By Vince Van Son of Facebook, and Letha Tawney of the World Resources Institute (WRI)
Facebook is committed to powering all of its operations with cost-competitive clean and renewable energy and has an intermediary goal for its global data centers of 25% in 2015. In November 2014 Facebook’s newest data center in Altoona, Iowa, came online. Almost simultaneously, 60 miles away in the town of Wellsburg, Iowa, a new wind project is beginning to deliver 140 MW of renewable energy into the grid. Being able to make this wind project a reality and help bring more new renewable to the grid than it expects to consume at its data center was a key part of Facebook’s decision to invest in Iowa. This is just one example of a growing trend in the United States where companies are collaborating with their utilities to secure renewable energy for their operations.
Eighteen other companies have joined Facebook as signatories to the Corporate Renewable Energy Buyers’ Principles, facilitated by World Wildlife Fund (WWF) and World Resources Institute (WRI). The Principles are an effort to foster a dialogue with utilities, regulators, and other stakeholders on how to make more renewable energy projects a reality. Like Facebook, these major companies — 3M, Adobe, Bloomberg, Cisco, eBay, EMC, General Motors, Hewlett-Packard, Intel, Johnson & Johnson, Mars, Novelis, Novo Nordisk, Procter and Gamble, REI, Sprint, Volvo, and Walmart – are committed to increasing access to cost-competitive renewable energy.
Before committing to locate its next data center in Altoona, Facebook secured rights to a 140 MW wind project still in its development stage in nearby Wellsburg. Facebook subsequently turned the project over to MidAmerican, the local power provider, to build, own, and operate. Like almost all renewable energy projects, the project’s generation will be tracked through the use of renewable energy certificates (RECs). The RECs will be registered in a tracking system and Facebook will retire the RECs needed to ensure 100% of its annual energy consumption in Altoona is met with the new wind energy added to the grid in Wellsburg. Similarly, at its data center in Luleå, Sweden, Facebook is using 100% renewable energy from locally generated hydroelectricity. Actively seeking cost-competitive supplies of clean and renewable energy is an integral part of Facebook’s overall energy strategy.
Price declines in renewable energy technologies in recent years, notably wind and solar, are helping provide companies with renewable energy options that are cost competitive and fixed over 15 to 20 years. This long-term price certainty is something fossil-fuel-based electricity cannot provide. As the financial case for renewable energy strengthens, companies are seeing that they can significantly lower their environmental footprint and build momentum in their pursuit of broader corporate sustainability objectives.
What Facebook and other companies want
Facebook values a variety of attributes when assessing clean and renewable energy options for its existing and potential data center locations, including:
- Lower net delivered energy cost: Delivered energy prices are a key driver to site competitiveness. Businesses using renewable energy can often cut their total energy cost in the near and long term because of the increasing competitiveness of renewable energy projects and because they avoid fossil-fuel-related prices and risks. The lack of exposure to varying commodity fuel prices and unpredictable operating and regulator costs means solar and wind power purchase agreements (PPAs) and other clean energy supplies can provide a fixed price over 15 to 20 years. Those securing energy from clean and renewable energy sources through ownership or PPAs can be better positioned to capture the full advantages of renewable energy over fossil fuel generation.
- Integrity of Environmental Claims: Renewable Energy Certificates (RECs) and related tracking systems provide transparency and third-party assurances that associated generation comes from renewable energy projects that meet specific criteria. Retiring the associated RECs ensures the environmental integrity of the energy supplied, which is important to corporate sustainability and environmental values.
- Supply Reliability: All stakeholders in the grid benefit from reliability, and reliability is strengthened by diversity in generation technologies and resources. Renewable energy projects are typically composed of smaller-sized blocks of generating capacity than fossil fueled projects. Accordingly, an individual renewable energy generator going offline has a much smaller overall impact on the grid. Additionally, resources such as hydropower can provide firm capacity that can start and follow load quickly and efficiently. Working together under the efficient direction of regulators, transmission system operators, and utilities, all stakeholders in the grid can participate to help ensure the vast number of supply and demand resources remain reliably balanced.
- Opportunity to invest or conserve capital: Different elements of a renewable energy project (ownership, operations and maintenance, and energy use) can easily be distributed among different parties or aggregated under one party. This flexibility plus the smaller-sized increments of generation provides consumers with an opportunity to invest their own capital or outsource asset ownership and conserve their capital. Accordingly, businesses have the opportunity to integrate their energy strategy more closely with their business strategy.
New models and opportunities for renewable energy
Renewable energy clearly has the potential to help businesses impact their triple bottom line —meeting economic, environmental, and social goals. Facebook and the other signatories to the Buyers Principles are collaborating with non-profits like WRI and WWF, utilities, regulators, and other key stakeholders to identify and develop innovative and replicable renewable energy solutions. These solutions strengthen the business case for renewables and ultimately help green the grid by expanding access to cost-competitive renewable energy for all consumers.
LEARN MORE: To learn about the innovative solutions– such as utility-offered renewable energy, read WRI’s working paper Above and Beyond: Green Tariff Design for Traditional Utilities.
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