Following on from my post this morning about the EPA Green Power rankings and Google’s sudden absence from the list, I’ve now received a statement attributed to a ‘Google spokesperson’, which reads:
"Google is proud of the work we’re doing to power our company with renewable energy. We’ve been carbon neutral since 2007, with a focus on energy efficiency, using renewable energy, and high quality offsets. We currently get 35% of our electricity from renewable sources through long-term contracts directly with developers and our utility providers. We have decided not to participate in this year's rankings as we continue to focus our efforts on more direct procurement of renewable energy beyond the purchase of unbundled renewable energy credits. Our efforts are outlined at www.google.com/green/energy."
Review: The point here is that Google not only wants its operations to be carbon neutral, it is also looking to encourage the renewable industry.
Back in 2010, when I reported on Google’s investment in NextEra for the supply of green energy – a company in which Google had already invested almost $40m – I pointed out that it means that Google no longer needs to buy the equivalent Renewable Energy Certificates (REC). At the time Google also said that direct purchasing deals from renewable suppliers over a long period is likely to have a greater impact on the renewable industry than simply buying ‘naked’ RECs from third parties.
That’s basically why the company has withdrawn from the Green Power Partnership, because within the Partnership one-off REC purchases are counted towards green energy use, whereas Google prefers longer term contracts with renewable energy suppliers.
Google buys electricity directly from a renewable project developer in the form of a power purchase agreement (PPA). For example, with NextEra it has contracted to buy 114 MW of wind power for 20 years. The company then sells that power back into the grid at the local, wholesale price, effectively stripping out and keeping the renewable energy credits (RECs) so that no one else can claim credit for the green aspect of the purchase. Those RECs are then applied to the energy used at Google’s data centres, displacing local conventional power, so that the electricity consumed can be treated as carbon free. (See the White paper here for more details).
The difference is that just buying RECs only provides the seller with the value of RECs — which is much less than the value of the energy. (The value of a renewable kWh can be seen as equal to the sum of a “generic” kWh plus a REC. So the REC is a small fraction of the total value of the renewable kWh.) By agreeing to buy renewable energy from a project developer, Google guarantees a long-term income stream that the developer can use it to get financing, which can be used for the next project. A promise to buy just the RECs but not the energy would be much less valuable to a renewable energy company.
Makes sense to me. But now I don’t understand why the EPA’s Green Power rankings can’t be adapted to accommodate Google’s approach.