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Google and Microsoft’s newest rivalry: renewable energy

Google and Microsoft aren’t just battling for supremacy in search engines, mobile phones and tablet computers. They’re competing to be the top tech do-gooder in renewable energy.

Microsoft announced today it has signed its first big green power deal, a 20-year agreement to purchase all the electricity generated by a 110-megawatt (MW) Texas wind farm to be built next year near Fort Worth.

The Keechi wind project, owned by a subsidiary of UK firm RES, will deliver electricity into the grid that powers a Microsoft data center in San Antonio. Like Google, Microsoft has pledged to go carbon neutral by tapping renewable energy sources like wind and solar. And that has the two companies competing to lock up deals in Texas, which has undergone a wind farm-building boom in recent years.

Google, for instance, announced an agreement on Sept. 17 to buy 240 MW of electricity to be produced by the Happy Hereford wind farm to be built near Amarillo, Texas. That power will flow in the grid that powers a Google data center in Oklahoma.

“By purchasing wind, we will reduce the overall amount of emissions associated with operating Microsoft facilities in this region and hopefully spur additional investment in renewable energy in Texas,” said Microsoft in a statement.

As we’ve written, such a strategy increasingly pits companies like Google and Microsoft against local utilities in the race to obtain clean, green electricity. Microsoft and Google have not revealed the financial terms of the latest deals but in the past Google has paid a premium for renewable energy. But such competition is good for green energy; if developers know they can lock in long-term contracts with tech companies, they’ll be quicker to build more wind farms. And they’ll avoid the bureaucratic hassles that involve negotiating with their regional utilities.

Microsoft has a long way to go in matching its rival in the green energy sweepstakes; Google has invested more than $1 billion in wind and solar and has contracts to purchase 570 MW worth of wind energy. Among its investments is the $168 million it has put into a 370 MW solar thermal power plant that is set to come online in the southern California desert by year’s end.

The software behemoth, however, has been innovative in the way it funds its renewable energy purchases. Last year it began levying an internal carbon tax on its various divisions to encourage them to reduce their greenhouse gas spew. The company sets a carbon price and then divisions must offset the emissions associated with electricity use and travel. Otherwise they pay a fee into a fund that finances renewable energy purchases and carbon credits.

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