms”. This energy is offered at a slight premium over standard energy rates, but there are many advantages that come by participating. Below are many of the advantages to participating. • • • • •

No up-front expenses or equipment maintenance costs Protection offered against future energy cost increases “Blocks” are sold in 150 kWh increments per month for $3.00 Surcharge exemption for solar energy purchases on renewable energy, fuel and purchased power Community Solar acts as “virtual” net metering – allowing for unused, but purchased, blocks to be rolled over into subsequent months.

Bright Roofs Customers who may have ideal roof space for the installation of solar photovoltaics, but not an ideal electrical load to offset, may elect to leasing their roof space to TEP. TEP will then install non-

penetrating solar PV panels on the customer’s roof and interconnect directly to the electrical grid. In exchange for the roof space, TEP will pay the customer an annual lease payment. • • • •

No up-front expenses or maintenance costs No need to worry about solar intermittency and issues with interconnecting behind the customer’s meter Solar panels are installed using non-penetrating ballasted racking systems Long term income stream from otherwise unused roof space o 250 kW installations o ~30,000 square feet o $4,000 per year lease payment Can be used in marketing collateral for building occupants.

Positioning and Target Market TEP/UNS Competitive Advantage •

Compelling Advantages o Competitive rates  Similar to APS and SRP  Lower than other west coast markets. o Power capacity  Some markets cannot handle new load generated data centers. o Power reliability  Reports verify power quality and reliability  Redundant substations. o Turn-key solution  Dedicated internal and external team for data center implementation  Easy to conduct business with TEP/UNS • Empowerment zones to expedite speed to market. o Location  Safe natural environment  Proximity to Phoenix, Las Vegas, southern California and Mexico. o Access  Availability to land and existing lease space.

Data center business drivers include low-cost and reliable power, redundant feeds and capacity. TEP/UNS is positioned to provide exactly what is desired for data centers. Therefore, these advantages will be articulated with data center executives, site selection teams and commercial real estate brokers through targeted communications. Positioning The following statements can be leveraged in communications to create awareness to Tucson and TEP/UNS as a perfect fit for data center operations, while also reinforcing key drivers for data centers. •

Tucson o Competitive costs compared to Phoenix, and cooler for everything else. o Data center’s best kept secret for profitable growth. o Mission critical systems surrounded by innovation and natural beauty.

Company (TEP/UNS) o Working today for a bright tomorrow.  Product: safe, affordable and reliable energy.  Relationship: trusted energy partner/advisor.  Image: leader in all that we do.

Program acquisition o Reliability and energy costs are a given, it’s the service and resources that exceed expectations.  Empowerment zones.

Matching your objectives with our resources to ensure success. People and places that will expedite your speed to market.

Target Market •

Primary Market o Tier II and III Colocation data centers with 4MW to 10MW annual usage.  Primary colocation services  Disaster recovery environment • Firms active in Phoenix, Las Vegas and southern California o 273 locations total (includes companies with multiple locations). o Corporate/private data center operations of large data users.  Insurance  Financial/Banking  Healthcare  Hospitality  Education. o Top 25 commercial real estate firms across U.S.  Firms active in data center hubs, such as • CBRE • JLL • Cushman Wakefield. o Site selection firms/data center consulting firms/architectural firms.  TelAxis.

Secondary Market o Colocation data centers with 10MW or more annual usage.  Explore potential in Mexico (explore direct flights to Tucson). o Fiber providers active in data center hubs with Tucson operations.  Century Link  Verizon  TW Telecom.

Market Niche o Redundant provider with excess capacity. o Disaster recovery with proximity to Phoenix, Las Vegas and Southern California. o Speed to market with Empowerment Zones that benefit data centers and TEP  Facilitator with city, government leaders to expedite process. o Green expert.  Solar innovation.  Renewable portfolio.

TEP Data Center Incentives Extensive research was collected regarding incentives in other markets – by both government agencies and Utility providers. Since TEP has an existing policy, which is provided below, we developed alternatives to position TEP competitively on a state and national level. Tables are provided in the Appendix, beginning on pages 95 and 97, which identify all available Utility incentives. This topic may warrant a further discussion to strengthen our current incentive package; Involta executives may be a valuable resource for this future conversation. By creating ‘Empowerment Zones’ for optimal data center site selection, we minimized any internal system development costs and limited any potential fees that would be required by data centers. Calculations were also made in the break-even analysis that demonstrate we can commit up to $1 million in expenses for each MW generated by a data center on an annual basis. TEP Line Extensions Policy: 1. TEP will provide Overhead Extensions to individual Applicants, per Section 7.C.1. All of the costs in Section 7, Line Extensions, are for Overhead line extensions unless specifically allowed by other sections at the expense of the customer. The line extension rule for Large General Service and Large Light and Power is Section 7.C.1.d and is specifically for overhead extensions as it is part of Section 7.C.1. 2. TEP will install only those facilities which it deems necessary to render service in accordance with its rate schedules and any costs incurred beyond that (over-sizing, undergrounding, or Excess Facilities,) will be paid by the customer, per Section 7.C.7.f, 7.C.3.i, and 7.A.2. Therefore, we can only waive the costs for the one line extension that would have normally been allocated to overhead construction. The second line falls under the Excess Facilities section. 3. Primary Service and Metering (PM) is specifically listed as a customer cost per Section 7.C.7.b. For LLP customers, PM is also specifically listed as a requirement in their tariff (see LLP-14 & LLP-90N). Large General Service (LGS)/Large Light & Power (LLP) customer can waive much of the cost of the first 14kV line extension With Involta the total cost of their line extension project was approximately $110,000. TEP was able to waive almost 50% of the project cost per our line extension policy. Involta was only responsible for $58,791.75.

Acquisition Plan TEP developed an internal model to determine areas available within UNS Energy Corporation service territories suitable to provide electric service to data centers in the greater Tucson area, Kingman, Lake Havasu and Nogales. The model assisted the Land, IT and Engineering teams in working together to identify locations most desirable to data centers. The preliminary research conducted included the following criteria: • • • • • •

Land use and local zoning regulations best suited for data centers Available properties both vacant and improved Flight paths for various airports Jurisdiction System capacity/reliability (dual feeds) Available fiber telecommunications

Using the model it was determined early on in the process, that Kingman, Lake Havasu and Nogales could support a data center, but not without substantial infrastructure improvements such as new substations and transmission lines. These areas currently have radial lines and would not provide the power reliability most data center providers seek in selecting a location. The TEP service territory became the focus of the search for Empowerment Zones (EZs). Empowerment Zones Identified Preliminary analysis of land use, and system capacity provided a snapshot of five locations suitable for data center use. The five EZ’s identified are shown in the map below:

Analysis and Ranking The EZs’ had already been identified as being the most qualified locations within the TEP electric system to locate a data center. Future marketing efforts for these areas would necessitate a more detailed analysis and ranking to determine the most qualified EZ to market to potential data center providers. Each was analyzed in more detail for the following criteria: • • • • • • •

Local zoning regulations best suited for data centers Available properties both vacant and improved Flight paths for various airports Available fiber telecommunications Areas capable of providing dual service feeds or alternatives System capacity System reliability

Other factors considered were planned or potential future improvements that would increase capacity providing further options in the EZs for data centers, and that would add capacity for other users in the near future. These improvements include the construction of the Kino substation and the Demoss Petrie rebuild. Kino substation is a planned improvement (in-service 2018) for new commercial business located at the UA Bio-Science Park. The Demoss Petrie rebuild is an unplanned improvement and would upgrade current infrastructure such as the existing 46kV switchyard, and re-conductor of getaways. While the improvements did not affect the ranking of the EZs, it did increase their scores overall and will provide more options for customers requiring additional capacity/reliability. Ranking each of the EZ’s using a weighted system of 1 through 5, with 1 being poor and 5 being outstanding was used to develop an overall EZ score. The higher the weighted score for each EZ, the more qualified the area was for data center placement. The attached ranking sheets provide a snapshot of the overall scores for the EZs. Sheets are also provided indicating increased EZ scores with both the Kino Substation and Demoss Petrie rebuild improvement plans. Land Use and Local Zoning Regulations A Geographical Information System (GIS) tool was developed to assist in locating commercial and industrial areas that would support a data center. Initially there were discussions with local municipalities to determine where the data center use best fit with local zoning regulations. Data Centers are considered “Communication” uses in local land use codes, which are generally allowed in all commercial and industrial zones for local jurisdictions within TEP’s service Territory. This includes Tucson, Marana, Oro Valley, Sahuarita and Pima County.

Available Properties A parcel analysis was conducted using Pima County’s parcel database, Arizona Department of Revenue land use classification system, TEP’s service territory boundary and GIS. Vacant commercial and industrial parcels, greater than 3 acres in size, outside of existing environmentally sensitive land designations were identified. Similarly improved industrial and commercial properties greater than 1 acre in size were identified. TEP partnered with CB Richard Ellis Commercial Real Estate brokers (CBRE) to identify available properties (both vacant and improved) in the areas initially identified by the previous land use and system capacity/reliability evaluations. CBRE provided current listings of properties suitable for data center use in each of the EZs. Other factors in ranking available properties included existing building space and type of construction. For instance we learned from our previous experience with Involta that concrete tilt up construction with at least 18-feet of ceiling height, with no or very little windows was more qualified than other construction types because this type of construction offers more energy efficiency and security opportunities. Our research of other desirable requirements indicated data centers should be located to provide easy access to freeways and airports. However, conversely it is not desirable for the location chosen to be in close of proximity to transportation infrastructure including airports, railroads and interstates which may pose disaster or accident risk to the data center site. Jurisdiction Municipal permits and regulatory approvals are considerations for data centers because the time frames for obtaining permits, cost of approval and the municipal entity’s willingness to participate are often factors in the success of a project. Each EZ was analyzed and ranked for the jurisdiction(s) and or municipal entities involved, and our past experiences with them issuing timely and cooperative approvals. System Capacity and Reliability Capacity A high level analysis of the current system capacity at both 14kV and 46kV voltages was conducted for existing circuits within or in proximity to each EZ’s. A preliminary review of TEP distribution system circuits and load capacity availability indicate the EZ’s could accommodate a data center with no or relatively minor system improvements. Data centers fewer than 3 megawatts would be served by the 14kV distribution system, so each area was evaluated to determine if this were the case and again the EZs were ranked 1 through 5, with 5 being the most qualified for a data center location. The 46kV system in the EZ’s was also evaluated and ranked for potential data center customers with power use ranging from under 1 megawatt up to 10 plus megawatts. Costs for line extensions were not considered in the ranking of the EZ’s because this is a high level of analysis over an area with a range of possibilities for line extensions and system improvements. Site specific costs will be evaluated when a site or range of sites have been selected by a potential customer.

Generally OH 46kV line extension costs are one-million per mile for and two-million per mile for an underground extension. Reliability Individual circuits were evaluated using the System Average Interruption Duration Index (SAIDI) and the System Average Interruption Frequency (SAIFI) indices. The SAIDI & SAIFI reliability calculations are generally based from the following models: SAIFI

Σ Total Number of Customers Interrupted Total Number of Customers Served

= Σ Customer Interruption Durations Total Number of Customers Served

The analysis conducted reviewed the average number of momentary outages (under 5 minutes in duration) and the average number of sustained outages (over 5 minutes in duration). No planned outages or major event days (MEDS) were included in the SAIFI & SAIDI analysis because they are events that cannot be forecasted and would therefore skew the overall calculation for each EZ. In the SAIDI and SAIFI model an EZ score higher than .21 (the TEP system average) the less the reliability of the circuit. Each EZ scored within reasonable limits or lower than the TEP system average and overall were chosen for their reliability. Each EZ was given a ranking of 5 for system reliability. The table below indicates the average scores for each EZ. Table 15: Empowerment Zone Reliability

Empowerment Zone

Average # of Sustained Outages

Average Outage Duration (Min.)

Average # of Average Momentary SAIDI Outages

Average SAIFI

Tucson International (2008 - 2011) 7 152 152 0.228705 0.003488 Butterfield (2008 - 2011) 7 67 67 0.032111 0.000396 UofA BioScience Park (2008 - 2011) 6 78 78 0.102295 0.001972 DeMoss Petrie (2008 - 2011) 12 88 88 0.212310 0.003712 UofA Science & Tech Park (2008 2011) 3 111 111 0.036912 0.000598 *DeMoss has a higher number of outages due to a higher number of feeders into the substation Fiber & Telecommunications Availability Available telecommunications (fiber) service to a potential location is one of the keys to successfully siting a data center. There are five major telecommunications providers in the TEP service territory. They are TW Telecom, Verizon, Century Link, Level 3, and Cox Communications. Each provider was contacted and given a physical address within each of the EZ’s for their use in evaluating existing telecommunications infrastructure. We also asked them to evaluate capacity that would support

multiple GigE connections, possibly even as high as 10 or 40GigE as well as circuit-switched OC48 or higher. We also indicated that fiber with dual entrance/diverse path was preferred. Three providers have facilities within ½ mile of each of the EZs. They are TW Telecom and Century Link. The five EZs all received a ranking of 5 given these criteria, as the three providers indicated their facilities capacity to provide service suitable for data centers within ½ mile. Ranking Results All of the EZs were chosen for their attractiveness to a data center customer. Each has the appropriate land use, proximity to transportation, available fiber, electric capacity/reliability requirements, available commercial and industrial building space and vacant property. The overall scores ranged between 275 and 415, with Tucson International achieving the highest overall score. The table below indicates the ranking of each EZ along with a summary of the analysis results with reasoning. Table 16: Empowerment Zone Rankings Empowerment Zone

1- Tucson International

Results of Analysis Capacity/reliability on 46kV system, number of available vacant properties and it proximity to the Tucson International Airport. Of interest: Available building space the Lisa Frank and Texas Instruments buildings.

Capacity/reliability on 46kV system, none on 14kV system; available vacant property; new Kino 138kV Substation adds capacity/reliability

Capacity/reliability on 46kV system; available property at UA Bioscience Park; Involta location; new Kino 138kV Substation adds capacity/reliability

4- DeMoss Petrie

Capacity/reliability on 46kV system; limited available property; rebuild potential at DMP for increased capacity/reliability

5- UA Science and Tech Park

Capacity/reliability on 14kV system, none on 46kV system; located in flight path; limited improved property

2- Butterfield

3- Tucson Business Park

Empowerment Zone 1 – Tucson International

Empowerment Zone 2 – Butterfield

Empowerment Zone 3 – Tucson Business Park

Empowerment Zone 4 – DeMoss Petrie

Empowerment Zone 5 – UA Science and Tech Park

Promotion TEP should utilize a direct sales and marketing approach for primary communications with the primary and secondary market, supported with geo-targeted online banners at key data center online portals. The market is very specific by geography and level of decision makers, so a direct response approach is the most cost-effective way to create awareness and interaction. Phase 1 = Existing resources Phase 2 = Aggressive campaign defined below Tactics & Costs ($73,700* initial minimum; up to $200,000+ annually) • • •

Direct mail promotion for 500 with micro-site for prospect qualification ($2000) o 11x17 flat brochure with variable data and personalized URL and automated email reply o Cost includes design, printing, list, micro-site and postage for 500 prospects Tucson/TEP overview brochure for 500 DM ($1000) o 11x17 flat brochure (4-panel folded) o Cost includes design, printing and PDF with hyperlinks Involta Case Study/Whitepaper for 500 DM ($1000) o 11x17 flat brochure (4-panel folded) o Cost includes design, printing and PDF with hyperlinks

Datacenter Dynamics Online & Print (http://www.datacenterdynamics.com/) o Option 1 – Cost is $26,500 Online Banner Campaign: • 3 Month online banner campaign o Oct-Nov-Dec. • 100,000 banner impressions o 50,000 impression for Leaderboard o 50,000 impression for Mid-Page Unit. Ads would target specified IP addresses only, to ensure we reach your target market (US/Canada/etc.). Units will appear on the DatacenterDynamics homepage and run of site. Campaigns will be reported on a monthly basis with regards to impressions and click-thru rates. eNewsletter Sponsorship: • 3x fully branded eNewsletter campaign to be sent directly to the inboxes of our opted-in global eNewsletter subscribers. • Exclusive Sponsorship that includes 3 banner units on the eNewsletter o § 2 – Leaderboard Units o § 1 – Mid Page Units. Email Campaign: • Fully branded eMarketing campaign to be sent directly to the inboxes of specific segments of our audience. • Emails can be linked to multiple marketing collaterals – product information, white papers, video, web pages / landing pages, lead generation, etc. o

Recommended Option 2 – Cost is $37,200 plus fees for Event Sponsorship Online Banner Campaign: • 3 Month online banner campaign o Oct-Nov-Dec. • 100,000 banner impressions o 50,000 impression for Leaderboard o 50,000 impression for Mid-Page Unit. Ads would target specified IP addresses only, to ensure we reach your target market (US/Canada/etc.). Units will appear on the DatacenterDynamics homepage and run of site. Campaigns will be reported on a monthly basis with regards to impressions and click-thru rates. eNewsletter Sponsorship: • 3x fully branded eNewsletter campaigns to be sent directly to the inboxes of our opted-in global eNewsletter subscribers. • Exclusive Sponsorship that includes 3 banner units on the eNewsletter o § 2 – Leaderboard Units o § 1 – Mid Page Units.

FOCUS Magazine: • 4 page insert o 4 page insert – FOCUS MAGAZINE o North America print run o 4 Color o 80# stock o Blown in and polybagged for distribution Email Campaign: • Fully branded eMarketing campaign to be sent directly to the inboxes of specific segments of our audience. • Emails can be linked to multiple marketing collaterals – product information, white papers, video, web pages / landing pages, lead generation, etc.

Event Sponsorship – $25,000 initial; up to $100,000 annually: Sponsorship and speaking opportunities with Datacenter Dynamics at all/any of their upcoming events, which include Dallas, Phoenix, San Francisco and Mexico. These events are great forums for meeting face-to-face with data center decision makers in each/any of these key markets. DCD offers onsite content stream covering DBO, ITO and outsourcing decisions that provide opportunities for partnering companies to engage with these audience and present their products and offerings in 35 minute speaking sessions. o Designed to generate sales and branding opportunities through a 6x10 exhibition booth and two staff passes to demonstrate and promote product and service offerings. o 35 minute speaking opportunity during prime time slot. o Access to full event participant list. Data Center Map (http://www.datacentermap.com/) o Standalone Option - Geo-targeted banner ads via Gold Sponsor ($7500/Quarter)  50,000 impressions per month • Top of page/section  Banner 728x90 and 300x250 Resources – .5 FTE from Energy Efficiency Total Promotion costs for items recommended above o $73,700 minimum

Project Timeline o September  Draft copy and design direct mail brochure, case study template and overview brochure  Design online banners  Create microsite (PURL)  Launch direct mail piece to primary and secondary market  Conduct external partner meeting

October  Launch Data Center Dynamic insert (Tucson/TEP) into November/December issue of FOCUS  Launch targeted emails to primary and secondary market  Launch online banners at Data Center Dynamics and/or Data Center Map  Create Involta case study November  Run online banners at Data Center Dynamics and/or Data Center Map  Launch follow-up targeted emails to primary and secondary market December  Launch Data Center Dynamic insert (Involta Case Study) into January/February issue of FOCUS  Run online banners at Data Center Dynamics and/or Data Center Map

Sales Plan Key Account Services plans to address the acquisition of new Data Centers in the following manner: • • • • •

Utilize existing Key Account Service resources and personnel Data Center Training o Online Training – DC- Professional - 4th quarter 2012 Data Center Conference Attendance o Gartner Data Center Conference – November 2012 Site Locator Relationship Development o CBRE - Ongoing o Tel-Axis - Ongoing Industry Relationships - Ongoing o Century Link o Level 3 o COX o Time Warner o Southwest Gas o Trico Economic Development Conferences, workshops and relationship development o Governor’s Economic Development Conference – Sept 2012 Economic Development contact meetings – Ongoing City of Tucson o Town of Marana o Town of Oro Valley o Town of Sahuarita o TREO o ACA o Local Chambers of Commerce o U of A Tech Park

Measure direct mail effectiveness with a personalized URL (PURL) that can both identify interest in Tucson market and pre-qualify prospects with a brief, online survey. o Achieve 6% response rate for direct mail.  Achieve 4% response rate for PURL. Measure online advertising through banners, newsletters and custom emails. o Achieve 2% online banner click-throughs. Assist Involta with reaching full capacity. o Host business exchange to draw business to Involta ($2500). o Conduct email campaign to select TEP customers. With Phase II, secure one new data center/colocation facility per 18 months. o Secure 8MW new load within five years (including Involta ramp-up).  Equivalent to $8 million in new revenue in five years.

Operations Plan Production – Involta case study We are using Involta as a case study to explain the level of operation expectations to work with future data center customers. Process of getting Data Center online • Customer may initiate contact with TEP via the following channels: • Design Build Department • Customer Service Department • Key Account Services • Local Chambers of Commerce contacts • TREO • AZ Commerce Authority The following narrative generally describes TEP’s recent experience with Involta. Involta is a nationally situated Data Center developer. They are interested in building a first-class Data Center in Tucson to support a significant tenant already in Tucson. Key Account Services made contact with Involta after receiving notice from Design Build. Involta requested a “Non-Disclosure Agreement” (NDA) early on in the process. Data requests were provided to TEP via email and conference calls from Involta. Key Account Services contacted appropriate internal company resources and collected requested information for customer. Subsequent meetings were conducted with customer to pass along requested information. Initially, part of Involta’s requirements was to have redundancy via an Automatic Throwover (ATO). Though it provides immediate power availability when failure of one feed occurs, this option can be costly to implement and maintain. An alternative suggestion was to have a manual throwover. This required onsite switching of feeds by TEP personnel. Customer would use emergency generation during switching time. Another alternative and the least costly was to have no ATO (either manual or auto). During failure of the single point of delivery, power would be restored via circuit switching availability in the area surrounding the Involta facility. This is the option that was selected. In an effort to better understand the Data Center customer TEP formed a “Data Center Task Force.” The task force is comprised of individuals from multiple TEP departments involved with the development of Data Center businesses in Tucson. Task force members participated in multiple educational forums with Data Center experts (inside TEP and external to TEP) in an effort to better understand what a Data Center is and how it operates. One such meeting identified early on several key elements important to locating a data center; cost of energy, communication bandwidth and availability of employee talent. In

addition the task force physically visited TEP’s own Data Centers at the Irvington Power Plant and the TEP downtown Headquarters. In addition a field visit was made to a significant Data Center in Phoenix. TEP conducted several high level meetings with Involta and its site locator and real estate broker TelAxis to establish a better understanding of the customer’s needs and requirements with regards to electric service pricing, electric infrastructure, data center operations and tenant requirements. TEP was informed by Involta that Tucson was one of the last metropolitan service areas (MSA) in the Country without a Tier 3 Data Center. Tiers range from 1 to 4 with 4 being the most secure and providing the greatest redundancy with respect to energy, communications and cooling. A request made by Involta of TEP was to host a “meet and greet” for Involta and potential Data Center Tenants in the Tucson marketplace. TEP invited and hosted on behalf of Involta at its HQ a “Meet and Greet” for approximately 80 to 90 Tucson businesses. The event resulted in several solid leads (TUSD, Ventana Medical and Pima County) Involta previously described their desired tenant consisting of mid to large size organizations (Hospitals, Universities and Technical Service Providers). A rate review was performed by TEP to determine rate qualifications and options based on opening load and load growth projections. Generally the customer initiates their own rate or pricing reviews, however, TEP determined as part of an economic development process it was beneficial to both the customer and TEP to provide this service. In addition, TEP’s Pricing Department has been tasked with investigating an Economic Development rate. This could take various forms with regards to pricing and/or amount of time that the new customer may take advantage of such a rate. For example, since current rate design revolves around demand charges to gain the most margin, an offering could contain low kWh charges as these are recoverable through TEP’s PPFAC. In order to incent the customer further, the PPFAC could be suspended for a period of time as determined by Pricing. At the same time the demand charge could remain at the same levels as other rates, thus protecting TEP’s margin. TEP’s Design Build and Land Management & Requirements Departments conducted an in depth search for properties within the Tucson area that matched Involta’s requested criteria. Land Management & Resources created several package options for Involta that included detailed maps and available property site marketing materials. The maps included information on TEP electric infrastructure and reliability statistics. Additional requests from Involta included requests for referrals for real estate attorneys and brokers in the Tucson area. Involta appears to be poised to make a decision on whether they will be purchasing a property in Tucson on or before May 16, 2012. •

Materials and facilities (dependent on Data Center load characteristic – >1MW, 3MW, 5MW, 10MW+  Improvements • Involta selected an existing vacant commercial building (formerly an optical development business). TEP facilities in place are extensive and at present don’t require upgrades.

However, Involta requested/stated the following items prior to final site selection: 1) An existing facility of approx. 15,000 - 25,000 square feet, with additional expansion space 2) If not an existing facility, land to construct the above 3) Large power service(s) 4) Capability to upgrade service to dual 2500kva transformers (480v) 5) Dual substation feeds (or loop-fed with fail over from primary) 6) Electric service at 13,800kv 7) Near but not too close to highway, high traffic areas 8) Loading docks 9) Security Fence 10) No wood frame building, prefer concrete slab and concrete standup walls 11) 18’-20’ Ceiling height 12) Single tenant with opportunity for collocation 13) No signage 14) Timing of supplying redundant/dual feeds (any extraordinary substation, ROW, distribution work, etc.) 15) Flight path information/ avoidance 16) Economic incentive zones (Tax breaks or incentive, workforce development services) 17) Communication and Fiber availability and capacity •

TEP Personnel • Client management – TEP / UNSE Key Account Services • Facilities management – Design Build, TEP Land Management & Requirements • Energy management – Demand-side Management & Renewable Energy Departments

Other • • • •

Permits – Design Build, TEP Land Management & Requirements Licenses - TEP Land Management & Requirements Regulatory issues - NA Insurance requirements - NA

Financial Plan Breakeven Analysis and Financial Projections Based on power costs and system upgrades, the best case scenario is to attract data centers in excess of 3MW annual usage; rate decrease over 4MW. Additionally, it is safe to consider an even match of TEP/UNS investment at $1 million to each MW of generation as both cost-effective and profitable. Table 17: Data Center Costs and Revenue Projections Data Center Financial Estimates May 2012

Annual Avg. ¢/kWh (all charges except taxes) 6.99 6.88

Notes: 1) Annual Revenue does not include DSM and REST. 2) Annual Avg. ¢/kWh includes DSM, REST, & PPFAC. 3) Estimates above are based on 90% LF, 5% Demand Spread Per Month, 5.5 Mil PPFAC, 1.249 Mill DSM, & Primary Metering. * Capital investment breakeven analysis does not include rate recovery of capital investment.

It should be noted that the above projections reflect assumptions and that projections can be based on specific clients once all variables are defined to determine exact revenue and costs. It is recommended that we benchmark energy usage with Involta to get a realistic consumption pattern and timeline for reaching full capacity.

Table 18: 4MW Data Center Revenue Projections New System Name:

4 MW Data Center

Name of System being Replaced BP&A Approval Date:

Cost Estimate Precision:

Contingency:

New System Information

Internal Rate of Return (IRR) NPV @ 9% Discount Rate Target Start Date Target Date-in-Service Projected Life of System in Years (straight line depreciation)

Date asset cost will start to be recovered in customer rates? Are any up front costs recoverable? es, how will up front costs be recovered (eg. tariff, 3rd party)?

Implementation Costs

Planning (Reqs, Planning, As-Is Processes) Execution (Training, Go Live, Transition) Closing (Administration and Review) Short-Term Production Support Contingency (0%) Capital Totals O&M Totals

Post-Implementation Costs

Cost Ctr(s)

Implementation Totals

Are any ongoing costs recoverable?

Hardware Replacement Licensing growth

Storage growth <etc..>

(Enter "N/A"'s below if there is no replaced system)

Additional Capitalized Cost of Replaced System Date System was placed into service Life of Current System in Years Date Current System is Fully Depreciated

O&M

N/A N/A 0.0 N/A

Annual Maintenance Long-Term Production Support Additional FTE(s) Write-off book value of replaced asset

Overhead Information

<etc..>

Rates* O&M 1.0%

Stores Clearing (Materials Purch/Contractor Serv)

Capital 1.0%

O&M Totals

Budget Reductions Commitment

Executive Summary Financial Information

Total Estimate d Cost for Planning: $0 Capital: $0 O&M : $0

Hardware lifecycle/failure costs Licensing growth Storage growth <etc..>

Total Estimate d Proje ct Cost (e xcluding inte rnal labor): $0 -25%

Total Estimate d Proje ct Cost (including inte rnal labor): $0

Annual Maintenance Long-term Production Support Reduction in FTE(s) <etc..> Capital Totals O&M Totals

Budget Reductions Commitment Total

Total Estimate d Cost for Close out/Short-te rm Support: $0 Capital: $0 O&M : $0

= locked, automatically calculated field

= to be populated by BP&A

= locked, fields not included in calculations or N/A

Cash Flow Impact 2013

Total Estimate d Cost for Exe cution: $0 Capital: $0 O&M : $0

*rates to be verified by BP&A

Capital Totals

Post Implementation Totals

5.0% Totals

es, how will ongoing costs be recovered (eg. tariff, 3rd party)? Percentage of ongoing costs that will be recoverable

Description

O&M Yes 357 Yes No

Percentage of up front costs that will be recoverable

Original Cost of Replaced System

Capital Planning (To-Be Processes, Design) Execution (Development and Testing) Hardware Procurement Software Procurement Contingency (0%)

TEP 10/1/2016

9% 9% 47,763 47,763 December-12

Name of Sponsor Project Currently in O&M Budget? What Cost Center(s) will the O&M budget dollars impact? Incremental impact to 1st year Capital budget(s)? Incremental impact to 1st year O&M budget(s)?

-25% to +75%

Project Phase:

Replaced System Information

Duration of TCO Analysis:

Main Business Driver:

Income Statement Impact

Capital Planning (To-Be Processes, Design) Execution (Development and Testing) Hardware Procurement Software Procurement Contingency (0%) Overheads

4,000,000 240,000

O&M Planning (Reqs, Planning, As-Is Processes) Execution (Training, Go Live, Transition) Closing (Administration and Review) Short-Term Production Support Contingency (0%) Overheads

4,240,000 2012

Capital Hardware Replacement Licensing growth Storage growth Overheads

O&M Annual Maintenance Long-Term Production Support Additional FTE(s) Write-off book value of replaced asset Overheads

Capital Annual Sales Increase Licensing growth Storage growth Overheads

O&M Annual Sales Increase Cost of Power Production Reduction in FTE(s) Overheads

(1,662,000) 897,000

(1,828,200) 986,700

(1,662,000) 897,000 -

(1,828,200) 986,700 -

Budget Reductions Commitment Totals

Capital Totals O&M Totals

4,240,000 (765,000)

212,000 765,000

212,000 841,500

Total "Hard" Costs

Soft Benefit Realization

System Usage by Company

Work Flow Efficiencies Integration Opportunties Disparate System Consolidation

TEP Usage Share UNSG Usage Share UNSE Usage Share

Income Statement "Hard" Costs by Company

Avoided Financial Penalties Improved Customer Satisfaction Incremental cost of maintaining current system Cost of future implementation (run to failure)

Total "Soft" Costs

TEP UNSG UNSE

1,053,500 -

Project Budget Tactics & Costs Phase 1 – Existing resources. Phase 2 – Aggressive marketing campaign, ($73,700 minimum for initial launch/up to $200,000 annually). • • • •

Direct mail promotion for 500 with micro-site for prospect qualification ($2000) o 11x17 flat brochure with variable data and personalized URL and automated email reply o Cost includes design, printing, list, micro-site and postage for 500 prospects Tucson/TEP overview brochure for 500 DM ($1000) o 11x17 flat brochure (4-panel folded) o Cost includes design, printing and PDF with hyperlinks Involta Case Study/Whitepaper for 500 DM ($1000) o 11x17 flat brochure (4-panel folded) o Cost includes design, printing and PDF with hyperlinks Datacenter Dynamics Online & Print (http://www.datacenterdynamics.com/) o Option 1 – Cost is $26,500 Online Banner Campaign: • 3 Month online banner campaign o Oct-Nov-Dec. • 100,000 banner impressions o 50,000 impression for Leaderboard o 50,000 impression for Mid-Page Unit. Ads would target specified IP addresses only, to ensure we reach your target market (US/Canada/etc.). Units will appear on the DatacenterDynamics homepage and run of site. Campaigns will be reported on a monthly basis with regards to impressions and click-thru rates. eNewsletter Sponsorship: • 3x fully branded eNewsletter campaign to be sent directly to the inboxes of our opted-in global eNewsletter subscribers. • Exclusive Sponsorship that includes 3 banner units on the eNewsletter o § 2 – Leaderboard Units o § 1 – Mid Page Units. • Timing o TBD. Email Campaign: • Fully branded eMarketing campaign to be sent directly to the inboxes of specific segments of our audience. • Emails can be linked to multiple marketing collaterals – product information, white papers, video, web pages / landing pages, lead generation, etc.

Recommended Option 2 – Cost is $37,200 Online Banner Campaign: • 3 Month online banner campaign o Oct-Nov-Dec. • 100,000 banner impressions o 50,000 impression for Leaderboard o 50,000 impression for Mid-Page Unit. Ads would target specified IP addresses only, to ensure we reach your target market (US/Canada/etc.). Units will appear on the DatacenterDynamics homepage and run of site. Campaigns will be reported on a monthly basis with regards to impressions and click-thru rates. eNewsletter Sponsorship: • 3x fully branded eNewsletter campaigns to be sent directly to the inboxes of our opted-in global eNewsletter subscribers. • Exclusive Sponsorship that includes 3 banner units on the eNewsletter o § 2 – Leaderboard Units o § 1 – Mid Page Units. FOCUS Magazine: • 4 page insert o 4 page insert – FOCUS MAGAZINE o North America print run o 4 Color o 80# stock o Blown in and polybagged for distribution Email Campaign: • Fully branded eMarketing campaign to be sent directly to the inboxes of specific segments of our audience. • Emails can be linked to multiple marketing collaterals – product information, white papers, video, web pages / landing pages, lead generation, etc. Event Sponsorship – $25,000 initial; up to $100,000 annually: Sponsorship and speaking opportunities with Datacenter Dynamics at all/any of their upcoming events, which include Dallas, Phoenix, San Francisco and Mexico. These events are great forums for meeting face-to-face with data center decision makers in each/any of these key markets. DCD offers onsite content stream covering DBO, ITO and outsourcing decisions that provide opportunities for partnering companies to engage with these audience and present their products and offerings in 35 minute speaking sessions. o Designed to generate sales and branding opportunities through a 6x10 exhibition booth and two staff passes to demonstrate and promote product and service offerings. o 35 minute speaking opportunity during prime time slot. o Access to full event participant list.

Data Center Map (http://www.datacentermap.com/) o Standalone Option - Geo-targeted banner ads via Gold Sponsor ($7500/Quarter)  50,000 impressions per month • Top of page/section  Banner 728x90 and 300x250 Resources – .5 FTE from Energy Efficiency Total Promotion costs for items recommended above o $73,700 minimum

Additional funds may be required for continuation of successful tactics above, event sponsorships, conference speaking engagements, and event hosting. It is recommended that up to $200,000 may be needed to support year 1 and year 2 campaigns. Financial Requirements – System Upgrades The ‘Empowerment Zones’ represent a cost-savings to TEP/UNS by identifying the optimal locations for data centers while minimizing any system upgrades. The breakeven analysis shows that it is reasonable to expect a 1:1 ratio of $1 million in upgrades and internal costs for every 1MW of new load. There are multiple variables to consider whit each prospect, so exact costs can be computed for each prospect to identify true costs.

Risk Analysis The following variables may impact parts or the overall success of the project, however these items can be addressed in promotional messages or with executive commitments. The greatest risk is providing competitive, or more favorable, incentives to data center companies who wish to relocate to Tucson. External and Internal Risks External Risks • Lack of awareness for Tucson as a data center destination. • Highly competitive market for data center growth. o Phoenix and Las Vegas are very aggressive and sophisticated with this market. • Political realities of state, county and city not reaching consensus to support data center acquisition to Tucson. • Limited/restricted incentives compared to other markets. • Limited fiber carriers (3). • Limited total number of facilities currently available for lease or build that meet specifications o Nine total available as of June 28th, 2012. • Data center could select location outside of established ‘Empowerment Zones.’ o TEP/UNS would have to encumber unplanned costs and negotiate with data centers. • Pitch and close process is lengthy and will not happen overnight; needs to be a long-term strategy. • Involta may feel slighted if TEP/UNS does not help drive business their way before it launches a campaign to attract competition to the market. • Competitive Reaction. o Natural part of business process or direct competition.  Caution: May want to collaborate with APS and SRP on Legislation regarding State incentives. Internal Risks • Commitment of labor and financial resources to drive acquisition of data centers. • Commitment of long-term strategy to secure data centers in Tucson; patience needed. • Ability to expedite existing system upgrades or other projects within ‘Empowerment Zones.’

Recommendations The Involta data center project has been a great learning experience for TEP/UNS. While it may take 1218-or even 24 months to secure the next data center, we have momentum and confidence to move forward. Data center operations present a lucrative client to any Utility and community, especially the nine key markets previously discussed. Based on the external research and internal analysis, TEP/UNS can compete and be successful in this space. The strategy to create ‘Empowerment Zones’ will limit internal costs and upgrades while demonstrating a solid understanding of data center operations/needs to prospects. The potential new revenue streams of approximately $1 million per MW illustrate that we can commit reasonable financial resources to promote Tucson as a viable choice while attracting significant long-term revenue. The following recommendations are made to move forward with this project: • •

Phase I – On-going commitment of using internal task force to build the support to drive data centers to the TEP service territory. Phase II - Commit necessary resources to aggressively support data center strategy. o Up to $200,000 annually in promotion, sponsorship and industry events for year 1 and 2.  Represents 5% of potential base profit from an operational 4MW data center. o Secure internal staff at .5 FTE to support program . Work hand-in-hand with Involta to demonstrate sincere relationship and commitment to expedite their operations to full capacity (3MW). o Benchmark process to create case study for industry publication. o Create industry advocates through Involta executive leadership. Explore additional incentives through the Arizona Commerce Authority and TREO. Work to progress data center house bill. Formalize internal and external data center team, then identify core working group. o Host kick-off meeting in September or early October. Monitor data center industry for trends, and keep pulse on nine core data center markets. o Monitor Phoenix closely as energy demand exceeds energy capacity, and competition for tenant space. o Continued interest from enterprise users in sourcing third-party COLO options.  Attract excess to Involta. Identify relevant green energy programs and energy-efficient opportunities for data centers. o Position TEP/UNS as expert in this arena.

Appendix Data Center Dynamics Market Overview - Growth 2011-2012 …………………………………………………………. 84 Market Profiles – Jones Lang LaSalle …………………………………………………………………………………………………. 86 Chicago Dallas/Ft. Worth Los Angeles New York/New Jersey North Carolina Pacific Northwest Phoenix Silicon Valley Virginia Overview of National Economic Development Programs offered by Utilities …………………………………….. 95 3 Tables total Overview of National Data Center Incentives offered by Utilities ……………………………………………………… 97 4 Tables total Empowerment Zone Service Conditions …………………………………………………………………………………………… 99 3 Tables total Officer Presentation …………………………………………………………………………………………………………………………. 100

Data Center Dynamics Market Overview See: http://www.datacenterdynamics.com/research/market-growth-2011-2012

Market Profile – Jones Lang LaSalle: Chicago

Market Profile – Jones Lang LaSalle: Dallas/Ft. Worth

Market Profile – Jones Lang LaSalle: Los Angeles

Market Profile – Jones Lang LaSalle: New York/New Jersey

Market Profile – Jones Lang LaSalle: North Carolina

Market Profile – Jones Lang LaSalle: Pacific Northwest

Market Profile – Jones Lang LaSalle: Phoenix

Market Profile – Jones Lang LaSalle: Silicon Valley

Market Profile – Jones Lang LaSalle: Virginia

Overview of National Economic Development Programs offered by Utilities

Overview of National Economic Development Programs offered by Utilities, Continued

Overview of National Data Center Incentives offered by Utilities

Overview of National Data Center Incentives offered by Utilities, Continued

Empowerment Zones - Current Service Conditions

Empowerment Zones - Service Conditions with New Kino 138kV Substation

Empowerment Zones - Service Conditions with DMP Rebuild

Data Centers Roberto Guevara Kelly Hanson Craig Jones Craig Jones Larry Lucero

Executive Summary 9Market Ͳ Small, growing, competitive 9TEP’s competitive advantage • Price and reliability / Quick move in • Excess capacity / Location Excess capacity / Location • Green Data Centers / Local Task Force 9 Operationally Ͳ Existing resources to build an economic f foundation to attract data centers. d ti t tt t d t t 9Risks Ͳ Incentives / “under dog” / coordination of business communityy 9 Limited financial investment Ͳ For every 1MW of load the breakͲeven capital investment is $1M.

Agenda g • Background • Financials • Market • Product P d t • Organization • Strategy

Innovation Attract additional customers through economic development.

All, This sounds Thi d lik like AZ except we don’t have gambling. See first part o pa of the ea article ceo on how NV is attracting data centers. We should be eating their lunch on data centers since we have lower rates than any utility in the SW …. Hutch

Internal Task Force Engineering

Transmission and Distribution

Donovan Sandoval Donovan Sandoval Jeremiah Rios Chris Lindsey Morgan Stoll M St ll Tyler Kilian

Roberto Guevara R b t G Chris Lindsey Mike Kaiser Anna Bustamante Eil Eileen Dickerson Di k Tom Mills

Pricing/Finance

Customer Programs and Services

Craig Jones S Steve Sims Si Nick Gilbert

Larry Lucero A M D Art McDonald ld John Brown Steven Hutson Barbara Beyer D Dave Couture C Art Fregoso Joey Cruz Kelly Hanson

Land Cheryl Eamick (Hall) Steven Eddy

Renewable and Energy Efficiency Ted Burhans Mike Baruch

Involta $15 million, Tier III, 40,000 square foot, coͲlocation data center in Tucson 4.4MW = $2M in annual sales and $900,000 in annual margin Customer Experience Customer Experience Lehrman (CEO of Involta) also praised the efforts of Tucson Electric Power (TEP) for their project assistance. “Tucson Electric Power was a valuable strategic partner on the project, assisting with the site selection technical requirements and introducing us to area business selection, technical requirements and introducing us to area business leaders. The team at TEP understood our objectives and helped create a business opportunity that will benefit economic development for the entire community. Overall, we could not be more pleased with the attractive business agreement, rate structure and power infrastructure that TEP offered to bring our new facility to Tucson,” said Lehrman.

Financials Peak Load Demand Annual (kW) Revenue Rate 85N 1MW $456,500 2MW $908,500 Rate 90N

3MW 4MW 5MW 10MW 20MW

$1,329,000 $657,000 $1,662,000 $765,000 $ $2,074,500 $ $954,000 $4,143,000 $1,901,500 $8,280,500 $3,707,500

Notes: 1.) Annual Revenue does not include DSM and REST. 2.) Annual Avg. ¢/kWh includes DSM, REST & PPFAC. 3.) Estimates above based on 90% LF, 5% Demand Spread Per Month, 5.5 Mil PPFAC, 1.249 Mill DSM & Primary Metering. *Capital investment breakeven analysis does not include rate recovery of capital investment.

Data Centers are everywhere, but they’re most concentrated in four U.S. states and Canadian provinces

Size Comparison p

Server consolidation brings more computing into computing into the cloud

Total annual spending on data centers will grow from $87 billion in 2010 to $126 billion in 2015 Industry Colocation Data Center Facts (CBRE)

UNS IT System Growth 2006

40 TB enterprise storage

466 TB enterprise storage 66% avg annual growth

174 servers

551 servers 27% avg annual growth

0 virtual PCs 0 virtual PCs

204 virtual PCs 204 virtual PCs 62% avg annual growth

Breakdown of Energy Delivered to a Typical li d i l Data Center

Data centerͲrelated emissions will more than triple by 2020

Data Center Needs 9Access to power today and in the future gy • Low cost energy • High reliability • Access to fiber network • 12Ͳ18 month move in window 9Proximity to risk • No natural disasters • Distance from flight paths/freeway/rail 9 Cooling and climate • Green Data Centers 9Business Community • Innovators • Entrepreneurial • State/local support and incentives /

Existing Rates Company Rocky Mountain Power

$ per kwh $ 0.0578

Arizona Public Service Arizona Public Service

TOU EͲ35 Standard EͲ34

$ 0.0621 $ 0.0662

Tucson Electric Power T El t i P Nevada Power Company Salt River Project

TOU TOU TOU TOU

$ 0.0664 $ 0 0664 $ 0.0665 $ 0.0697

Tucson Electric Power

Standard LLPͲ14

UniSource Energy Services UniSource Energy Services Standard Standard LPS

$0 0200 $0.0200

Colorado Public Services TOU PG Public Service New Mexico Standard IPS

$ 0.0861 $ 0.0864

Los Angeles DWP

Standard A2

El Paso Electric Company

Power Costs

LLP 90N LLPͲ90N LGSͲ3 EͲ63

$0.1200 $0.1000

North Carolina Pacific NW Silicon Valley Virginia 4.5 4.6 10 5.5

Proposed Rates (Fall 2013) Company Rocky Mountain Power

Type Type TOU

Arizona Public Service Tucson Electric Power Arizona Public Service

TOU EͲ35 TOU LLPͲ90N Standard EͲ34

$ 0.0621 $ 0.0658 $ 0.0662 $

Nevada Power Company

Salt River Project Tucson Electric Power

TOU EͲ63 Standard LLPͲ14

$ 0.0697 $ 0.0741

UniSource Energy Services Colorado Public Service Public Service New Mexico

Standard LPS TOU PG Standard IPS

$ 0.0815 $ 0.0861 $ 0.0864

$ per kwh $ per kwh $ 0.0578

$0.1200 $0.1000 $0.0800

Rate Incentive for LGS Customers: For the upcoming rate case, TEP has developed LGS rate structures that benefit high load f t factor customers such as data centers. t h d t t

Empowerment Zones Zones Siting Criteria: 9 Local zoning regulations 9 Available properties (land and existing) 9 Away from flight paths (TIA and DM) 9 Available fiber telecommunications 9Dual service feeds or alternatives 9 System capacity System capacity 9 System reliability

Area 4: DeMoss Petrie

Area 2: Tucson Business Park

Area 3: Butterfield

Area 1: Tucson International

Area 5: UA Science and Tech Park

Green Data Centers New Construction • Design Assistance Ͳ Design Assistance Ͳ Provide design assistance to exceed building code standards. Provide design assistance to exceed building code standards • Building Performance Ͳ Provide incentives based on installed energy efficient measures.

C&I Comprehensive (Large Business) • Incentives paid for lighting equipment and controls, air conditioning and heat pump equipment Incentives paid for lighting equipment and controls air conditioning and heat pump equipment (“HVAC”), motors, air compressors, refrigeration equipment, and customͲefficiency measures.

Bid for Efficiency (Dependent on ACC approval) • Bundling of measures to maximize savings (lighting, HVAC, refrigeration, etc.) Bundling of measures to maximize savings (lighting HVAC refrigeration etc )

Bright Tucson Community Solar • Purchase Blocks of energy produced by utilityͲscale solar farms.

Bright Roofs • Leasing of roof space to TEP , TEP will pay the customer an annual lease payment.

Data Center Incentives 9Oregon • Sales of server equipment that will be installed in a data center Sales of server equipment that will be installed in a data center • Labor and service charges for installing servers, and to sales of power infrastructure equipment • Sales of power infrastructure • Labor and services for construction of power infrastructure Labor and services for construction of power infrastructure

9Wyoming • Sales tax and use tax exemptions to data centers for equipment purchases of more than $2 million if the center has also made a purchases of more than $2 million if the center has also made a $5 million capital investment in the state.

9New York (Greenest Legislation) • Offering up to $5 million to upgrade existing data centers to be Offering up to $5 million to upgrade existing data centers to be more energy efficient. • Physical plant type upgrades, virtualization, application management, core server upgrades, demonstrated improvement in the energy efficiency of the data center improvement in the energy efficiency of the data center.

Arizona Incentives 9Arizona Commerce Authority • Quality Jobs Tax Credit – state corporate income tax credits up to $9,000/job. • Arizona Job Training Program Arizona Job Training Program – up to $8,000 per employee to companies creating up to $8 000 per employee to companies creating permanent new jobs or training existing workers within the state. • Registered Apprenticeship / Customized Training • RealͲtime industry intelligence / Outplacement Services / Virtual Recruitment 9HB2787 Sales and use tax exemption for computer server equipment. Construction sales tax exemption for: Construction of qualified data center / Installation of server equipment Construction of qualified data center / Installation of server equipment Construction of power infrastructure (e.g. substation) Reduction of real and personal property tax by 75% for 5 years. 9 TEP Line Extension : TEP Line Extension : Large General Service (LGS)/Large Light & Power (LLP) customer can waive much of the cost of the first 14kV line extension 9 TEP Energy Efficiency Incentives: TEP Energy Efficiency Incentives: Existing commercial incentives available with current EE plan (if funded.)

Target Market 9Primary Market • 4 to 10 MW 4 to 10 MW • CoͲlocation and enterprise • Phoenix, Las Vegas, Texas, Southern California, Mexico • Disaster Recover (Involta) and Primary (TEP) Disaster Recover (Involta) and Primary (TEP) 9Messages • Low energy costs • High reliability High reliability • Speed to market • Empowerment Zones • Local government, leaders support • External data center task force External data center task force • Green Data Center focus • System Capacity • Service Levels

Involta – December 2012 December 2012

Strategy – Phase I •

Sales – Conferences, events, industry organizations, site locators Conferences events industry organizations site locators – Coordinating with Internal Task force to service any prospects

Marketing – Web Web content / Involta video case study / Online advertising / Email electronic content / Involta video case study / Online advertising / Email electronic brochures and links

Economic Development Commerce Authority / TREO / Tucson Chamber of Commerce / City of – Arizona Arizona Commerce Authority / TREO / Tucson Chamber of Commerce / City of Tucson / Pima County / Phoenix organizations

External Task Force – Commercial Real Estate / Fiber providers Commercial Real Estate / Fiber providers

Government Affairs

¾ Existing resources

– Revive HB2787 (partner with APS/SRP)

Start Your Data Center Business in Minutes

How to Start a Profitable Data Center Business in 11 Steps

Ever dreamt of owning a business that's not just profitable, but also at the forefront of today's digital revolution? Welcome aboard, as we guide you through the thrilling journey of starting your very own data center business, a venture that's as lucrative as it is exciting in our increasingly data-driven world.

Our Shortlist Steps to Start a Profitable Data Center Business:

• Draft a data center business plan.
• Pick a business name & business entity that works best for you.
• Find ways to finance your data center startup.
• Open a professional business bank account.
• Set up your accounting & tax reporting.
• Obatin the necessary licenses & permits for your data center business.
• Purchase the equipment, software, & tools needed.

Startup Costs for a Data Center Business:

Initiating a data center business can involve substantial financial commitment, the scale of which is significantly influenced by factors such as geographical location, market dynamics, and operational expenses, among others. Nonetheless, our extensive research and hands-on experience have revealed an estimated starting cost of approximately $2550000 for launching such a data centerbusiness. Please note, not all of these costs may be necessary to start up your data center business.

• Data Center Startup Expenses

Table of Contents: (Page Navigation)

11 steps to start a profitable data center business with little to no money:, 1. data center business plan..

Creating a business plan for a Data Center business is essential to ensure that the business succeeds and can make a profit. A comprehensive business plan should include a comprehensive overview of the business, the goals and objectives of the business, an analysis of the market and competition, an analysis of the financials, and a strategy for success. Additionally, the plan should provide a detailed description of the proposed data center services, the management team and the technology needed to support the services. By carefully considering each of these components, a well-crafted business plan can be the foundation upon which a successful data center business is built.

• Comprehensive overview of the business
• Goals and objectives
• Analysis of the market and competition
• Analysis of the financials
• Strategy for success
• Detailed description of the data center services
• Management team
• Technology needed to support the services
• Check out our entire small business plan directory

2. Form the Legal Business Entity.

Are you looking for ways to start your own data center business? You'll want to consider officially registering your business with local and federal governments. There are four different types of entities you can choose from, each with their own pros and cons. 

Sole proprietorship : 

• The simplest type of business to set up 
• Offers no personal liability protection 

Corporate organization : 

• Shareholders elect board members to run things 
• Requires an annual meeting with stockholders' meetings every three months 

Limited Liability Company : 

• Provides extra protection for investors by limiting their liability exposure 
• Allows flexibility in operating their businesses 

Partnership : 

• Business owner plus partners 
• Can offer personal liability protection 

When deciding what type of business entity is right for your data center company, it's important to consider what kind of liability exposure you want and what your goals are for the business. If you're just starting out and selling to family and friends, a sole proprietorship may be enough. But if you're looking for more protection or to grow the business, a corporate organization or LLC may be a better choice. 

No matter what type of business entity you choose for your data center business, be sure to register it with the state in which you'll be doing business. This will give you the legal protections you need to operate your business and protect your personal assets. To register your business, you'll need to file the appropriate paperwork with your state's Secretary of State office . You can find more information on how to do this on their website. 

Once you've registered your data center business, you'll need to get a business license from your local city or county. This will allow you to legally operate your business in your area. To get a business license, you'll need to fill out an application and submit it to your local licensing authority. They will then review your application and decide whether or not to issue you a license. 

Now that you know how to register your data center business, it's time to get started! Follow the steps above to get started on the right foot and be sure to consult with an attorney if you have any questions. Good luck!

• Check out our U.S. Registered Agent Directory
• Check out our U.S. LLC Directory

Form an LLC in your state!

3. Source Financing for Your Data Center Business.

There are several different ways to go about sourcing financing options for your data center business, but it’s extremely important to think through each and every method because each decision may have financial implications on you and your business in the long term.

Some new founders may find themselves in a situation where your data center startup costs are actually only a few hundred dollars to get started, but we thought it was important to share the below methods in case you’re thinking of ideas down the road.

Here are 5 financing options for your data center business:

• Raising money from friends and family
• Bootstrapping by tapping into your own savings account
• Sourcing investment from outside investors
• Obtaining a bank loan
• Getting money from a hard money lender

Now, there are of course many other alternatives to financing your business, but these 5 options are just a few that come to mind.

It’s also important to stress the importance of decisions and only make the decision you believe is the best fit for your current situation. There is no right answer when deciding how much money should go into starting up your own company, but there may be some guidance from below regarding what type of financing would work best for someone like yourself - so take note before making any final decisions about which path will suit both yourself and your data center business best! We definitely recommend advising your accountant before making any final decisions.

4. Open a Business Bank Account.

Opening a  business bank account for your data center company can be a daunting task, especially if you're not sure what you're doing. But it doesn't have to be! There are different types of accounts that you can open for your data center business, depending on what you need and how much money you're looking to deposit.

We'll go over some of the advantages and disadvantages of each type of account, so you know what to expect from each one.

Checking Account:  The most common type of business bank account is a checking account. Checking accounts are easy to open and offers a variety of features and benefits that can be helpful for businesses. One of the biggest advantages of a checking account is that it allows you to easily deposit and withdraw money as you need it. You can also write checks from your checking account, which can be helpful for paying bills or suppliers.

Savings Account:  Another popular type of business bank account is a savings account. Savings accounts earn interest on the money that you deposit, so they can be a great way to grow your data center business's cash reserve. However, savings accounts typically have lower interest rates than checking accounts and may have withdrawal limits.

Business Card Card:  If you're looking for a more robust bank account for your business, you may want to consider opening a business credit card. Business credit cards can be very helpful for businesses that need to make large purchases or need to build up their credit history. However, business credit cards typically have high-interest rates and may have annual fees.

No matter what  type of business bank account you choose, be sure to shop around and compare features and fees before making a decision. Once you've found the right account for your business, you'll be on your way to the next step in building your data center business! As always, be sure you advise your certified professional accountant before making any final financial decisions.

5. Set up Your Accounting and Taxes.

As a new data center business owner, you have a lot on your plate. There are so many things to think about and so much to do in order to get your business off the ground.

But one of the most important things you need to do is set up a proper accounting system. This will help you  track your expenses , revenue, receipts, taxes owed, and much more.

There are a couple of different ways that you can set up your data center accounting system.

• You can use an online accounting software like QuickBooks or Xero
• Hire an accountant to do it for you.

If you decide to do it yourself, make sure you choose a system that is easy to use and understand.

Once you have your  accounting system set up, start tracking your income and expenses. This will help you see where your money is going and where you need to cut back. It will also help you budget for the future.

Make sure you keep up with your accounting regularly. This means setting aside time each month to reconcile your accounts and update your records. This may seem like a lot of work, but it will save you a lot of headaches in the long run.

If you have any questions about setting up your accounting system, talk to your accountant or  financial advisor . They can help you choose the right system for your business and make sure you are using it correctly.

• Find account software for your business

6. Obtain Data Center Business Permits and Licenses.

Starting a new data center business can be a daunting task, but there are some important things to keep in mind that can make the process a bit smoother. One of the most important things to do when starting a new business is to  obtain the proper licenses and permits from the appropriate government agencies.

There are a number of different business licenses and permits that may be required, depending on the type of data center business you are starting and where it will be located. The best way to find out which licenses and permits you need is to contact your local business licensing office or chamber of commerce. They will be able to provide you with information on which licenses and permits are required in your area.

Once you have obtained the necessary data center licenses and permits, you will be able to officially open your business and start operating. Congratulations! You are now on your way to becoming a successful business owner.

7. Purchase Equipment, Software, Supplies & Tools Needed.

There's a lot to think about when starting a data center business. One of the most important elements is equipment, tools, and supplies. 

Here's a few tips to help you:

• Determine what equipment, tools, and supplies you need.  This will depend on the type of business you're starting and the products or services you'll be offering. Make a list of everything you need, including both big-ticket items (like office furniture) and smaller items (like paper clips).
• Research different suppliers. Once you know what you need, it's time to start shopping around. Compare prices and quality between different suppliers to find the best deal.
• Consider equipment rental or leasing.  If you're on a tight budget, you may want to consider renting or leasing equipment instead of purchasing it outright. This can be a good option for expensive items that you won't need to use on a regular basis.
• Get everything in writing.  Once you've decided on a supplier, make sure to get all the details in writing before making a purchase. This will help avoid any misunderstandings later on.
• Stay organized and keep track of your inventory. It's important to stay organized when running a business. Keep track of your equipment, tools, and supplies so you know what you have and what needs to be replenished.

By following this process will help ensure that you have the equipment, tools, and supplies you need to run your business smoothly.

• Check out our small business software & tools review directory

8. Create a Brand Identity for Your Data Center Company.

Creating a brand identity for your data center company can be very difficult. There are so many factors to consider, from the logo design to the colors you use. But if you take the time to plan and focus on what you want your customers to feel, you can create a brand identity that will set your business apart from the rest.

Here's how to get started:

1.  Define your data center company's purpose and values.

What do you want to achieve with your business? What kind of feeling do you want your customers to have when they think of your data center brand? These are important questions to answer before you start creating any visuals for your brand.

2. Choose a color scheme that reflects your company's personality.

Colors can communicate a lot about a brand, so it's important to choose wisely. If you're not sure where to start, try looking at  other brands in your industry and see what colors they use.

3. Develop a unique logo that represents your data center brand.

This is often the first thing people will think of when they hear your company name, so it's important to make it memorable. Work with a professional designer to  create a logo that's both visually appealing and reflective of your brand values.

4. Create consistent branding across all channels.

Once you have your logo and color scheme, make sure you use them consistently across all of your marketing materials, from your website to your business cards. This will help reinforce your brand identity and make it easier for customers to recognize your company.

Creating a strong brand identity is essential for any data center business, but it doesn't have to be complicated. By focusing on your company's purpose and values, you can develop a brand that will resonate with your target audience. With a little planning and some creativity, you can create a brand identity that will make your data center company stand out from the rest.

9. Build a Beautiful Website.

In today's world, and no matter what type of business you're in, it's always best to have a beautifully designed website to share with your customers. For your data center business, you may not need one right away, but it's best to plan for this!

There are a few key steps to building a beautiful website for your new data center business:

• Hiring a professional website designer or working with a freelancer - make sure to look at their portfolio and get recommendations from others in the industry.
• Planning out your  website's structure and hierarchy - this includes deciding what pages and baby clothing content will be included on the website, and how it will all be organized.
• Creating  stunning visuals and graphics - images, videos, and other visual elements should be high-quality and reflect your brand identity.
• Writing compelling website copy - the text on your website should be well-written, informative, and persuasive.
• Testing the website before launch - it's important to test all the website's features and functionality to ensure everything works correctly.

Following these steps will help you create a website that is both visually appealing and effective in promoting your data center business. If you have any questions or need help getting started, feel free to contact us and we would be happy to assist you.

10. Create a Company Email Address & Phone Number.

With a company phone number and email address, you'll be able to give your business a more professional appearance and stay in touch with customers more easily.

Here's how to set them up:

• Purchase a business phone number . You can do this through a telecom provider like Twilio or Grasshopper.
• Register the phone number by creating an account with the telecom provider.
• Set up a professional email address using a service like  Google Workspace or  Microsoft 365 .
• Configure your email account to forward messages to your business phone number.

Note: When you're first starting out your data center business, you can definitely use your personal phone number and email address, but as it grows, be sure to look into other communication options!

Once you're all set up, you'll now be able to more easily communicate with customers more professionally!

11. Make a Go-To Market Launch Strategy.

You’ve done all of the hard work up until this point and prepared your data center business for launch – Now, it’s time to get your data center business name out there and start generating customers!

You’ll likely already have worked on a bit of your marketing plan during the build out of your business plan, but now you’ll take a magnifying glass to your strategy and plan out how you’ll obtain your first few customers.

To get things started, below are a few marketing strategies you can steal from:

• Reach out to local newspapers about your launch
• Identify social media influencers your customers follow
• Host a business launch event at your office, storefront
• Run a business launch sale to attract first time customers
• Run a few ads online to attract customers
• Get your friends and family to share your products on social media
• Partner up with other local businesses in the area to share your business

Again, remember, marketing is never a “said it and forget” method. You must always be iterating on your strategy and doubling down on what worked and what your customers love most. Also, always be sure you’re never overspending in this area so that it doesn’t cut into your margins.

• Check out all of our small business marketing ideas

You have questions, we have answers.

Frequently Asked Questions:

Below, based on our research are some of the most common questions entrepreneurs have when thinking about starting a business.

What does it cost to start a Data Center business?

Are data center businesses profitable, how to come up with a name for your data center business, what do you need to do to define your target audience for your data center business, how does a data center business make money, list of software, tools and supplies needed to start a data center business:.

Helpful content

More business resources to help you get started:

External resources:, business blogs and magazines to read:.

• Entrepreneur
• Business Insider
• Fast Company
• Harvard Business Review
• The Wall Street Journal
• The Economist
• Bloomberg Businessweek

Small Business Websites:

• https://www.sba.gov/about-sba/sba-locations - Additional resources for small businesses
• Department of Commerce, Community, and Economic Development - ( https://www.commerce.gov/ ) - Information on local, state, and federal programs, provides information on local business events, and provides loans and other funding opportunities
• Department of Law - ( https://www.justice.gov/agencies/list ) - Provides information on business regulations
• Department of Revenue - ( https://www.irs.gov/ ) - Provides information on taxation regulations

Data Center Tax Information:

The IRS has all the information you need on tax deductions, tax preparation, filing, forms and much more. IRS.gov also has a wealth of information for small businesses, nonprofits, and other special groups.

Keeping up with information is important:

The world of business is always changing, and keeping up with it all can be difficult. Here are some different ways that you can make sure you are up to date on the latest news and information, both in your industry and beyond.

• Specific data center business-related content so you can keep up with trends, and consumer behavior over time.
• TV/Newspaper: Though this may seem like a basic tip, watching the right TV shows and newspaper headlines can save you a lot of time. There are many daily news shows geared to specific industries that will cover the most important topics relevant to you.
• Podcasts : Podcasts have become very popular in the last few years, but they aren't just for entertainment purposes. There are many business podcasts that highlight current issues, trends, or events from around the world that could impact your company.
• Social Media: Social media has become a major source for both personal and professional interactions over the past decade or so - make sure to keep up with your accounts! Social media platforms like Twitter allow users to follow topics in addition to people; this way when something related pops up on someone's feed (or even just their newsfeed) they'll see it immediately. In addition, there are many sites dedicated solely to business news such as "Fortune."

Internal resources:

• Data Center Business Names
• Data Center Business Plan Template & Guidebook
• Best Technology Business Ideas & Examples in 2023
• List of the Best Marketing Ideas For Your Data Center Business:

I'm Nick, co-founder of newfoundr.com, dedicated to helping aspiring entrepreneurs succeed. As a small business owner with over five years of experience, I have garnered valuable knowledge and insights across a diverse range of industries. My passion for entrepreneurship drives me to share my expertise with aspiring entrepreneurs, empowering them to turn their business dreams into reality.

Through meticulous research and firsthand experience, I uncover the essential steps, software, tools, and costs associated with launching and maintaining a successful business. By demystifying the complexities of entrepreneurship, I provide the guidance and support needed for others to embark on their journey with confidence.

From assessing market viability and formulating business plans to selecting the right technology and navigating the financial landscape, I am dedicated to helping fellow entrepreneurs overcome challenges and unlock their full potential. As a steadfast advocate for small business success, my mission is to pave the way for a new generation of innovative and driven entrepreneurs who are ready to make their mark on the world.

Get worry-free services and support to launch your business starting at $0 plus state fees.

Data Center Construction Business Plan

$59.00 $39.00 6 reviews

Instant Download, Editable on MAC & PC

Resources On Data Center Construction

• Financial Model
• Value Proposition
• One-Page Business Plan
• SWOT Analysis
• Business Model
• Description

Executive Summary

Products & services, market analysis, marketing plan.

• Management Plan
• Financial Plan

EcoNet Data Centers will offer sustainable and energy-efficient data center services to large corporations and organizations that require high-performance computing resources. Our revolutionary data center design will lead to energy savings, technical efficiencies, and environmental sustainability, aiming to reduce costs and improve reliability for our clients. By utilizing the latest eco-friendly technologies, sustainable construction expertise, and energy-efficient design strategies, we believe our solution will revolutionize the traditional data center landscape. Our goal is to establish a loyal customer base and develop strong relationships with them, while pursuing renewable energy opportunities to create additional revenue streams.

Target Market

Our target market consists of large corporations and organizations that require high-performance computing resources. These customers are typically in industries such as finance, healthcare, technology, and government. They value sustainability and are looking for data center services that reduce their environmental impact and increase reliability. By offering sustainable and energy-efficient data centers, we believe our target market will be drawn to our unique value proposition and become loyal customers. We will also attend industry conferences and form partnerships with IT service providers to expand our reach and attract potential customers. Our focus will be on building strong customer relationships and providing top-notch service to ensure their needs are met.

Competition

The data center industry is highly competitive, with numerous established players offering similar services to our target customer segments. Some of the largest competitors in the market include Amazon Web Services, Microsoft Azure, and Google Cloud Platform. These companies have a significant market share and have established brand recognition. However, we believe that our sustainable and energy-efficient data centers will differentiate us from our competitors and allow us to capture a unique segment of the market. Additionally, we will leverage partnerships with IT service providers and attend industry conferences to increase our visibility and attract potential customers.

Financial Summary

Below are the key highlights of our financial plan:

• Initial funding of $50 million from venture capitalists and angel investors
• Projected construction and design costs of $40 million for our first data center
• Predicted sales revenue of $20 million in the first year, with a projected growth rate of 15% annually
• Anticipated operational costs of $10 million annually, including IT infrastructure and workforce salaries
• Potential revenue streams from selling excess renewable energy back to the grid, contributing to potential profitability
• Break-even point within the first three years of business operations

Overall, we anticipate sustainable and energy-efficient data centers to be a profitable and promising business venture, with a strong emphasis on establishing and maintaining long-term customer relationships and investing in advancements and innovations within the eco-friendly technology sphere.

Funding Requirements

Our proposed company, EcoNet Data Centers, aims to secure $50 million in funding from venture capitalists and angel investors to cover the following expenses:

• Initial costs for sustainable construction and energy-efficient design
• Purchase of IT infrastructure
• Management of workforce salaries

The funds will be utilized to build world-class sustainable data centers that promote eco-friendliness while providing top-notch computing services to our clients. With this funding, we can invest in the latest and best eco-friendly technologies, construct a comprehensive business plan, and build a successful and sustainable data center. We will use this funding to establish ourselves as a leader in sustainable data centers and to create long-term value for our investors, customers, and employees.

Milestones and Traction

At EcoNet Data Centers, we have a clear roadmap for achieving success and becoming leaders in sustainable data centers. Our milestones include:

We will continuously track our progress and adjust our roadmap as necessary, with the goal of achieving long-term success and creating a positive impact on the environment.

Problem Worth Solving

The traditional data center industry is plagued with high energy consumption, excessive costs, and negative environmental impact. Large corporations and organizations require data center services to support their computing needs, but they also demand sustainable and eco-friendly solutions to reduce their carbon footprint.

EcoNet Data Centers aims to revolutionize the industry by offering sustainable and energy-efficient data center services that not only meet, but exceed, customer expectations. Our innovative data center design will address the problem of high energy consumption and costs while also promoting environmental sustainability. We will solve the pain point of corporations and organizations wishing to minimize their environmental impact while maintaining reliable computing services.

Our Solution: Sustainable and Energy-Efficient Data Centers

At EcoNet Data Centers, we understand the critical need for reliable and secure data center services for large corporations and organizations. However, due to the high energy consumption and environmental impact of traditional data centers, we recognize the urgent need for sustainable solutions to address these issues.

That is why our proposed product and service are sustainable and energy-efficient data centers. With our innovative data center design, we aim to reduce energy consumption and environmental impact while increasing technical efficiencies and reliability. Our sustainable construction and energy-efficient design will lead to significant cost savings for our clients, making us a more affordable and eco-friendly option for their computing needs.

Our data centers will utilize the latest eco-friendly technologies, including cooling systems that use recycled water, renewable energy sources like solar power, and energy-efficient hardware that minimizes energy consumption. By providing sustainable data center services, we can contribute to building a better future for ourselves and generations to come.

We believe that our sustainable data centers will revolutionize the traditional data center landscape by providing eco-friendly and cost-effective solutions to large corporations and organizations. With our innovative product and service, our clients can enjoy reliable data center services while reducing their environmental impact, making us a win-win solution for all.

Validation of Problem and Solution

Product overview.

EcoNet Data Centers offers sustainable and energy-efficient data center services to large corporations and organizations seeking high-performance computing resources. Our innovative data center design reduces environmental impact, while enhancing reliability and cost efficiency. We prioritize eco-friendly technologies to promote sustainability, creating a positive impact for both our clients and the environment.

Our data centers are equipped with reliable and modern IT infrastructure, built to provide top-notch service to our clients. We offer customized solutions tailored to meet our clients' specific needs, and continuous communication to ensure customer satisfaction and trust. Our customers benefit from our sustainable data center services, which reduce costs, enhance reliability and help meet corporate social responsibility goals.

At EcoNet Data Centers, we aim to revolutionize the data center industry by reducing environmental impact, promoting sustainability and providing unmatched service quality. Our innovative, eco-friendly design will lead to energy savings and technical efficiencies while maintaining excellence in service.

The data center industry is highly competitive, with many established players offering traditional data center services. However, there are few companies that focus on sustainable and energy-efficient data centers, which is where EcoNet Data Centers will have a competitive advantage.

One of the main current competitors in this market is Google, who has invested heavily in reducing their data center energy consumption and has implemented many sustainability initiatives. However, Google only provides data center services to its own operations and not to other large corporations and organizations.

Another competitor is Green House Data, which is a data center company that focuses on offering eco-friendly services. However, their services are limited to a few locations in the US and do not offer the same level of energy efficiency and sustainability as EcoNet Data Centers.

EcoNet Data Centers will differentiate itself from these competitors by providing sustainable and energy-efficient data center services that meet the needs of large corporations and organizations. Our innovative data center design will lead to energy savings, technical efficiencies, and environmental sustainability that will reduce costs for clients and create a better world for future generations.

Products & Services Roadmap

Our focus at EcoNet Data Centers is to provide sustainable and energy-efficient data center services to large corporations and organizations. We plan on establishing a world-class sustainable data center that promotes eco-friendliness while providing top-notch computing services to clients.

Here is an outline of the steps we have taken so far and our roadmap for establishing and growing our business:

Our roadmap for establishing and growing our business is aimed at building and maintaining sustainable data centers while managing customer relationships effectively and pursuing renewable energy opportunities. We aim to offer reliable and sustainable data center services that will revolutionize the traditional data center landscape.

Market Segmentation

By focusing on large corporations, government agencies, and technology startups, our data center construction business has the potential to capture a significant portion of the market. These segments have a high demand for energy-efficient and sustainable data centers, making them ideal customers for our services. With a targeted marketing strategy, we believe we can effectively reach and convert customers in these segments, increasing our overall market potential.

Target Market Segment Strategy

Our ideal customer segment consists of large corporations and organizations that require data center services. These clients typically have a high demand for reliable and secure data storage, processing, and distribution. They are also increasingly concerned about the environmental impact of their operations and are looking for ways to reduce their carbon footprint.

By offering sustainable and energy-efficient data centers, we provide a unique value proposition that meets the needs of this customer segment. Our construction and design strategies help reduce costs and improve reliability while also reducing the environmental impact of their data center operations.

Through direct sales and marketing, partnerships with IT service providers, and attendance at industry conferences, we will actively target this customer segment and communicate our value proposition to them. We will also maintain strong relationships with our customers, continuously communicating with them to ensure their needs are being met and identifying new opportunities to provide value.

Key Customers

Our ideal customer archetype is a large organization or corporation that prioritizes sustainability and energy efficiency in their operations. They value reliability and are willing to invest in long-term solutions that reduce costs and environmental impact. These customers will be the main advocates for our business, recommending our services to others in their industry and helping to establish us as leaders in the sustainable data center market.

Future Markets

Based on the customer segments and value proposition offered by our data center construction business, the potential market looks promising. Large corporations and organizations are increasingly prioritizing sustainability and energy efficiency in their operations, making our offerings highly relevant and in demand.

As we continue to build strong relationships with our customers and pursue renewable energy opportunities, we anticipate expanding our reach to new markets in the future. Our channel strategy, partnering with IT service providers and attending industry conferences, will also help us stay ahead of market trends and attract new customers.

In summary, our business strategy aligns well with the evolving market and sets us up for sustainable growth and success in the data center industry.

Below is a table of potential competitors in the data center industry:

Our competitive advantage lies in our sustainable construction and energy-efficient design strategies, which not only reduce costs and environmental impact but also enhance reliability. This focus on sustainability sets us apart from traditional data center providers and positions us as a leader in the industry.

Marketing and Sales Plan

Our marketing and advertising strategy will focus on building brand awareness, establishing industry partnerships, and attending key industry conferences. Our goals include generating leads, securing contracts with large corporations and organizations, and becoming a recognized leader in sustainable data center construction.

Advertising channels will include industry publications, digital ads targeting our customer segments, and social media marketing. We will also partner with IT service providers to leverage their existing customer bases and increase our reach. Costs for advertising will be included in our marketing budget.

Our sales team will be responsible for building strong relationships with prospective customers and providing ongoing communication to ensure their satisfaction. We will also offer incentives for referrals and repeat business to encourage customer loyalty.

Based on market research and the growing trend of sustainable and eco-friendly practices, we anticipate a high demand for our data center services. Our initial capacity will be able to serve five large corporations or organizations. We will offer competitive pricing strategies based on the current market rates and our eco-friendly approach. As we establish ourselves as leaders in the sustainable data center industry, we anticipate expanding our capacity and increasing the number of customers we can serve. Additionally, we will attend industry conferences and partner with IT service providers to reach potential customers and increase our sales efforts. Overall, we anticipate significant sales growth and a loyal customer base in the data center industry.

Location and Facilities

EcoNet Data Centers will utilize the latest and best eco-friendly technologies to create sustainable and energy-efficient data centers. Our innovative data center design will lead to energy savings and technical efficiencies that will enhance reliability and sustainability, making us a leader in the traditional data center landscape.

We will integrate the following technologies into our data center services:

• Renewable energy sources: We plan to utilize renewable energy sources, such as solar and wind, to power our data centers, reducing our reliance on traditional energy providers.
• Modular construction: We will design our data centers using modular construction techniques, allowing for seamless scalability and flexibility while minimizing our carbon footprint.
• Water conservation: Our data center design will focus on water conservation, reducing water consumption through high-efficiency irrigation systems and water-efficient fixtures and appliances.
• Cooling technologies: We will incorporate advanced cooling technologies, such as liquid cooling and hot aisle containment, to reduce energy consumption and minimize our environmental impact.

By implementing these innovative technologies, we will revolutionize the data center industry and establish EcoNet Data Centers as a leader in sustainable data centers.

Equipment and Tools

Our data center construction business requires a range of equipment and tools to ensure the sustainable and energy-efficient design and construction of our data centers. We have carefully researched and selected the necessary equipment and tools to carry out these activities with precision and quality.

These investments in high-quality equipment and tools will ensure the efficiency and effectiveness of our sustainable data center construction processes. Additionally, they will enable us to provide reliable and quality data center services to our customers while also reducing their carbon footprint and energy costs.

Management and Organization

Organizational structure.

Our data center construction company operates with a hierarchical organizational structure that ensures clear communication and streamlined decision-making processes. The following table outlines the roles and responsibilities of our key employees:

The flow of information between levels of the organization is structured to ensure timely and effective decision-making, with information flowing from the Account Manager to the Construction Manager, Operations Manager, CTO, and CEO as needed. Regular communication and collaboration between teams and departments is prioritized to ensure successful project outcomes and satisfied customers.

Management Team

Our management team consists of seasoned professionals with extensive experience in the construction and IT industries. We believe that our success lies in hiring the right people for high-level management positions. Below is a table of potential candidates we anticipate taking on key roles within our company:

We are confident that our management team possesses the necessary skills, expertise, and vision to successfully revolutionize the data center industry through sustainable construction and energy-efficient design strategies.

Management Team Gaps

As a relatively new company, we currently do not have candidates ready to fill certain key management positions. Specifically, we are seeking individuals with expertise in sustainable construction and energy-efficient design strategies. Our ideal candidates will possess a combination of technical knowledge, project management skills, and a commitment to our values of sustainability and environmental responsibility. We are actively seeking out qualified candidates to fill these positions and are committed to building a strong and diverse team that can lead our company to continued success.

Personnel Plan

Below is a table of potential positions that we expect to require in order to run our data center construction business effectively:

Company History and Ownership

EcoNet Data Centers is a newly established data center construction company founded in 2023 in Austin, Texas, United States. The company was founded by a group of experienced professionals with extensive expertise in sustainable construction, energy-efficient design, and IT infrastructure management. They recognized the need for eco-friendly and sustainable data centers that can reduce environmental impact while providing top-notch computing services to large corporations and organizations.

The company is a privately held entity, and the ownership is divided among the founding members. Their shared vision and mission have allowed them to establish a solid foundation for the company and create a business plan that aligns with their values and principles.

EcoNet Data Centers' history and experience in sustainable construction and energy-efficient design are central to the planning of the business. The founders' collective experience has allowed them to create a comprehensive business plan to secure funding and establish a world-class sustainable data center that promotes eco-friendliness and enhances reliability. The company's values and principles reflect their commitment to establishing an eco-friendly, sustainable, and reliable data center that can revolutionize the traditional data center landscape.

As part of our management and organization plan, we have developed a detailed roadmap that outlines specific goals and objectives we plan to achieve. These milestones will help us manage and steer our business towards success:

Key Metrics

As a data center construction business, it's important to regularly measure and track the success of our operations. Here are some key performance indicators (KPIs) that we will use to gauge the overall performance and health of our business:

• Customer satisfaction ratings to ensure we are meeting their needs and providing high-quality services.
• Revenue growth to ensure we are continuously increasing our profits and expanding our business.
• Energy efficiency ratings to ensure we are reducing our environmental impact and keeping costs low.
• Employee retention rates to ensure we are maintaining a strong and dedicated workforce.
• Industry awards and recognition to showcase our success and credibility in the market.

Financial Plan and Metrics

Sales forecast.

The following table outlines our projected sales for the next three years, broken down by product categories:

We project steady growth as we establish ourselves as a leader in sustainable data centers and pursue opportunities to sell excess renewable energy back to the grid.

Starting a data center construction business requires significant initial investment in sustainable construction materials, equipment, and workforce. Below is a breakdown of expected startup costs:

Once the business is operational, ongoing expenses include IT infrastructure maintenance, employee salaries, and potential revenue loss from selling excess energy back to the grid. The following table outlines these operational costs:

Projected Profit and Loss

Our revenue streams will be recurring revenue from data center services and potential revenue from selling renewable energy back to the grid. Based on our financial projections, we anticipate generating the following profit and loss statement for the first three years of operation:

Our focus on sustainable construction and energy-efficient design strategies will lead to a high initial cost, but we anticipate that our profitable revenue streams will allow us to recover these costs and generate significant profits in the long run. As we continue to pursue renewable energy opportunities, we believe that we can create additional revenue streams and increase our profits even further.

Projected Cash Flow

Below is a table outlining the projected cash flow for EcoNet Data Centers for the years 2023, 2024, and 2025.

As shown in the table, in our first year of operation, we anticipate no inflow, and significant outflow as we cover the initial sustainable construction and energy-efficient design costs. However, by the end of 2024, we anticipate a net cash flow of $10,000,000 as we begin to generate recurring revenue from our data center services while keeping our operational costs low. By the end of 2025, we anticipate a significant cumulative net cash flow of $35,000,000 as our revenue streams grow and we continue to innovate and invest in sustainable technologies.

Projected Balance Sheet

Below is the projected balance sheet for our Data Center Construction business for the years 2023, 2024, and 2025:

As we continue to grow and expand our business, we anticipate a steady increase in assets and equity, while also accounting for liabilities in our financial planning. Our sustainable construction and energy-efficient design strategies will help reduce costs and increase profitability in the long run.

As a data center construction company focused on sustainability and energy-efficiency, we will hire individuals with expertise and experience in sustainable construction, IT infrastructure, and project management. Our priorities in hiring will be to ensure that we have a skilled team that can execute on our business strategy and deliver exceptional value to our customers.

We intend to hire the following positions:

• Project Manager
• Construction Supervisor
• IT Infrastructure Specialist
• Design Engineer
• Sustainability Analyst
• Customer Relationship Manager

We will offer competitive compensation packages that include salary, benefits, and opportunities for professional development. Employee performance will be evaluated regularly, with bonuses and promotions available based on merit.

Our team will be an integral part of our business operations, with each member contributing expertise and knowledge to ensure the success of our sustainable data center construction projects.

Use of Funds

Exit strategy.

Our long-term goal is to establish ourselves as a leading data center provider with a sustainable and energy-efficient focus. We aim to achieve this by continuously improving our infrastructure and developing strong relationships with our customers. In the event that we decide to exit the business, our preferred option would be to seek acquisition by a larger company in the industry that can continue to grow and expand our vision. Alternatively, we may also consider selling the business to a family member or employee who shares our values and vision for sustainable data center construction.

$199.00 $119.00 Get Bundle

Customer Reviews

Extraordinary

I highly recommend this

Frequently Asked Questions

• Current item: Data Center Construction Business Plan $59.00 $39.00
• Financial Projection Model, Financial Model, Financial Modeling For Startups, Startup Financial Analysis $49.00 $29.00