Hi. I'm looking at the impact of a data center (NAICS 518210; IMPLAN 436). According to the commodity demand balance sheet for this industry (at the national level in 2019), spending on electricity is 0.7% of industry output, which seems wildly low to me. I haven't (yet) traced this back to the sourcing in the BEA IO tables, but do you have any thoughts as to why that value is so low, and how I might estimate a more reasonable one? Thanks.
Data center electricity demand
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Hello!
Our Data Team dug into this a little to ensure that we had the correct value. They confirmed the value in the raw BEA Benchmark data, which are from the raw BEA Benchmark IO USE spreadsheet. If you divide the electricity purchase from the total output and you'll get 1%. The value in IMPLAN is very close to this, just a bit lower because in the benchmark table it is a combined commodity that includes both the electricity and the transmission and distribution of said electricity. In IMPLAN, regular industries don't directly purchase electricity but rather the separate commodity that represents the transmission and distribution of electricity. Also, the new 2020 % is the same, as well as the previous 2007 benchmark.
A couple potentially helpful ways to look at it:- That small purchase of electricity transmission & distribution is 21st largest out of the industries 215 commodity purchases, so it is in the top 10% of commodity purchase values for the industry.
- Industry 436 is 175 out of 531 industries that purchase this commodity, putting it (barely) in the top 1/3 of industries that purchase it.
- Also note that those absorption percentages are a percentage of OUTPUT, not a percentage of total Intermediate Inputs; when one divides the purchase amount by total II, the percentage does rise a bit (though is still low at about 1%).
- So based on all this, it seems more reasonable, compared to just looking at the absorption %
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Hello,
I had a similar question about this. Literature suggests that about 40% of data center's operational budget is spent on electricity. Usually we use the bill of good approach to these type of facilities but I wanted to just do a general model for data centers using the industry detailed analysis. In the past, I had thought these percentages represented the proportion of total intermediate spending by commodities, sort of a production function. But here you are saying that absorption percentages represent a percentage of output. Can you discuss point 3 a bit more? Would it be appropriate to take electricity out of the intermediate inputs and then model that as a separate industry event if we aren't certain this percent for electricity is accurate? I realize industry 436 must cover facilities other than data centers so maybe that is affecting the industry spending pattern? Just trying to make sure I understand how to do an analysis of data center operations correctly.
Thank you
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Hello Sara!
There are two ways that an Industry's purchase of Commodities for Intermediate Inputs are reflected on a relative percentage basis within IMPLAN. When looking at an Industry Spending Pattern (i.e., using an Industry Impact Analysis Event), they are shown as a percentage of total Intermediate Inputs for the Industry, meaning that the sum of all percentages will be 100% by default:
When viewing the list of Commodity purchases for an Industry in Region Details (Region Details>Social Accounts>Balance Sheets>Industry Balance Sheets>Commodity Demand), the percentages reflect Gross Absorption. Gross Absorption tells us the percentage of Output that is allocated to the purchase of a given Commodity in an Industry's Leontief Production Function. Total Gross Absorption is the percentage of Output that is spent on all Intermediate Inputs for the Industry:
You are correct to note that other types of business activities are captured in IMPLAN's Industry 436, so that is likely leading to the percentage being allocated to Commodity 3047 (for the purchase of electricity) being smaller than what you might expect. To get a better idea of what kinds of businesses are included in the underlying data for IMPLAN Industry 436, you can refer to our 2022 NAICS to IMPLAN Bridge that can be downloaded here. The most straightforward way to account for this when using an Industry Impact Analysis (Detailed) Event on Industry 436 would be by editing the Spending Pattern percentage going towards Commodity 3047 to more accurately reflect the magnitude of electricity purchases (relative to all other Intermediate Inputs). Our support article - Editing Spending Patterns - walks through this process in more detail.
Hope this helps! Feel free to follow up with any additional questions that you may have.
Best,
Michael Nealy
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