TCO: Comparing Traditional and Modular Data Centers

A comparative analysis of TCO between prefabricated modular data centers and traditional facilities: discover how to reduce operational and capital costs with scalable, efficient solutions.

Prefabricated modular data centers are reshaping the IT infrastructure market, delivering an average savings of up to 30% in Total Cost of Ownership (TCO). With CAPEX up to 27.2% lower and OPEX reduced by 31.6% compared to traditional builds, these solutions offer advantages such as fast deployment, energy efficiency, and scalability. In this article, we explore how these two approaches impact the Total Cost of Ownership (TCO | Total Cost of Ownership) over a 10-year period, considering factors like labor, maintenance, energy consumption, and time-to-market. Learn why more companies are shifting to modular models and leveraging their potential to meet dynamic demands with higher efficiency and lower costs.

The key factors driving the reduction in the total cost of ownership, or TCO (Total Cost of Ownership), are:

1. Reduction in Construction Time

Prefabricated modular data centers are built in a factory environment, which significantly reduces the deployment time compared to traditional data centers. As a result, this ensures faster implementation and a shorter time-to-market (TTM). A reduced TTM is essential for maximizing return on investment (ROI), as it minimizes the period during which resources operate without generating revenue. This allows companies not only to take advantage of emerging market trends but also to respond efficiently to changes. Ultimately, the ability to capitalize on technological innovations before competitors provides a strong competitive edge, keeping the company relevant and ready for future challenges.

2. Lower Labor Costs

Factory-built modular units rely on automated processes, operating in a highly controlled manufacturing environment. As a result, the need for local labor is reduced, in addition to eliminating reliance on on-site artisanal construction. This significantly decreases labor costs, contributing to more efficient resource management and helping optimize the total cost of ownership (TCO | Total Cost of Ownership). Therefore, this approach allows companies to reduce operational expenses while also increasing predictability in timelines and delivery.

3. Energy Efficiency

Modular data centers are designed to meet initial loads while allowing future expansions without requiring on-site construction or creating operational risks as demand grows. In addition, they are developed with a strong focus on energy efficiency, incorporating advanced cooling systems and intelligent power management. This makes it possible to minimize energy consumption and, consequently, significantly reduce utility costs. Therefore, this approach not only enhances operational sustainability but also improves financial returns over time.

4. Scalability

Modular solutions offer the advantage of incremental scalability. Instead of building a large facility with idle capacity from day one, organizations can add modules as needed, optimizing their resources. This approach makes it possible to reduce initial capital expenditures (CAPEX) while also minimizing ongoing operational costs (OPEX). In addition, these modules can be upgraded or supplemented with new technologies as innovations emerge, ensuring the data center remains efficient and aligned with market demands.

5. Reduced Operational Risks

With a prefabricated solution, organizations face fewer risks and delays during the construction phase. This predictability lowers the chances of unforeseen issues and enables more accurate budget planning, optimizing both costs and project timelines.

6. Easier Maintenance and Upgrades

Modular designs simplify maintenance and upgrades, which can reduce downtime and the associated costs of repairs or technological updates.

7. Better Space Utilization

Modular data centers are designed to maximize space utilization, ensuring more efficient use of physical area. This leads to lower real estate costs and a significant reduction in installation and energy expenses, further optimizing the operational and financial performance of the infrastructure.

Comparative TCO: Assumptions

Based on known deployment costs, the following illustrates the reductions in Total Cost of Ownership (TCO | Total Cost of Ownership) when comparing a prefabricated modular solution vs. a conventional data center. To conduct a comparison between both models, we rely on a set of assumptions and a 10-year analysis period, listed below:

• Conventional Data Center

Estimated maximum capacity from the start: 5 MW
Total built area: 3,500 m² on day 1
Total deployment time: 24 months

• Modular Data Center

Modular scalability: Each module provides 1 MW
Initial capacity: 1 MW, with gradual expansion over 10 years, reaching 5 MW
Total deployed area: 2,600 m², divided into 4 phases of 648 m² each
First phase: Completed in 6 months
Additional phases: Each expansion deployed in 3 months

TCO Comparison: Methodology

Step 1: Defining the TCO components:

o CAPEX: Initial costs related to construction, equipment, and setup.

o OPEX: Ongoing costs, including utilities, maintenance, staff, and property management expenses.

o Time-Related Costs: Costs associated with project delays, lost opportunities, etc.

Step 2: Cost estimation for conventional construction. Consider the following costs:

o Construction Cost: Includes materials, labor, and overhead.

o Construction Time: A long construction timeline increases indirect costs such as financial expenses and lost revenue (Time to Market).

o Operational Costs: Includes energy costs, maintenance, staffing, and any inefficient use of resources.

o Contingency Costs: Construction delays and budget overruns often result in additional expenses.

Step 3: Cost estimation for prefabricated modular construction

Consider the same cost categories for a prefabricated modular data center:

o Construction Cost: Typically lower due to factory efficiencies and reduced on-site labor.

o Construction Time: Significantly shorter, resulting in lower indirect costs.

o Operational Costs: Often more efficient thanks to energy-efficient designs and better resource utilization.

o Contingency Costs: Generally lower due to reduced risks and shorter timelines.

Step 4: Compare and calculate the TCO

o Total TCO for the Conventional Method: [ TCO_{conventional} = CapEx_{conventional} + OpEx_{conventional} ]

o Total TCO for the Modular Method: [ TCO_{modular} = CapEx_{modular} + OpEx_{modular} ]

o Calculate the Reduction: [ TCO_{Reduction} = TCO_{conventional} - TCO_{modular} ]

o Calculate the Percentage Reduction: [ TCO_{Percentage Reduction} = TCO_{Reduction} / TCO_{conventional} x 100 ]

Total Cost of Ownership Comparison (TCO | Total Cost of Ownership)

Cost Component

Capital Expenditures (CapEx)

Construction Cost + Facilities

Construction Time (financial + revenue impact)

Contingency Costs

Operational Expenses (OpEx)

Total TCO

Redução no TCO

Redução Percentual no TCO

Conventional Data Center

$

68.292.000

54.200.000

$

8.672.000

$

5.420.000

$

61.462.800

$

129.754.800

$

Prefabricated Modular Data Center

$

42.661.440

48.640.000

$

535.040

$

486.400

$

37.246.080

$

86.907.520

$

$

42.847.280

33,02%

% Reduction

$

27,3%

39,4%

Final Considerations:

1. Cost Comparison

The cost comparison shows a 27.3% difference in CAPEX and a 39.4% difference in OPEX between a conventional data center with traditional operating practices and a prefabricated modular data center designed and implemented using industry best practices.

2. Conventional Construction

When a data center is designed using the traditional model, it must be deployed with its full final capacity from the start. Designers plan for the worst-case end-state load because the costs and operational penalties of running out of capacity during the data center’s lifespan are extremely high. In reality, the final load rarely reaches the projected value. Significant savings in both CAPEX and OPEX can be achieved when the data center is built to grow modularly, deployed in phases according to demand.

3. Modularity and Scalability

Being able to deploy a data center in modules and scale its infrastructure over time leads to greater savings, because capital costs and maintenance costs are deferred until they are truly needed to support the load. Additionally, the system operates closer to its actual demand at each phase, resulting in energy savings. As shown, there is a considerable reduction in OPEX.

The figure below shows the difference in PUE between modular and traditional solutions. When comparing the PUE of a traditionally deployed data center with a modular one that scales as load increases, during the early years—when demand is still low—a major efficiency penalty occurs due to low utilization relative to the fully installed load. Modularity and scalability reduce this effect by up to 50% on the electricity bill in real installations. This economic advantage, both in CAPEX and OPEX, is one of the main reasons the industry is moving toward scalable prefabricated modular data centers.

Data center modular sustentável | Carga de TI | Edgefy

5. Climatization, Power Distribution, Raised Floor

The cooling systems in modular data centers are more efficient, as they use economizer-based models and are positioned closer to the loads. This reduces energy costs because it greatly improves air distribution efficiency. Power distribution is also more efficient since the UPS units are located near the loads, and raised floor costs can be avoided when cooling is done in row or in rack, with power and cabling routed overhead.

6. Prefabricated

This standardized prefabricated architecture reduces CAPEX primarily because components are assembled and integrated by a single provider. Secondly, factory assembly is less expensive than on-site construction, which requires an extensive management structure to coordinate multiple field vendors. In addition, the time spent tuning the cooling system controls—integrating fans, pumps, circuits, chillers, cooling towers, and more—is drastically reduced when standard modules are deployed.

7. Smaller Areas

Traditional buildings are designed with people in mind. For that reason, electrical and/or mechanical rooms inside a building may be specified to consume 4 to 5 times the floor space to meet local code requirements, compared to modular solutions designed for infrequent human interaction. This extra space then requires more energy and more water to cool, heat, and ventilate. The compact nature of a pre-engineered, prefabricated modular solution means more equipment is packed into a single “enclosure,” resulting in higher efficiency when considering footprint. With a typical cost of $1,076 to $1,614 per square meter, this leads to significant savings. The confined footprint inside the modular solution also allows operations to be tightly controlled, as the influence of other systems (such as building comfort HVAC) is nonexistent. This helps prevent overcooling. Additionally, prefabricated facility modules are free from “parasitic” loads such as office areas or shared lighting.

8. Standardized and Integrated Cooling Controls

Cooling controls directly affect the performance of the cooling plant and its ability to operate in economizer mode. A design with standardized integrated controls makes cooling plant operations more predictable and reliable. Traditional cooling components are often oversized to account for performance uncertainty resulting from one-off systems with custom controls.

Traditional designs almost always intentionally incorporate excess load capacity, since expanding power capacity is extremely difficult and expensive in a live data center. This often leads to an overly conservative approach to capacity planning, resulting in higher upfront capital costs and a chronically inefficient data center.

Prefabricated modular data centers, on the other hand, eliminate this tendency toward unnecessary oversizing, as their modular and standardized architecture makes it much easier to add or reduce capacity to meet dynamic, real-world demand. Combined with integrated and efficient power and cooling technologies, this leads to approximately 30% savings in Total Cost of Ownership (TCO | Total Cost of Ownership) compared to traditional data centers.

Insights

+ 150

racks

+ 1,82

MW

III

Tier

1,4

PUE

Case SERPRO

Block building, modular, high processing capacity, scalable, efficient power infrastructure

NBR/ABNT 10636 Certification

O novo data center modular do SERPRO (Serviço Federal de Processamento de Dados) possui certificação conforme a norma NBR/ABNT 10636, atendendo aos critérios estabelecidos para garantir um ambiente protegido contra diversos riscos.

Tier III

Além de uma infraestrutura física robusta e resiliente, o Data Center possui certificação Tier III pelo Uptime Institute. Dessa forma é possível realizar manutenções concorrentes sem impactar no serviço para garantir a disponibilidade.

Edgefy: Case SERPRO: usina de geradores

PUE 1,4

O data center modular do SERPRO tem um PUE de 1,4 que é altamente eficiente, consumindo apenas 40% da energia total para operações de suporte, como climatização. Esse desempenho reflete um design otimizado e sustentável, garantindo economia e alta performance operacional.

Edgefy: Data center modular SERPRO: Tela de gestão do ar-condicionado

Planta baixa simplificada

O data center modular do SERPRO é formado por múltiplos containers e oferece uma infraestrutura completa e segmentada, garantindo eficiência e segurança. Com áreas separadas para front desk, NOC (Centro de Operações de Rede), data halls, salas elétricas, e uma usina de geradores, ele permite maior controle e gestão operacional. Essa estrutura modular também proporciona escalabilidade, permitindo que novos containers sejam integrados conforme a demanda cresce, além de oferecer alta resiliência por meio da segregação de sistemas críticos e operacionais.

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