Green energy owes much of its rapid growth in the US over the past decade to state laws requiring utilities to obtain a share of the electricity they sell from wind, solar and other carbon-free sources. Now Google wants environmentally-minded but energy-hungry corporations to give green power an added push.
The search giant today proposed that regulators allow utilities to sell clean power to big industrial consumers through what it calls a renewable energy tariff. Such tariffs, widely used in Europe and elsewhere, usually include a premium to cover the higher cost of solar and wind power, which is passed on to all a utility’s customers. Under Google’s scheme, only power-hungry customers, like data centers, would pay the tariff. In exchange, they’d be guaranteed that the money is going towards creating new sources of renewable energy.
Geeky stuff. But here’s why it’s important. As utilities achieve their state-mandated renewable energy targets, they’re signing fewer new supply deals, which means fewer new big solar and wind projects are being built. In California, for instance, the number of power purchase agreements for renewable energy has dropped sharply over the past two years. Expect even fewer deals when a federal tax credit for renewable energy projects drops from 30% to 10% at the end of 2016.
A renewable energy tariff for big corporate customers could encourage the construction of new wild farms and solar power stations. Data centers are energy hogs and consume around 2% of electricity production in the US and about 1.5% globally.
But it’s not only the Googles of this world that might pay the tariff. “Because the service is made available to a wide range of customers, companies that don’t have the ability or resources to pursue alternative approaches can participate,” Gary Demasi, director of Google’s global infrastructure, wrote in a blog post published today. “And by tapping utilities’ strengths in power generation and delivery, it makes it easier for companies to buy renewable energy on a larger scale.”
Google timed its proposal with an announcement today that it would invest $600 million to expand its Lenoir, North Carolina, data center. Duke Energy, the coal-dependent local utility, said it would file a proposal with state regulators for a Google-like program to sell renewable energy to large corporate customers.
Utilities that take up a renewable energy tariff will have to negotiate individually with each state’s regulators. And while such an idea may prove popular in windy and sunny states, renewable energy may be too expensive elsewhere.
Google itself has invested more than $1 billion in renewable energy, from installing solar arrays at its Mountain View, California, headquarters to investing in a 370-megawatt solar thermal power plant to signing power purchase agreements with Oklahoma wind farms.