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The Cloud Begins With Coal The Big Picture & A New Report

We have been absent in recent months from these Commentary distributions.

During our absence, we have reviewed, analyzed and assembled a large body of research

relating to the current and future state of electric demand associated with the globalinformation-communications-technology (ICT) ecosystem.

Herein a brief overview and summary from our new report, The Cloud Begins With Coal,from the Digital Power Group. (A copy of the full report, with citations and references isavailablehere.)

The information economy is a blue-whale economy with its energy uses mostly out of sight.Based on a mid-range estimate, the worlds Information-Communications-Technologies(ICT) ecosystem uses about 1,500 TWh of electricity annually, equal to all the electricgeneration of Japan and Germany combined -- as much electricity as was used for globalillumination in 1985. The ICT ecosystem now approaches 10% of world electricitygeneration. Or in other energy terms the zettabyte era already uses about 50% moreenergy than global aviation.

Executive Summary,The Cloud Begins With Coal, 2013

Reduced to personal terms, although charging up a single tablet or smart phone requires anegligible amount of electricity, using either to watch an hour of video weekly consumesannually more electricity in the remote networks than two new refrigerators use in a year.

Shortly, hourlyInternet traffic will exceed the Internets annualtraffic in the year 2000.

Size of the Digi tal Universe Ann ual Data Created & Consum ed

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DIGITAL POWER GROUP

Electricity fuels the infrastructure of the worlds ICT ecosystem -- the Internet, Big Data andthe Cloud. Coal is the worlds largest single current and future source of electricity. Hencethe title of our new report.

Coal supplied 68% of additional electricity generated globally over the past decade and isforecast to supply at least 50% for the next decade.

Ann ual Global Electr ici ty Generated

For the U.S. economy, where data are more readily available, over $1 trillion of the GDP isassociated with the ecosystem of information and data -- moving bits. This is more thantwice the share of the GDP associated with transporting people and stuff similarly countingeverything from manufacturing to services. The information sector is now the fastestgrowing part of the economy.

U.S. Share of GDP: Moving Inform ation v. Moving People & Thing s

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DIGITAL POWER GROUP

While data centers are the largest and most easily identified feature of the infrastructure ofthe Internet and the Cloud, they comprise just one part of the ICT ecosystem.

Where Electr ici ty Is Consum ed in the Digi tal Universe

DIGITAL POWER GROUP

To estimate the electricity used by everything that produces, stores, transports, processesand displays zettabytes of data, one must account for the energy used by:

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Data centers that have become warehouse-scale supercomputers; Ubiquitous broadband wired and wireless communications networks; The myriad of end-use devices from PCs to tablets and smart phones to digital TV; The manufacturing facilities producing all the ICT hardware.

Estimated Glob al Electr ici ty Used in the ICT Ecosy stem

DIGITAL POWER GROUP

Most current estimates likely understate global ICT energy use by as much as 1,000 TWhsince up-to-date data are unavoidably omitted, as is the migration of television and videoonto the global Internet. At the mid-point of the likely range of energy use, the total ICTecosystem now consumes about 10% of world electricity supplied for all purposes.

Global Trends in Electr ici ty Use

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DIGITAL POWER GROUP

Global Internet traffic is going mobile. Migration to the wireless Internet is happeningfastest in emerging markets, but is occurring everywhere. Wireless networks use moreenergy than legacy wired networks, a fact locked into the physics. Compared to legacy 2Gvoice-dominated wireless networks, the rapidly growing high-speed LTE architectureconsume 60 times more energy for the same coverage

Global Instal led Based of Com putin g - - The Rise of the Mobi le Internet

DIGITAL POWER GROUP

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Even as the efficiency of computing equipment improves, with radical gains achieved inoverall data center operational efficiency in recent years, total global power needs to lightup the worlds data centers keeps rising, nearly doubling in the past five years.

Global Data Centers -- Agg regated Power Trend

Future growth in electricity to power the global ICT ecosystem is anchored in just twovariables, demand (how fast traffic grows), and supply (how fast technology efficiencyimproves): As costs keep plummeting, how fast do another billion people buy smartphones

and join wireless broadband networks where they will use 1,000 times more dataper person than they do today; how fast do another billion, or more, join the

Internet at all; how fast do a trillion machines and devices join the Internet to fuelthe information appetite of Big Data?

Can engineers invent, and companies deploy, more efficient ICT hardware fasterthan data traffic grows?

And while data centers energy use will continue to draw the most attention, because of theirastounding individual scale and high profile, the entire ICT ecosystem consumes far moretotal energy, and the fastest growing portion will come from transport hardware in thewired (fiber, coax, and legacy copper) and wireless domains (cellular, WiMax, and WiFi.)

Where Electr ici ty is Used in th e ICT Ecosys tem

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In every credible forecast -- including from the EIA, IEA, BP, Exxon -- coal continues to bethe largest single source of electricity for the world. Coals dominance arises from theimportance of keeping costs down while providing ever-greater quantities of electricity to

growing economies, and as the IEA recently noted, the absence of cost-effective alternativesat the scales the world needs. Even in the U.S. where EIA forecasts assume continuingunfavorable policies directed at coal, the most recent projections show coal as the dominantsource of electric supply for decades yet.

The Cloud begins with coal.

EIA Forecast for U.S. Electr ici ty Supply Everyth ing Grows & Coal Dominates

Mills - Digital Power Group