OpEx vs CapEx in datacenter

Question

"Paying electricity for your datacenter is an example of OpEx". Is it true or false?

For me it is clearly "true" since you pay for electricity month to month. Also you pay for how much you use. Those are 2 factors typical for OpEx.

But in many exam practise test you can find it as "false" meaning electricity is CapEx. However i can not find any reason for that since CapEx means paying upfront for everything no matter how much you use.

So what should be real answer for it? True or false?

Answer 1

Hi @jan kowalski

You are right, I personally have completed az900,az204 and az400 so as far as my knowledge it is true

Paying electricity for a data center is an example of an operational expense (OpEx). Operational expenses refer to the ongoing costs incurred in the day-to-day operations of a business or organization. These expenses are essential for maintaining and running the business but are not directly related to capital investments or long-term assets.

If you find this answer useful kindly accept, thanks much

Answer 2

Let's look at it another way. The hardware (CapEx) that you set up for the data center requires power. This is part of the equipment. Without electricity, your data center will not work.

You can also read about this in the documentation:
https://learn.microsoft.com/en-us/azure/cloud-adoption-framework/strategy/finance-vocabulary-terms

"Capital Expense (CAPEX): The upfront investment in equipment. This equipment is capitalized as an asset and put on your balance sheet."

Answer 3

https://energy.utexas.edu/policy/fce/framework/operation

"Operating expenditures include fuel, operation and supervision engineering labor, the cost of electric energy consumed by generation and delivery equipment, and the cost of environmental monitoring and controls."

clearly opex.