Cloud center lures with low power prices

A stall of China Telecom's cloud computing base in the Inner Mongolia autonomous region at an expo in Beijing, March 4, 2014. PROVIDED TO CHINA DAILY

Low electricity prices have drawn telecommunication companies to the cloud computing center in the Inner Mongolia autonomous region, according to an executive of China Telecom Corp's branch in Hohhot, the capital city of the region.

"The cost of electricity in Inner Mongolia accounts for around 30 percent of the total operating cost of the data center," said Yuan Xiaodong, operation manager of China Telecom's cloud computing bases in Inner Mongolia and Guizhou province. "In areas south of the Yangtze River, such cost takes up 45 to 55 percent of the total cost."

Work on the cloud computing base started in 2012. Hohhot has put 70 billion yuan ($11 billion) into the project to build China's biggest cloud computing data center, with about 4 million servers and business reaching Beijing, Shanxi, Gansu, Heilongjiang, Qinghai and other provinces.

The base has attracted the three telecom operating giants in the country－China Mobile Communications Corp, China United Network Communications Group Co and China Telecom－and IT giants like Baidu Inc, Alibaba Group Holding Ltd, Tencent Holdings Ltd and Inspur Group Ltd.

China Telecom's cloud is the first to be put into operation among the three mobile service providers. It plans to build 42 communication buildings with the capacity to support more than 1.2 million cloud computing servers.

"We are going to launch six products in cloud computing, including storage, desktop cloud and host computer," said Yuan.

Hohhot has many advantages in the cloud computing industry, said Tian Jianjun, deputy director of the development and reform commission in the city.

According to Tian, Hohhot has a strong power generation capacity since it is the largest base of coal-fired power generation in Asia. It is in the temperate continental climate with average temperatures of 8 C. In this cool climate, the equipment in the data center does not require cooling for three months throughout the year, which has significantly lowered the cost.

In February, China Telecom's cloud computing base in Hohhot signed an agreement with Inner Mongolia Jingneng Shengle Thermoelectricity Co Ltd, a subsidiary of Beijing Energy Investment Holding Co Ltd. The agreement has lowered the power price from the market price of 0.39 yuan to 0.32 yuan per kilowatt hour. The discounted price has reduced the power cost of China Telecom's cloud computing base in Hohhot in March by 1.03 million yuan.

"We are able to offer a lower power price because of the multilateral trading platform," said Guo Jun, general manager of Jingneng Shengle.

The trading platform involves the power generator, consumers and the grid. It introduces competition in power generation and trading, which is a breakthrough from the noncompetitive system where the government sets the prices and the grid companies are monopoly suppliers.

The multilateral electricity trading platform, which has greatly lowered electricity prices, is a key factor in drawing internet companies to Inner Mongolia, said Guo.