While utility-scale wind projects in the US (especially onshore) are continuing apace, many corporations are cashing-in on renewables by investing in wind energy to power their operations. IKEA, Microsoft and Facebook are just a few of the leading lights. PES takes a look.
Those who bemoan the relatively slow adoption of renewable energy in the U.S. should take heart. Not only is the use of solar energy growing at rates well beyond those predicted as recently as last year, but so many companies have recently announced renewable energy (RE) initiatives that it looks like we’ll need a bigger bandwagon pretty soon.
It’s hard to keep up with all the new developments, pledges and commitments businesses large and small are announcing of late. Here are just a few examples.
IKEA just bought the Hoopeston Wind farm, comprising 49 turbines in Vermillion County, Ill. This is its first wind farm investment in the U.S. and its largest renewable energy project. Set to become operational in 2015, Hoopeston will generate 380 GWh per year – nearly 1.5 times the energy needed to operate all of IKEA’s U.S. operations.
Late last year, Microsoft announced that under a 20-year power purchase agreement, it plans to purchase the entire output of the 55-turbine, 110 MW Keechi Wind Project farm in Texas to power one of its data centres. The move is a departure from most of Microsoft’s renewable energy efforts to date, which primarily have been in the form of buying renewable energy credits.
Facebook reported its own new wind power initiative last winter: When its new data centre in Altoona, Iowa, goes online in 2015, it will be 100 percent powered by a wind farm in nearby Wellsburg. Currently under construction, this farm is expected to produce 138 MW for the Iowa grid.
Then, of course, there’s Google. Long a leader in energy efficiency and renewable energy, in April it announced its largest RE purchase to date: a deal to purchase up to 407 MW of 100-percent renewable wind energy to power its data centre in Council Bluffs, Iowa. This purchase brings Google’s renewable energy commitments to more than one gigawatt.
Kohl’s, Intel, Walmart, Volkswagen – the list of companies investing directly in renewable power generation to meet their own energy needs goes on and on.
Given the high price tags on wind farms and large solar arrays, it’s not surprising that these are all companies with very deep pockets. But it’s telling that a growing number of businesses that have the money to spend – particularly ones with gargantuan energy needs – spend it not just on NASCAR sponsorships, stadium naming rights and Super Bowl commercials.
It makes more than financial sense
So why has the bandwagon gained such momentum in the business world? “Because it’s the right thing to do” may be part of the answer: Shelton Group’s B2B Pulse report found that company culture/CEO or owner values are the second strongest driver behind business sustainability initiatives.
However, IKEA CFO Rob Olson said his company invests in RE “not only because of the environmental impact, but also because it makes good financial sense.” Solar Energy Industries Association (SEIA) president Rhone Resch similarly stated that a solar commitment is “a street-smart investment. […] Companies are expanding their use of solar because it makes sense from both a business and social responsibility viewpoint.”
The business case for renewable energy is fairly well established and has become even stronger in the past year, particularly in RE’s ability to work toward lower and stabilised operating costs.
The social responsibility viewpoint cited by Resch is also becoming increasingly important to companies of all sizes. Shelton’s Eco Pulse 2013 report revealed that the importance of corporate reputation continues to rise in the minds of consumers and can have a significant influence on their purchase decisions. More than 48 percent of survey respondents said that a company’s environmental reputation had some to major impact on their decision about whether to buy its products.
And Americans are in love with the idea of renewable energy. In our Energy Pulse 2013 study, when asked to rank national energy issues in the order in which they should be tackled, the development of alternative energy sources was ranked first – higher, on average, than the development of more domestic oil and natural gas.
All the recent good news is heartening. However, plenty of room is left on the bandwagon, and it appears that companies not pursuing renewable energy in some form, whether directly or through RECs, soon may risk appearing anachronistic, if not downright irresponsible, at the ultimate expense of their bottom lines.
The data centre drain
Data centres accounted for 1.3 percent of global energy consumption in 2010, and 2 percent of electricity use in the U.S., according to research by Stanford University Steyer-Taylor Center research fellow Jon Koomey. Between 2000 and 2005, energy use by data centres worldwide doubled, but from 2005 to 2010 energy use increased by only 56 percent worldwide and 36 percent in the U.S. Koomey’s paper suggests that the cause is a lower than anticipated rate of server installations.
“Enterprise data centres are the biggest part of the issue [of excess energy use]: between 80 and 85 percent are in companies whose primary business is not computing. The Facebooks, the Apples, the Googles are the most efficient of all the data centres, and they’re the ones getting all of the attention,” says Koomey.
In his research, Koomey found that Google’s data centres’ electricity use comprises less than one percent of all data centre energy use globally.
As a result, Koomey says, demand from the companies with the most pressure to switch to renewable energy is tempered by their improvements in data centre energy efficiency.
“These are customer-facing companies, and the customers care about this issue,” says Koomey. He adds that assuaging customers’ energy concerns has benefits for the companies in addition to benefits for the environment. “These companies also have very high margins. Data centres are highly profitable. That means that they’re willing to pay a little bit extra” to get green energy kudos.
According to the Environmental Protection Agency’s National Top 100 Partner Rankings, Intel uses 3.1 billion kilowatt hours of green power annually. This constitutes the entirety of the company’s electricity use, making Intel the top-ranked EPA green power partner. Microsoft ranks third, using 1.4 billion kilowatt hours of green power – 50 percent of the company’s total electricity use.
With these substantial agreements taking place, renewable energy capacity is growing at a far faster rate. Most contracts with major tech companies involve wind power, production of which grew almost 20 percent between 2012 and 2013 in the U.S., totaling 467 million megawatt hours last year. Meanwhile, wind energy consumption for the commercial sector has remained steady at around 293,071 megawatt hours since 2012.
So, while suppliers continue to expand their projects, steady demand isn’t likely to stress the market. On whether major contracts could someday pressure renewable energy facilities and suppliers to expand their capacity, Koomey says, “If enough companies do it, then, absolutely.”