Modern lifestyles call for ever more power. Population and economic growth along with digitisation have driven energy demand skyward – all while greenhouse gas emissions should be falling in order to curb global warming. How can this contradiction be solved? In its newest series “Economy & Renewables”, en:former will be shedding some light on a number of businesses which are pursuing a more eco-friendly approach. In this first instalment, the ambitious efforts of large digital corporations will take centre stage.
YouTube, Instagram and Spotify have long been part of our daily routines. In fact, barely an hour passes in which our society is not online. This calls for an incredible amount of electricity, as proven by US publication Fortune magazine: This summer’s earworm ‘Despacito’ had more than five billion hits. A feat which needed as much power as 40,000 US households consume in a single year.
But why is a hit song related to so much energy consumption? The answer is the huge amounts of information which data centres of online businesses such as Google and Facebook have to process. According to Fortune, around two percent of global power consumption is attributable to data centres, which process all searches, emails, streaming services and cloud applications – and the acceleration of digitisation could drive this figure up to eight percent by 2030.
Google, alone, consumed 5.7 terawatt hours (TWh) in 2015 – as much as the city of San Francisco. Despite their sky-high electricity consumption rates, or perhaps precisely because of them, these businesses have set themselves ambitious targets when it comes to climate protection. But precisely what are they doing to lower their greenhouse gas emissions?
Take Amazon, for example. Earlier this year in September, the online retailer launched The Climate Pledge with a number of partners, and its signatories are committed to meeting the targets of the Paris Climate Agreement ten years ahead of schedule, i.e. as early as 2040, thus making them climate-neutral. Amazon is not only planning on addressing its electricity consumption. The corporation is also taking its other emissions, such as those related to sending packages and sourcing packaging materials, into account when revising its carbon footprint. What is more, the company is looking to power 80 percent of its business activities with renewable energy by 2024, with a view of completely transitioning to renewables by 2030.
Facebook’s targets on the other hand are much more ambitious: In the coming year, the company is planning on reducing its emissions by 75 percent versus 2017 as well as exclusively obtaining its power from renewable sources. According to their own sustainability statements, Apple and Google are both slightly ahead of Facebook in this respect. They are already covering their entire power requirements with renewable energy. Google, on the other hand, has allegedly been carbon-neutral since 2007.
To earn these bragging rights, the online search engine invests in climate protection projects and in return receives certificates equivalent to the amount of greenhouse gases it has offset. The offset carbon dioxide is finally tallied up with Google’s actual emissions. In the long run, the company plans to reduce the number of certificates it purchases by becoming more energy efficient and sourcing all of its power from renewables. Google is already the leading global consumer of renewable energy.
There are many different ways an IT company can source such large amounts of electricity from renewable sources. One way is to produce power themselves. Amazon, for example, has installed solar panels on the roofs of 51 of its distribution and sorting centres across the world. All in all, the company is involved in more than 60 renewable energy projects. An Irish wind farm in Cork with a capacity of 23.2 megawatts is one such project, as is a solar farm in Virginia, USA, currently under construction, with a capacity of 45 megawatts. Upon completion, all projects combined will generate more than 3.9 billion megawatt hours (MWh) of electricity every year.
Apple is also investing in generation facilities such as solar farms, biogas fuel cells and hydropower stations – all told the company has a total capacity of around 600 megawatts (MW). Apple’s new head office in Cupertino, just south of San Francisco, is supplied by the 17-megawatt solar panel installed on its roof along with four-megawatt biogas fuel cells. Another example is the data centre in Maiden, North Carolina, which is powered by three solar energy systems as well as a biogas fuel cell with a total capacity of 68 MW.
However, these in-house generation facilities are by no means enough to cover the entire power demand of these digital power-houses. The companies thus need to source their surplus energy elsewhere, and they often rely on long-term electricity contracts with plant operators, referred to as Power Purchase Agreements (PPAs), to do so. With the help of these PPAs, corporations are able to secure the output of a wind or solar farm for extended periods of time. In addition to an improved carbon footprint, this also means that the business can rely on a set electricity price, which is established in a contract. In return, the PPAs offer power producers a sense of financial security, which means they can cover the costs of constructing the plant or investing in new energy projects.
A good example for ways in which online corporations use PPAs is, once again, Google. The company has set itself two targets for the procurement of green power: On the one hand, it is planning on contributing to the generation of more renewable electricity. On the other hand, Google is trying to use its investments to exert what it says is the greatest possible positive influence on the energy sector. As such, Google claims that it only enters into PPAs with electricity suppliers that invest in the construction of new generation facilities. What is more, the plant must be connected to the same power grid as the data centre which is to be supplied with electricity.
It is important to emphasize that the data centre is not supplied directly by the plant but is connected to the local power grid. This means power supply to the server and computers is dependent on the current electricity mix. Therefore, the electricity generated by the plant is fed into the grid and sold by Google at market prices. As these prices are often lower than those set out in the PPA, if for example there is a lot of wind, Google incurs losses.
Google does not resell Renewable Energy Credit certificates (RECs), which a company can use to prove that it has purchased green electricity. In this way, the company prevents other consumers from taking credit for the procurement of green electricity. If annual power demand corresponds to the amount of electricity generated by the green power plant, the operation of the data centre is considered to be climate-neutral.
In our increasingly digitalised society, data centres of online corporations are becoming increasingly larger. PPAs are therefore an important tool for companies to meet the growing demand for electricity in a climate-friendly manner.