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In one of the brighter moments of New York governor David Patterson's unanticipated and beleaguered administration, Yahoo! has announced that it will plunk down its next data centre just east of Buffalo, New York, so it can tap the carbon-free hydroelectric power generated by Niagara Falls.

When - not if - New York City has a blackout, as it gets very hot in the summer and there are not enough megawatts to go around, we'll all know who to blame. It will be the exclamation point that broke the generator's back.

Governor Patterson - who has his hands tied by a deadlocked state senate that has been refusing to do its job because it cannot decide which party is in charge - and (federal) Senator Chuck Schumer of New York have been pushing to win the $150m Yahoo! data centre deal for Buffalo. They got some credit from David Dibble, Yahoo!'s executive vice president of service engineering and operations, who announced the winning bid.

But the real reason why this deal went down in New York - and not in Ohio, Pennsylvania, Illinois or Virginia, as was reported in the Albany Business Review - is the New York Power Authority. It runs the hydropower in western New York, which has Niagara Falls as its main generating facility. NYPA has guaranteed a total of 15 megawatts of hydropower that the Business Review says will save Yahoo! around $100m over a 15-year period.

The statement put out by Patterson's office concerning the Yahoo! data centres says it will be located in the town of Lockport, east of Buffalo in Niagara County. Yahoo! plans to invest "tens of millions of dollars" to put its East Coast regional data centre, weighing in at 190,000 square feet, on a 30-acre plot in an industrial park. Not counting construction work, the data centre is expected to create 125 jobs.

The Lockport data centre has been allocated 10 megawatts of power during the initial construction phase and data centre buildup. Construction is expected to start in August, with the first phase of the facility being operational in January 2011. In a second phase that starts in the spring of 2012, Yahoo! will build out the Lockport data centre, spending an additional "tens of millions of dollars," and would get an extra allotment of 5 megawatts of guaranteed power from NYPA.

Based on that power consumption, you would assume that another 95,000 square feet of data centre space will be built in the second phase of the project. It is not clear how many servers Yahoo! will put into the data centre, but using modern half-width two-socket "Nehalem EP" servers, you could put about 167,000 server nodes in that 190,000 square feet of space. The second phase of the Lockport data centre would push it up to around 250,000 server nodes.

Western New York has been courting big data centres thanks to the relatively cheap electricity it can generate from Niagara Falls, and was disappointed last year when HSBC pulled the plug on a $139m, 275,000 square foot data centre that was to open in nearby Cambria, New York. The subprime mortgage mess killed that deal, and HSBC decided to load up its data centres in Chicago rather than pour new concrete in Cambria. It is also planning to shut down facilities in Buffalo and the suburb city of Amherst.

Bringing in Yahoo! to replace the lost HSBC centres was something all politicians were clearly interested in doing. This is why so many of them lined up in Patterson's statement. Still, we're talking about 125 jobs and maybe an aggregate payroll for them of $8m to $9m. The incentives that New York state and the regional governments gave were not divulged, but those jobs are only worth about $125m to $130m over a 15-year term. Hopefully the economics works out in the long run.

According to a report at CNET, Yahoo! co-founder David Filo said the Lockport data centre will use outside air for cooling, something you can do for many months of the year in the chilly Buffalo region. Filo also said that Yahoo! would stop buying carbon offsets in an effort to make itself carbon neutral, and would instead focus on getting its data centres to be as efficient as possible. ®

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