Tech Companies Apply Pressure On Utilities For Clean Power
The technology industry is already well-known for its progressive views on renewable energy. Now it is applying pressure on the coal-intensive utility industry to conform to those views.
According to a Bloomberg article, prominent technology companies are forcing utilities to increase the share of renewable energy in their mix of generation sources. For example, Dominion Energy, a local utility in Virginia, agreed to provide clean power to Facebook’s data centers in September. Facebook leases data center space in Ashburn in the state and is planning to invest $1 billion in building a brand new data center in Richmond. Adobe systems, which already has two data centers in the state, had asked Dominion to increase its renewable energy sources back in September.
The impetus for technology companies to demand renewable energy sources is the growing market for data centers and cloud technologies. According to estimates by the Energy Department, energy consumption for data centers is expected to increase at a steady pace of 4% per year until 2020, when it will result in consumption of 73 kWh of electricity.
As power consumption for data centers increases, technology companies are expected to become important customers for utilities as they represent future sources of demand. Based on current data from the Energy Information Administration (EIA), natural gas is the largest source of electricity generation followed by coal. The share of renewable energies in electricity generation was roughly 15%, half of the electricity amount generated by coal.
The Bloomberg article quotes Lucas Beran, a senior research analyst with IHS Markit, as saying that big technology companies are not “afraid to throw around their weight or their ability to influence - some might say bully - their local utility or local governments in what they want to get.” Much of that influencing has taken the form of research-based persuasion. For example, Alphabet released a paper last year that called on utilities to change their business model. The Mountain View company also leads other technology companies in purchase of corporate PPAs from utilities and renewable energy companies.
To be sure, technology companies are not above blame either. Data centers are energy hogs but the source of their power is still shrouded in mystery. But we do know that major gains have been made in efficiency for energy consumption at data centers. Technology companies have also consciously located such facilities near natural sources for renewable energy. They also stand to benefit with a pivot of the utility industry towards renewable energy. For example, the Bloomberg article mentions several emerging technologies, such as energy storage, which are being promoted by Silicon Valley companies. Tesla, which makes such systems, considers itself a technology company. Similarly, development of smart grid systems and renewable energy technologies requires products and standards from technology behemoths.