While it makes financial and environmental sense for ICT companies to ‘go green’, open generation markets and member-led platforms that encourage corporate procurement of off-site renewable energy help seal the deal.
Corporate investments to accelerate renewables
For instance, the latest renewable energy procurement deal by technology company Hewlett-Packard (HP) involves a 12-year contract to purchase 112MW of wind power from renewable energy development company SunEdison’s wind farm in Texas. For HP, this means that the firm will soon be able to power its five Texas data centres with 100% renewable energy. The company gets 14% of its electricity from renewable sources already.
It will also help HP achieve its 2020 operational greenhouse gas emissions reduction goal five years ahead of schedule, avoiding the emission of over 340,000 tons of carbon dioxide annually.
As well as reducing its corporate carbon footprint, HP knows that it will save money, hedge prices and ensure energy resiliency by using renewable power. In fact, HP joins a growing list of ICT companies in the US that have cottoned onto the benefits of renewable power.
HP is the latest in a line up of big names in the technology sector including Intel, Microsoft, Google, Apple, Facebook, Salesforce, and Cisco with big commitments to renewable power. In fact Google has actively invested in the sector [Google Sees Green.]
PPAs account for 1GW in Texas alone
Power purchase agreements (PPAs) are certainly advantageous for locations that have open generation markets such as Texas. HP has joined an impressive list of companies that have already bought wind power from the US state. These include Facebook, Walmart, Dow Chemical and Microsoft. The HP purchase brings the amount of Texan wind bought through corporate PPAs in the past three years up to 1GW.
The contracts also bring large corporate interests into the state, creating employment opportunities and economic growth. The HP PPA will allow SunEdison to begin construction on the 300MW South Plains II wind farm.
Texas leads the USA in wind power generating capacity, having a total installed capacity of over 14GW—21% of the 66GW installed in the US.
Other than having good wind resources and relatively cheap land, the boom in Texas wind power is partly due to the Competitive Renewable Energy Zone (CREZ) transmission lines completed in 2014. The new 345kV transmission lines include 186 projects across Texas that help get energy from the ideal wind farm sites to the areas that need energy most. These will increase Texas’s wind capacity to an estimated 50%.
As data traffic is expected to grow more than 20% annually through 2018, high-tech companies are expanding across the US and globally with new data centres and supporting infrastructure. In the US, economic development commissions and governor’s offices should note that helping companies access higher levels of cost-competitive, scalable renewable power that is additional to business-as-usual will make their locations more attractive to the many technology companies considering various location options.
The utility sector needs to start playing
There is also a sense of urgency. While tech firms generally prefer to work with existing providers, they are not going to wait for renewables to come on line, or accept options from utilities that aren’t attractive.
For utilities to succeed, they must adapt their business model. Utilities are in the prime position to get involved in the ICT-renewables boom. They have close ties to customers, not only at the household level, but also in industry and at grid operator level. They also possess the engineering capability and knowledge of the infrastructure. While generation may not be their main concern, managing information will be.
ICT's impressive contribution to renewables
Figures show that the amount of money the ICT sector spends on renewable energy is growing faster than in any other sector, according to a recent National Renewable Energy Laboratory (NREL) report.
Data centres are responsible for about 30% of all electricity used by the ICT sector, and 2% of total US electricity consumption. The ICT sector is proving to be an important market for renewables. According to the NREL report, the large scale usage of electricity by ICT firms shows that renewable electricity procurement across all levels of the industry could be a major market driver for renewable development in the US.
Among the tech companies that report their use, some like Intel, SAP America, and Workday all get 100% of their electricity through renewables—Adobe Systems topped the list at 234%.
Tech vendors and cloud providers are continuing to grow their use of renewable sources of energy. This year, Google announced that NextEra Energy Resources will install new turbines at its wind farm in California that will generate about 43MW of electricity starting 2016 that will be used to Google's headquarters, while Amazon Web Services (AWS) announced it will build a wind farm in North Carolina to not only power its data centres, but also local neighbourhoods.
The sector is also looking at solar power. Apple says it will spend US$848 million over 25 years to buy solar power to run corporate offices, stores and other sites in California. Cisco Systems intends to buy solar power for its head office and AWS said it will have an 80MW solar farm built in Virginia. [Apple and Amazon Commit Big To Solar Power.]
Bringing developers and corporations to the table
Most corporate companies have clean energy or climate targets to meet but due to the high transaction cost and complexity of large-scale renewables transactions, few take action. In response to this, collaborative platforms such as the Business Renewables Center (BRC) which has been established to accelerate corporate renewable energy procurements of off-site renewable energy by bringing together corporate buyers, project developers and service providers. The BRC works with its members to remove obstacles that prevent corporations from building renewables into their energy profiles. HP and SunEdison are founding members.
One challenge for corporate offsite renewable purchases is often the length of the PPA. Developers often want long-term deals such as 25 years but generally, corporates are keen on shorter-term deals. The BRC helps bring developers and corporations together and bridge that gap to move a deal forward. The BRC provides a platform for developers and corporations to meet in a low-risk, pre-commercial environment, build relationships, and build trust.
The 12 year PPA that HP and SunEdison signed sufficient longevity for revenue assurance for the developer and short enough for corporate comfort.
The Buyer’s Principles for Renewable Energy, led by WWF and WRI, are also driving change in utilities and among policymakers, opening the door for customer-utility collaboration, such as utility leadership forums and discussions with utility regulators. RE100, led by the Climate Group, helps amplify the message to U.S. and international policymakers that renewable energy is good for business.
It is clear that the ICT sector’s interest in renewable energy is gaining momentum and it is up to policy makers, project managers, IPPs and utilities to take full advantage of this growth potential-for economic and environmental reasons.