Google favours renewable power in bid to reduce emissions

Google (NASDAQ: GOOG) is focusing on wind-power purchases to reduce emissions, even as it devotes most of its renewable energy investments to sun-related projects, a trade-off aimed at reining in costs as the company seeks higher returns.

Bloomberg reports that Google drew 30 per cent of the energy it consumed last year from renewable sources, virtually all of it from wind, up from 19 per cent a year earlier. Yet of the $917m that the company has invested in renewable-energy projects, about two-thirds—or $622m —is channelled toward solar.

Wind power is at least 50 per cent cheaper than solar energy, according to data compiled by Bloomberg. That explains why Google, which consumes 2.26 million megawatt-hours of electricity a year, mainly for data centers that run its billions of Web searches, increasingly prefers wind.

Whole Foods Market (NASDAQ: WFM), Bank of New York Mellon (BK) (BK), Starbucks (SBUX), and Intel (INTC) are among those companies that made the biggest wind-power purchases in 2010, data compiled by Bloomberg New Energy Finance show.

“Wind makes more economic sense right now,” says Gary Demasi, who manages the data-center location- and site-selection team at Mountain View (Calif.)-based Google.

Power prices from both wind and solar energy are under pressure, as an oversupply of equipment and low wholesale-power prices squeeze project developers. Still, solar power remains more expensive. That’s why the lion’s share of Google’s wholesale electricity purchases have been for wind energy, while most of its investment dollars are devoted to solar.

“We’re trying to be as economical as possible while being green, so low power-purchase-agreement prices are what interest us,” Demasi says. “On the investment side, they’re looking for returns, so they’re looking for high-priced power-purchase agreements.” While both types of energy are pricier than coal-generated electricity, Google makes the purchases as part of its effort to be carbon neutral.

Although Google has invested more than $622m in solar projects, the company doesn’t purchase solar power for its data centers. The solar panels on the company’s headquarters generate about 3 million kwh of energy, compared with more than 790,000 Mwh—virtually all of the renewable energy it buys—for wind. And while Google has invested more than $295 million in wind projects, it doesn’t buy power from the wind farms in which it invests. Instead, it seeks power on the electric grids where its data centers are located.

The company has set up long-term power-purchasing agreements with NextEra Energy (NEE) in Iowa and Oklahoma, which both contain Google data centers.

After purchasing the electricity wholesale from NextEra, Google resells it to a local utility in exchange for renewable energy credits, offsetting the price of conventional electricity from the utilities.

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