Google has spent more than $1 billion in solar and wind energy projects but it ultimately has no control over the fuel that produces the electricity that powers its data centers. Google today is proposing a new tariff to buy renewable energy directly from utilities, a model it hopes will help scale renewable energy for data centers and other big energy consumers.
At its Lenore, North Carolina data center, Google today is announcing plans to spend $600 million to expand there, which is on top of the $600 million it has already spent. In tandem with the event, local power provider Duke Energy says it will submit a renewable energy tariff to the state utility commission within 90 days. The tariff would allow large power consumers, such as the many data centers in North Carolina, to buy renewable energy from specific projects in the area.
Cloud computing companies have come under public pressure for the considerable amount of energy data centers use. Google has improved the efficiency of its data centers and has invested in various ways to promote large-scale solar and wind. But existing approaches have limitations.
Data center operators can invest in on-site solar farms, as Apple has done at its Maiden, North Carolina data center. Large arrays take up a lot of space and provide power intermittently so big energy users still draw power from the grid. (See, The Little Secrets Behind Apple’s Data Centers.)
Another approach is to buy renewable energy certificates, or RECs, that represent the environmentally beneficial attributes of produced energy. Google went as far as buying power directly from two local wind farms in the Midwest near its data centers. It retired the RECs attached to the power so they won’t be sold again, a way to ensure that RECs represent additional renewable energy on the grid. But direct investment in wind or solar farms requires selling the power on the wholesale markets, not something most companies will go to the trouble of doing.
In a white paper published today, Google proposes that the renewable energy tariff be structured so that utilities own renewable energy projects and customers have the option to purchase a portion of their energy production. It recommends that each purchase represents an additional renewable energy project and above existing state mandates, known as renewable portfolio standards, says Michael Terrell from Google. The price of the power would be passed directly to customers who opt for the renewable energy tariff, not the entire ratepayer base.
As a policy proposal, the tariff is sensible in that it tries to attach renewable energy purchase directly to known projects. Purchasing RECs, on the hand, offers much less transparency since the projects could be anywhere. Also, RECs are not closely regulated to ensure they represent additional projects, rather than something a company would do anyway, such as capturing methane from landfills.
The question is whether utilities will offer the tariff and invest in renewable energy projects beyond their mandates. Since solar and wind is typically more expensive than power from coal or natural gas, utilities could have trouble getting this type of structure approved by regulators. But cloud companies have a lot of buying clout; a renewable energy option gives them more power to exercise it.