Google shakes up US utility with green power tariff

Google is using its giant pile of money to try and change how utility companies work, so that more businesses can buy their power from renewable sources.

As part of a $600m expansion of its North Carolina data center, Google's local utility provider Duke Energy has pledged to develop a renewable energy tariff for Google and other large companies, Google's director of global infrastructure Gary Demasi announced in an effusive blog post on Friday.

To date we've committed more than $1 billion to renewable energy project investments, signed agreements to procure wind power near our data centers, and installed solar panels at our corporate headquarters.

It's also important to work directly with our utility partners to find solutions that will make more renewable energy available for us and for others.

The most straightforward way to do this is for utilities to offer a renewable power option for companies that request it—something that’s not currently offered by most utilities.

Google is on a green kick for two reasons: logic and PR. The logic part is that if it can make its faciliities more efficient then it gets to spend proportionally more of its electicity bill on the compute gear that makes it money and less on the supporting infrastructure.

The PR part is that its data centers have become a high profile target for environmental activists Greenpeace, who are incensed at the way Google and other tech companies pride themselves on the efficiency of their bit barns, yet procure energy from utilities that generate most of their power from non-renewables like coal.

Cognizant of this, Google (along with cloud kin Apple and Facebook) has been trying to green its data centers for several years, either through radical new building designs like the seawater-chugging facility in Finland, or through investments into renewable energy tech like biogas and wind farms.

Because cloud computing has led to a centralization of compute and storage among service providers, these companies have an important role to play in changing energy consumption habits in the data center industry.

And change is needed – a 2007 report by the EPA noted that in 2006 US data centers consumed 68 billion kilowatt hours of US energy production – equivalent to 1.5 per cent of all the generation capacity at the time, and this number was expected to rise to over 100 billion kilowatt hours by 2011.

The North Carolina scheme means Duke Energy will try to offer the Chocolate Factory a renewable energy tariff that will pass on the additional costs (if any) of the renewable to Google. More details will come out about that tariff in about three months, when Duke files its plan with the North Carolina state commission.

In a whitepaper published alongside the blog post, Google gave further details on how it thought such a tariff could work, and the idea behind its renewable policy:

"First, our efforts must result in 'additional' renewable power generation," Google wrote in the paper, "Second, we want our activities to be scalable and have the highest possible impact on the industry."

While not explicitly mentioning Duke Energy, the paper did suggest that large electricity users like data center operators would be a good test-bed for a renewable tariff. "But it's a model that could work with any customer group that has sufficient load and is willing to commit to using such tariffs."

Renewable energy tends to have extreme spikes and troughs in generation (eg wind power). To deal with this, Google's proposed green tariff need not be entirely composed of renewable energy; the tariff can also include "a supplemental 'shaping' service from other (likely non-renewable) generation to fill in the gaps of variable renewable resources and ensure that customers receive continuous and reliable service," Google wrote.

Though the tariff may increase Google's energy prices, it will broaden access to renewables in North Carolina, and this could lead to an increase in demand that drives down prices. Either way, Google can afford to pay a bit extra: the search giant made $3.55bn in net income in the first three months of 2013. ®