Published on July 20th, 2019 | by Steve Hanley0
Speakers At DCD-San Francisco Ask, “Why Won’t Utility Companies Give Us The Renewable Energy We Want?”
July 20th, 2019 by Steve Hanley
At this year’s Data Center Dynamics conference in San Francisco, speaker after speaker took to the stage to lament how utility companies refuse to provide even the largest corporations with the renewable energy they want. Utility companies are accustomed to having things pretty much their own way. Their attitude is “It’s our electricity, damn it. We will decide how it is made, how it is distributed, and how much you will pay for it!”
The tech industry and its data centers want renewable energy for two reasons. First, there will be no need of data if a warming planet leads to the extinction of humans. Second, businesses crave predictability. Renewable energy power purchase agreements mean stable long term electricity costs with no fluctuations if a hurricane shuts down refineries in Houston (as happened last week) or Iran seizes a tanker in the Straits of Hormuz (as happened yesterday).
“We’re the largest corporate buyer of renewable energy in history,” Google’s senior director of data center energy and location strategy, Gary Demasi, told the DCD – San Francisco conference last week. “And, frankly, it’s very frustrating that we still can’t buy the product that we want to buy and that everybody can’t buy the product that they want to buy.”
“I mean, you’re dealing with utility models that have been in place for a very long time,” he added. “Sometimes you’re challenging the actual business model itself. That’s been a significant challenge for us and our journey since 2010, trying to get our utility partners to actually incorporate renewables into their plan in a way that works and doesn’t impact their other customers and all these sensitivities.”
Demasi says the companies must work together to break down the negative attitudes common in the utility industry. “I think it’s working. We’ve been successful. We’ve done deals with Duke Energy, with Southern Company. We just did a 400+ MW deal with TVA all for renewable energy supply in grids where we operate large data centers. Those are really tough counter parties. They’re very powerful entities in the geographies in which they operate.”
Adam Kramer, executive vice president at Switch, one of the largest data center operators, detailed his company’s struggles to obtain renewable energy going back almost a decade. “In 2010, we began trying to work with our local utility in Nevada, at the time, to achieve 100 percent renewable energy. That proved very difficult for us. They didn’t want to provide us with an opportunity for 100 percent renewable energy.”
What followed was an epic legal fight with NV Energy — owned by Berkshire Hathaway — that involved Switch, several Las Vegas casinos, and Tesla, among others. Both sides dumped huge amounts of money into lobbyists, PACs, and publicity campaigns.
“We launched the largest ballot initiative in the state’s history to create open access energy in the state,” Kramer said. “It was a $100 million dollar campaign with Warren Buffett’s utility spending $70 million to try and stop direct access for consumers.”
The DCD – San Francisco panelists agreed that changes are coming — albeit slowly — in the utility business. But there’s one utility company — Dominion in Virginia — that has been particularly stubborn. The company is a strong proponent of the highly controversial Atlantic Coast Pipeline project, which has drawn the ire of residents and businesses along its proposed route.
Many of those data center operators — including Adobe, Akamai, Apple, AWS, Equinix, Iron Mountain, LinkedIn, Microsoft, Salesforce and QTS — joined forces to write a letter to Virginia’s State Corporation Committee attacking Dominion’s stance on renewable energy.
“It isn’t in Dominion’s DNA to be slapped around by their customers,” Travis Wright, vice president of energy and sustainability at QTS, told the DCD – San Francisco conference. “They’re a very big, powerful entity. And they have a lot of big lobbyists out there that make sure that they get to do things the way they like to do things. And that’s sort of the way it’s been.
“This got a lot more attention than we thought it would. I personally have had meetings with their head of renewables within the last week that have been a very different tone,” Wright said.
Data centers need to be where their customers are and sometimes the electricity available comes from burning coal. Google’s Demasi said, “We have business reasons to have to grow locations when we need to grow them, right? Our job is to provide capacity for a slew of internal customers. We need capacity in particular places at a particular time.”
One of those places is Taiwan, where coal is still the primary source of electricity. The company has just signed up to buy the entire output of a 10 megawatt solar farm in Tainan City. “That took three years,” Demasi said. “It literally took a meeting with the President of Taiwan to get that done. And so we have to work hard at this to influence this kind of change.”
While data center operators are finding that working together can help alter the attitudes of utility companies, they are also are aware that there will soon be other interest groups trying to get utility companies to respond to their needs — electric car drivers and charging network operators.
The lessons learned by the data center operators about how collective action can bend the thinking of utility executives toward more sustainable electricity options may one day prove useful for those of us who are advocates for moving the EV revolution forward.
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