Computer hardware gets cheaper and more powerful at the rate of Moore’s Law. But now, businesses have to contend with an opposing trend: energy costs are increasing around the world, as emerging economies such as China rapidly ramp up their demand for energy.

Beyond the short-term fluctuations in core energy prices coming from geopolitical instability, the long-term trend has turned upwards. Many organizations trying to implement “dense” strategies for their data centers have turned to server-virtualization technologies such as VMware, Xen, Microsoft Virtual Server and others to consolidate low-utilization servers.

Often the justification for such projects and the ROI are found in hardware savings. But the decreasing cost of servers makes that ROI shrink year after year.

On the other hand, the energy savings can be substantial. The only problem: The person responsible for server strategy has probably never seen an electricity bill for the data center.

From an efficiency perspective, what really matters in the data center is not how many servers are “housed,” but instead how much productive computing is done on these servers. Most of the power consumed by a server does not go to “productive” work in the form of computation. Heat losses and inefficiencies in the power supplies, motherboards and peripherals consume large portions of the power. Fans within the server, in the racks and around the data center push air around to cool all the components, using up a tremendous amount of power.

Even when a server CPU is completely “idle” it consumes a tremendous amount of power just sitting there, heating up the room. The data center environmentals then consume a lot of power trying to cool a server that is not producing much.

Server virtualization technology can therefore allow you to move these loads to other servers, increasing CPU utilization and freeing up servers. If you turn those idle servers off or use them to expand your workload capacity and applications, you can greatly increase the power efficiency of your data center.

Data center managers may never see the electricity bill for the data center. In many organizations the electricity bill goes to a facilities or real-estate management unit that has little relation to IT. Thus, one of the greatest areas of potential savings (and increasingly painful costs) is hidden from IT.