Is a KeyBlock datacenter the key to success? Keystone NAP will find out
Wed 27 Apr 2016
A new operator, Keystone NAP, has launched in Fairless Hills, Pennsylvania, at the former US Steel complex there. The site is near the border with New Jersey and 30 miles from Philadelphia, with a massive amount of power available at a tall former industrial building, plus land to expand on. Keystone NAP plans to fill its facility with customized Schneider Electric prefabricated datacenter modules (KeyBlocks) stacked three-high. In addition to targeting the Philadelphia market, the new entrant hopes to target the New York/New Jersey market – just when that market looks to be recovering from supply additions and price pressure.
The 451 Take
Keystone NAP has found a site near population centers and key fiber routes, with incredible amounts of power available. Using KeyBlocks from Schneider Electric allows it to conserve capital, adding infrastructure according to customer demand while enabling some customization, as well. Normally, we would expect this to be very appealing for enterprises in the greater NY-NJ-Philadelphia area.
However, this is one of the most competitive markets in the country for datacenter space. As a new entrant, Keystone NAP will be taking on well-known providers with large campus environments (and some economies of scale). A lot will depend on how customers perceive the KeyBlocks – will they like having individual suites, or feel that the modules are not similar enough to the spaces they are used to? If they like them, Keystone NAP will put Pennsylvania on the map as a competitive location for New York businesses.
Context
Keystone NAP is a new company founded by a group that includes Peter Ritz, John Parker, Phil Lanctot and Shawn Carey. The founders formerly worked at or ran service providers such as AirClic, ASD Worldwide, iPipeline and Xtium. Keystone NAP’s first project is to create a network-dense facility between Philadelphia and New Jersey that can serve both markets. The firm has raised around $20m in private funding, and has received
$2m in financing and loan guarantees from the Bucks County Industrial Development Authority.
The building is at the Keystone Industrial Port Complex near Trenton, on the border of New Jersey, roughly 30 miles from Philadelphia and 60 miles from New York City. In addition to the 62,000-sq-ft building, Keystone NAP has 80 acres of land to build on. There is a river nearby, but the site is above the 150-year floodplain. It is in a Keystone Opportunity Improvement Zone, so the facility is eligible for some state and local tax incentives.
The power available at this location is unusual, to say the least. Back when it was a steel mill, the site had two 300MW arc furnaces running continuously. To provide the power for this, a mini-grid was set up with six on-site substations that aggregated feeds from various generation plants near the site. These plants provide more than 2,000MW of generation capacity today. One converts methane from a nearby landfill into natural gas and burns that to generate roughly 60MW of power. Another is a natural gas plant fed by a pipeline that produces a little more than 50MW. PSEG has a combined coal/gas plant that produces around 800MW in the neighborhood, and Dominion has a power clearinghouse nearby with just more than 1,000MW of capacity.
With regard to connectivity, the datacenter is connected via dark fiber from Sunesys to Philadelphia’s main carrier hotel at 401 N. Broad and to 60
Hudson in New York, as well as MAE-East in Northern Virginia and 350 Cermak in Chicago. AT&T, Cogent, Comcast, Level 3 Communications, Lightower, Verizon and Zayo Group are available at the facility. The owners hope to provide a direct connection to Amazon Web Services and Microsoft Azure in the next six months.
The KeyBlocks
Keystone NAP already has several Schneider Electric KeyBlocks set up in the facility, and plans to keep one or two available at all times for clients that need space quickly. In general, the KeyBlocks will be somewhat customized for each client, and can be delivered in less than 16 weeks, with the power and cooling systems installed and tested. Each offers capacity from 100-400kW in a 45×10.5-foot space, and has an integrated fire protection system. The customer can choose the density and availability configuration. It will be possible to just use A+B grid power (from separate power plants); to have N+1 UPS/generators as backup; or to have a complete 2N setup for UPS, generators and cooling. The power and cooling equipment is at one end of the module, in its own room with a separate entrance for maintenance. Aisles are standard width, and the module has space for 20-24 racks 48 inches deep, but the racks can be configured according to the customer’s needs. Cool air is blown through the wall at one end, with hot air returning via a plenum overhead, and there is containment on both the hot and cold aisles. The switchboard and UPS are in a separate module, with each containing a Symmetra MW UPS supplying 600kW of critical power. The plan is to stack the KeyBlocks three-high and add power modules as necessary.
Cooling will initially be done using an airside cooling system. However, there is an aquifer below the site with 53 F water that Keystone NAP hopes to use for cooling as well, starting in phase two, by circulating the water through a heat exchanger. This would provide at least two completely different cooling options, allowing the customer to select N cooling, N+1 or 2N.
The flexibility of the configuration may be appealing to customers: It will be possible to have a KeyBlock (or partial KeyBlock) with traditional UPS and generator backup, plus another one next door (or upstairs) that is only connected to grid power, providing different levels of availability for particular applications at a range of cost points. Keystone NAP appears to be actively incorporating operational experience and customer feedback into the KeyBlock design. It is already on the second design generation, and further refinements can be expected, such as doubling rack and power densities per KeyBlock. Combined with the granular deployment strategy, this allows Keystone NAP to react to changes in requirements rather quickly, which lowers its business risks.
Services and strategy
In addition to basic colocation, Keystone NAP offers migration services as well as network management. It plans to add disaster recovery, backup and storage services, as well. Retail colocation and higher-level managed services will be available through its tenants.
Keystone NAP is targeting Philadelphia-region customers, as well as firms in New York and New Jersey, since its taxes and electricity costs will be lower. It is close enough to the New York market to serve as a low-latency (active-active) backup site. Keystone NAP also offers disaster-recovery workspace in the building. The firm hopes to be seen as a network-dense space, but we believe that will take some time.
Competition
In the Philadelphia area, TierPoint and Directlink Technologies have been providing wholesale and retail options. TierPoint, in particular, has four facilities in the area and a roster of local healthcare firms as clients. SunGard will occasionally compete for large deals. Still, competition for large deployments in the area has been relatively limited. New Jersey, on the other hand, is one of the most competitive markets in the country, especially for wholesale space. The IO facility in Edison is not far away, and has a similar focus on individual modules. Other wholesale competitors include CoreSite, Digital Realty, DuPont Fabros and Sentinel Data Centers. The New Jersey market saw price pressure in 2012-2013 after quite a bit of new supply came online. That has eased, and demand is picking up, according to providers in the area. Keystone NAP hopes to offer interesting price points, thanks to its reasonable electricity costs, low up-front capital spend, the tax advantages of its site and the redundancy of the grid. So this new facility may stir things up again.
We believe that New York businesses tend to be fairly specific about where they would like their facilities located, and this new site may be considered a bit far for them, but its advantages may outweigh the perceived distance. In addition, the form factor is a bit different to that of many competitor facilities, which could be a positive or negative, depending on how customers perceive the individual modules.
SWOT Analysis
Strengths
The vast amount of power available and the redundancy of the mini-grid is a key strength for Keystone NAP. The location along main fiber routes and within striking distance of Philadelphia and New York should be another. The facility has some cost advantages, as well, between its location and the pay-as-you-go modular approach.
Weaknesses
Modules have not always been popular with enterprises, and we have not seen them stacked three-high before, so it is unclear how appealing this will be for customers. This is also a business plan quite tailored to the site that may be difficult to replicate elsewhere.
Opportunities
With plenty of space and power at the site, Keystone could potentially provide larger individual wholesale facilities there (complete buildings) for enterprises, if desired.
Threats
The New Jersey market is one of the most competitive in the country, with established providers of all types, many of which have room to expand fairly quickly. They are used to competing on price when necessary.
