A line-by-line build-up of cost per MW, and why the same building can be quoted at three different prices.
Data centre development cost per MW is the all-in project cost divided by the critical IT load the building can lease. On an illustrative 60 MW campus the build-up comes to $670.2 million, or $11.17 million per MW of IT load, close to the $11.0 million per MW the book's own illustrative case uses for a turnkey building. Divide the same cost by utility capacity instead and it reads $8.59 million: the denominator, not the building, explains most of the spread in quoted figures.
Worked in full in The Data Center Development Handbook by Julian R. Sterling, with every figure reproduced in a free workbook.See the book on Amazon →
The case is a single-tenant turnkey campus of 60 MW of critical IT load, with N+1 electrical redundancy and air cooling. Each cost line is expressed in millions of dollars per MW of IT load, because that is how a development budget is usually benchmarked. All line items are illustrative assumptions, not sourced market cost levels; only the $11.0 million per MW turnkey figure and the 6.3 per cent interest rate come from the book's case, as set out on its companion page.
| Cost line | $m per IT MW | $m total | Share of base |
|---|---|---|---|
| Land and site works | 0.45 | 27.0 | 4.4% |
| Substation and grid connection | 0.80 | 48.0 | 7.8% |
| Shell and core | 1.60 | 96.0 | 15.6% |
| Electrical: switchgear, UPS, generators | 4.10 | 246.0 | 40.0% |
| Mechanical: cooling plant and distribution | 2.30 | 138.0 | 22.4% |
| Fit-out, controls and security | 0.45 | 27.0 | 4.4% |
| Design, permits and project management | 0.55 | 33.0 | 5.4% |
| Base cost | 10.25 | 615.0 | 100% |
Two further lines turn a base cost into a budget a lender will fund: a 5 per cent contingency on everything above, and interest during construction on a loan at 60 per cent of cost, priced at 6.3 per cent over a two-year build with half the facility drawn on average.
Base cost per MW = sum of the seven lines = 10.25
Contingency = 10.25 x 5% = 0.51, so hard and soft cost = 10.76
Interest during construction = 10.76 x 60% x 6.3% x 2 years x 50% average draw = 0.41
All-in cost per IT MW = 10.76 + 0.41 = 11.17; x 60 MW = $670.2 million
In Excel, with the seven lines in B2:B8: =SUM(B2:B8)*(1+5%)*(1+60%*6.3%*2*50%)
The structure of the number is the useful part. Electrical and mechanical plant together are 62.4 per cent of the base cost; the building that houses them is 15.6 per cent. A data centre is a power and cooling installation with a roof on it, which is why its cost scales with megawatts rather than with floor area.
The same $670.2 million can be quoted on four different bases, and each of them can turn up in market commentary.
| Basis | Denominator | Cost |
|---|---|---|
| Per MW of critical IT load, all-in | 60 MW | $11.17m |
| Per MW of IT load, excluding land and interest | 60 MW | $10.29m |
| Per MW of utility capacity, at a 1.30 PUE | 78.0 MW | $8.59m |
| Per square foot of white space, at 200 W | 300,000 sq ft | $2,234 |
| Per square foot of gross building area | 600,000 sq ft | $1,117 |
Utility capacity is IT load multiplied by the peak design PUE, 60 x 1.30 = 78.0 MW. A developer who quotes cost per utility MW looks 23 per cent cheaper than one who quotes per IT MW for an identical building. The square-foot figures are the least useful of all: they move with rack density, so a high-density hall looks expensive per square foot precisely because it packs more megawatts into each square foot.
Before comparing two cost-per-MW figures, ask three questions: IT or utility MW, with or without land and grid connection, and with or without contingency and interest during construction. The answers can move the number by more than any genuine difference in build cost.
Because the electrical and mechanical lines dominate, specification choices move the per-MW cost far more than location or building form.
| Case | $m per IT MW | Change |
|---|---|---|
| Base: N+1, air cooled, 60 MW, two-year build | 11.17 | 0.0% |
| Three-year build, more interest during construction | 11.37 | 1.8% |
| Liquid cooling, mechanical line up 30% | 11.92 | 6.7% |
| Smaller 12 MW site, fixed lines 50% dearer per MW | 12.15 | 8.8% |
| 2N electrical, electrical line up 25% | 12.29 | 10.0% |
| 2N electrical and liquid cooling | 13.04 | 16.7% |
The smaller site is dearer because land, the substation and the design team, together 1.80 per MW on the large campus, do not shrink in proportion to capacity. A longer build matters less than people expect for cost, at 1.8 per cent, though it matters a great deal for return, because rent starts later.
The frequent error is dividing by the wrong megawatts. A budget built per MW of IT load, then compared against a peer figure quoted per utility MW, makes the budget look dearer by the PUE factor, here 30 per cent, for an identical building. The reverse error is quieter and more dangerous: underwriting rent on IT load but importing a per-MW cost benchmark that excludes land and interest. On this campus that is $10.29 million instead of $11.17 million, 0.88 per MW, and $52.8 million of cost that the budget has not provided for.
The second error is treating cost per MW as a target to minimise. The tenant pays rent per kW of IT load, so the right test is the yield that rent produces on the all-in cost, not the cost alone. A design that cuts PUE adds leasable megawatts on the same grid connection, as the article on how PUE limits leasable capacity shows, and can justify a higher cost per MW.
Build the cost line by line, add contingency and interest during construction, and divide by critical IT load: $11.17 million per MW on this illustrative campus, with power and cooling plant carrying almost two thirds of it. Quote the denominator every time. The full turnkey underwrite on the book's 180 MW site, from cost per MW to levered return, is in the free workbook for this case, and the data centre financial model template takes the same build-up through to rent and value.
Developers and lenders normally quote cost per MW of critical IT load, because that is what the tenant leases and pays rent on. Utility capacity is larger by the peak PUE. On the illustrative 60 MW campus the all-in cost is $11.17 million per IT MW but $8.59 million per utility MW at a 1.30 PUE, a gap of almost a quarter.
Usually the majority. In the illustrative build-up, switchgear, UPS and generators are 40.0 per cent of the base cost and cooling plant 22.4 per cent, together 62.4 per cent, against 15.6 per cent for the shell and core. That is why the per-MW figure tracks redundancy and cooling choices far more than building size.
It depends on how much electrical plant is duplicated. If 2N adds 25 per cent to the electrical line, the illustrative all-in cost rises from $11.17 million to $12.29 million per MW, 10.0 per cent more. Adding liquid cooling on top takes it to $13.04 million, 16.7 per cent above the base case.
The turnkey cost is worked into a full underwrite in chapter 13 of The Data Center Development Handbook. The book takes the same case from first principles to the decision, chapter by chapter, and every figure it prints is a live formula in the free companion workbooks.
Get the book on Amazon →Free companion files
Also on Amazon UK · Amazon Germany · Amazon France · Amazon Canada
Reading guide: infrastructure, data centres and energy → · All 453 articles →
If this book helped, or didn’t, a few lines on Amazon are worth more than they look: they are what the next reader goes on. Write a review. The workbook stays free either way.