Nautilus Data Technologies is proposing to convert Building 530, located at 120 West Oriskany Avenue at Alameda Point, into a data storage facility. The facility would draw 10,000 gallons of water a minute from underneath Pier 2 in order to cool the racks of computer servers. The warmer water, about 4 degrees warmer, would be discharged into San Francisco Bay. Water cooling is a cheaper alternative than traditional air conditioning.
The proposal will be voted on at the May 7 city council meeting.
Here are some points made in the city staff report in support of the proposal, followed by reasons why this proposal does not deserve support.
Point: The city staff report claims that the facility will be environmentally friendly because water cooling will use less electricity for cooling than traditional air conditioning.
Counterpoint: Starting in 2020, all of Alameda Municipal Power (AMP) electricity will be carbon free, producing zero greenhouse gas. Reducing electrical usage in Alameda is not an environmental benefit, only a cost-saving benefit to the business.
Point: The data center is desirable, according to the staff report, because it will be a major purchaser of electricity to operate its computer servers, estimated at $1.5-$2.5 million per year.
Counterpoint: Increasing AMP’s yearly revenue stream will not help achieve the massive infrastructure investments needed at Alameda Point. The data center would contribute to upgrades at AMP’s Cartwright Substation at Alameda Point, but so would a big development deal. Base reuse decisions should favor putting money into the ground for infrastructure, not transferring money to AMP.
Furthermore, since AMP is a city-owned utility, it could be argued that income from electricity rates are not much different than lease revenue and should stay in the Alameda Point base reuse fund. Keeping city revenue at Alameda Point would be in keeping with the spirit of the Navy’s free economic development land conveyance.
Point: Windfall electricity revenue from the Nautilus Data Center may benefit all rate payers in the city by keeping electricity rates low.
Counterpoint: Low electricity rates is not a goal for base reuse. Furthermore, “keeping rates low” is a vague speculative statement. No dollar figure is given as to what this would mean for the average ratepayer.
Point: “Data storage has not been an industry that meets the base redevelopment overall goals for job and sales tax generation.” In this case, staff says an exception should be made because “Innovative technologies, especially green energy, are a key sector of the Alameda economy and are supported in the City’s Economic Development Strategic Plan.”
Counterpoint: This project does not directly, or indirectly through product development, produce “green energy.” The fact that the storage apparatus cooling system is “innovative” is not reason enough to abandon job, infrastructure fees, sales tax, and property tax benefits.
Point: The Nautilus Data Center will be a catalyst for development at Alameda Point.
Counterpoint: It will produce only 30 permanent jobs. It will produce no incentive for other businesses to move here, nor will it benefit existing businesses. This data center will be part of “the cloud.” Being close to the cloud has no benefit.
Point: Nautilus is being offered a lease that could extend for 25 years.
Counterpoints: Nautilus would pay only 40 percent of the infrastructure fees that it would otherwise have to pay if it purchased the building immediately. And it will pay no property tax. This is tantamount to a cost-saving subsidy to a business whose only novelty is the cooling system. This corporate welfare proposal is not balanced out by commensurate job creation, infrastructure investment, or property tax revenue. It would forfeit, for 25 years, the opportunity to have a new 100-foot-tall building producing high tax revenue, full impact fees and potentially more jobs and businesses.
Point: The data center is a good fit for Alameda Point because it is a green business.
Counterpoints: The water cooling system will discharge 10,000 gallons of water a minute into the Bay through a five-foot diameter pipe, 24 hours a day. The pipe will run in an underground trench over to the shoreline by the Hornet Soccer Field. It will then, according to the company, be laid on the sea bed and run directly under the harbor seal float and then through the rock wall jetty where it will then discharge the warmer water into San Francisco Bay.
The 24/7 discharge of 10,000 gallons a minute of warmer water into the Bay will create a permanent warmer water zone on the Bay side of the jetty. Unlike discharging into a river or deep into a cold lake where the temperature easily dissipates, the warmer water zone at Alameda Point will not change with the tides. And currents are partially blocked by a leg of the jetty seen in the above photo. This permanent warm zone will potentially foster the growth of algae.
According to an article in the March edition of Estuary News, subtle shifts in water temperature, in combination with other factors, may increase the chances for harmful algae blooms. “San Francisco Bay has not experienced the magnitude of harmful algae bloom (HAB) seen recently in Florida. Cloern, Thompson, and their USGS and regional colleagues have all attempted to understand the Bay’s resistance to these eutrophic blooms, and tried to figure out if and when that resistance might time out. It all has to do with subtle shifts in temperature, waning turbidity (as gold mining era debris washes out of the system), estuarine mixing, and climate. A combination of unidentified factors is likely at play.”
The volume of warm water to be discharged into San Francisco Bay would be an experiment.
Point: Staff consulted the marine biologist who worked with the community on the harbor seal haul-out, and he determined that the project will have no impact on the seals.
Counterpoint: The warm water will have no impact on the seals. However, the five-foot diameter pipe will run directly under the harbor seal float and then through the rock wall jetty where it will then discharge the warmer water. The float would have to be moved during construction.
The lowest tide level in the harbor is about seven feet. The harbor seal float is two feet thick. [Correction posted May 4, 2019: The harbor seal float is 46 inches thick at the high end and 28 inches on the ramp end. The float extends two feet below the waterline.] There is not enough clearance to avoid having the float hitting the pipe under all conditions – wind, waves, and two tons of seals on the float. The harbor seal float would soon be damaged as the concrete skin is cracked by running hard aground on the pipe.
Point: “Nautilus has committed to providing the City data storage space in its facility.”
Counterpoint: Now that really sweetens the deal. For free?
Question: Should we really be conducting this warm water environmental experiment in San Francisco Bay just to lower the operating costs of a private company and to keep electricity rates low?