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Summary:

As the world demands more clean energy, will North Carolina — and its power that largely comes from coal and nuclear — continue to attract these types of data center deals? Or will areas that can provide more grid-connected clean power win out?

Gujarat solar 1

Poles dot the dusty solar farm, which will eventually hold solar panels.

This article is the third in a four-part series that we’re publishing this week.

Over the past several years, a couple-hundred-mile area north of Charlotte, North Carolina, has emerged as a new hub for massive data centers that power the Internet, attracting industry heavyweights like Apple, Google and Facebook. North Carolina has been able win over those companies despite the fact it generates its power largely from dirty coal and nuclear, which runs counter to a general trend toward a desire for greener sources of energy.

As the world demands more clean energy, will North Carolina continue to attract these types of mega data center deals? Or will areas that can provide more grid-connected clean power win out?

These are questions I pondered as I took a day-long road trip around North Carolina’s new mega data center cluster last month. To me, the state’s data center corridor represents a transition in how the leading Internet companies have come to think about clean power.

When Google started looking at building its site in North Carolina in 2006 (announced in early 2007) clean power wasn’t at the top of mind for even the leading Internet companies. Gary Demasi, who has led Google’s efforts purchasing clean power for data centers, told me in an interview recently: At the time “we were cognizant of the [energy] generation mix [of the state]. We’ve gotten more proactive and aggressive since then.”

Three years later, by 2009, when Apple and Facebook were making their decisions to build in the state, it was still an early idea. But by the time word got out in late 2011 about Apple’s massive solar farm in the area, the shift in thinking about clean power and data centers had begun to occur. Some Internet leaders like Google now have goals to get roughly a third of their power for data centers directly from clean power. Apple is pledging to have some of its new data centers powered by 100 percent clean power, from both direct consumption and clean power purchasing.

The problem with clean power and data centers

Here’s the rub with clean power and data centers: Data centers consume large amounts of power — some 2 percent of the total electricity in the U.S. as of 2010 — and this consumption will only grow as more web services are put in the cloud. Dirty power from sources like coal is cheap, readily available, and provides power 24/7, or what’s called baseload power. So it’s a perfect fit for data centers.

Clean power sources, like solar and wind, are more expensive right now in many regions, are only readily available in certain locations, and only provide power when the sun shines or the wind blows. One of the only clean power sources that’s cheap and provides baseload power is hydro (dams), and that’s only plentiful in a few regions in the U.S., like Washington state, or near Canada and New York.

Utilities like Duke Energy, which sells power to the Internet companies in North Carolina, are highly regulated, and they need aggressive state incentives to get them to add more clean power to their grids. North Carolina only gets 4 percent of its electricity from renewable sources, with coal at 61 percent and nuclear at 31 percent, according to a Greenpeace report, and that generation mix isn’t expected to change at least by 2030.

Utilities have long maintained that data center operators aren’t willing to pay a premium for clean power. And for many years they haven’t. The small number of data centers operators that have picked areas where they can run off carbon emissions-free electricity like hydro have only done so because that clean power has been as cheap as dirty power. Hydro can be as cheap as 3 cents per kilowatt hour, according to a GigaOM Pro report (subscription required), which is even cheaper than the 4 to 6 cents per kilowatt hour for power in North Carolina. The town of Quincy, Washington, has attracted companies like Microsoft, Dell and Yahoo that want to run data centers off of this clean hydro power in the Pacific Northwest.

But Internet companies need data centers in various places — in proximity to their different large user bases. While Google keeps the amount and location of some of its data centers under wraps, it details at least 11 data centers throughout the world, could have 20 to 30 according to some estimates, or as many as 40 according to this Wired article.

Power lines around Google’s data center in Lenoir

Most data centers are as clean or dirty as the local power grid supply because that’s what they draw off. Apple’s massive onsite solar farm here is the industry exception.

Time of transition

Many of the biggest Internet companies are now concluding that they need to consider clean power in their data center plans to show their commitment to sustainability. Some of them, like Google, are aiming to have a third of their data center power come directly from clean power, while Apple is shooting for 100 percent clean power for some of its facilities via a variety of methods.

At the same time, the price of solar panels has plummeted over the past year, to the point where they can provide an increasingly competitive (and fixed) price of electricity with a long-term contract in a region with strong government incentives. The cost for electricity from solar panels today can be anywhere from 13 to 30 cents per kilowatt hour, depending on the contract and location, according to numbers from GigaOM Pro (subscription required). Bloomberg New Energy finance says that they’re seeing contracts for solar panel farms planned for 2016 as low as 7 to 9 cents per kilowatt hour.

The trend has also been helped by environmentalists like Greenpeace. In early 2011 Facebook became the subject of a Greenpeace campaign to try to get the social network giant to “unfriend coal,” or stop building its data centers in coal-power regions. At one point Greenpeace said it was competing for a Guinness World Record for the most comments ever on its post about how Facebook should “unfriend coal.”

Facebook seemed to listen. Late last year, it agreed to move clean power up the list of factors it weighs in choosing where to build data centers. Around the same time, Facebook announced that it would build its next data center in Lulea, Sweden, partly because of the abundant low-cost clean power of the area (it’s got hydropower from dams in spades).

Greenpeace has also targeted Apple, and its data center in North Carolina, and Greenpeace has a report coming out on Thursday that looks at the details — or lack there of — of Apple’s 100 percent clean power plan. Greenpeace wants Apple to meet a few criteria including: to use the clean power from its solar farm directly for the data center, and not sell it to Duke Energy, to find a source for biogas for its fuel cells to be used directly, to adopt a siting policy for data centers that emphasizes clean energy, to find additional sources of clean power generation for data centers instead of buying renewable energy credits, and finally to push Duke to put cleaner electricity on the grid.

Finally, as data center operators build more and more facilities and consume more and more energy, they’re finding that diversifying their energy mix can hedge against a potential spike in power prices — say, if natural gas costs suddenly soar, or a carbon policy ever drives up the price of coal.

Data centers consumed around 2 percent of the electricity in the U.S. in 2010, somewhere between 67 and 86 billion kilowatt hours per year, according to researcher Jonathan Koomey, who produced the study. And that number will only grow in the coming years. If even a part of that electricity came from clean power sources, the carbon emissions reduced could be substantial. But perhaps more than the actual carbon emissions reduction, the choices that the leading Internet companies make may be examples for other companies and industries to follow.

“I’ve been asking utilities for over a decade to offer a green power option to myself and my clients. It’s been rather lacking,” long-time data center developer executive K.C. Mares explained to me in an interview. “In their defense, the companies haven’t been willing to pay the extra price. But it’s my belief that there will be more takers over time, particularly as part of targeted efforts to capture or retain data center companies that want to purchase green power.” In recent months, Mares helped attract Apple’s next big $1 billion data center project to the Reno Technology Park, which looks to have ample clean power options available already at the site.

The sign in front of Google’s data center

Grid-connected vs off-grid clean power

At this point, Apple seems to mostly stand alone in its desire to build such massive clean power plants next to a data center. The only other firm to announce that it will tackle something similar is eBay. Last month eBay announced that it would build an extension to one of its data centers in Utah that would run off 30 fuel cells, powered by biogas, and use the grid as backup power.

Google’s data center in Lenoir

Google has arguably been the most innovative and aggressive web business when it comes to clean power. But Google’s Demasi told me that Google has “a basic philosophy that renewable energy should be provided through the utility.”

Likewise Facebook’s VP of Site Operations Tom Furlong, told me: “The utility is the obvious location [for clean power]. It would be a lot easier if the utility came to the site with 20 percent renewables and said this is our mix.” Facebook’s sustainability guru Bill Weihl (formerly of Google) emphasizes that Facebook is still working out its strategy for clean power for data centers and he isn’t ruling out onsite clean-power generation. But Weihl also says he’s interested in one day possibly creating an industry trade group that could help bring together companies to influence utilities’ grid choices through the group purchasing of clean power.

Onsite generation won’t be a fit for many data center operators. Facebook already experimented with a tiny (100 kilowatt) onsite solar farm at its data center in Prineville, and discovered that developing clean power can be tough, due to the complexities inherent in solar projects, as well as Facebook’s inexperience with it. “It was hard and incredibly illuminating, and it was more costly than we ever expected,” Furlong said. Facebook also looked into using fuel cells at its data center in Oregon, but the economics didn’t make sense to them, says Furlong.

On Apple’s decision to use fuel cells in North Carolina, Weihl says: “I’d love to know more about how they are making the economics work. Certainly based on the analysis that I’ve done in the past, it doesn’t seem like it would be even close. But they may have figured out something the rest of us haven’t.”

It may be that Apple isn’t making the economics “work” for clean power, and perhaps has just decided to pay a premium for it — at least in North Carolina. The two 20 MW solar farms combined probably cost Apple somewhere around $150 million (other 40 MW farms have cost that much), and the fuel-cell farm potentially another maybe $20 million (those are my estimates). Then the question is, would that added expense come to more or less than if Apple sited its data center in a region with higher, and cleaner, power prices?

Apple says it’s planning to use biogas to power the fuel cells at its data centers (as is eBay), albeit it likely indirectly (the biogas will probably get injected into a natural gas line, not directly into the fuel cells). While natural gas (a fossil fuel) can more easily be used instead, biogas comes from the decomposition of organic waste and is carbon emissions free. But with natural gas prices at some of the lowest in history, biogas is a far more expensive choice. That can’t be seen as an economic choice at all.

Apple, as one of the world’s most successful tech companies, is one of a very small list of companies that could afford to invest this much into clean power — Google is another. While questions still remain about how exactly Apple will meet its 100 percent clean power data centers goals (see Greenpeace report out tomorrow),  Apple is clearly acting as a pioneer. And the move could have profound effects on the rest of the tech sector. It already has.

Here’s the rest of the 4-part series this week:

  1. They should go to Iceland where data centers can run off an abundance of geothermal energy and where there is abundant sources of water to cool the equipment.

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    1. we were about to say the same thing.

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  2. So – today you cannot substitute clean energy for traditional generation (I’m including hydro as traditional) – until you have electrical energy storage. So far it is looking like the “cloud” is just driving up electricity demand…not the other way around.

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  3. I would recommend the author do some research in nuclear power. Nuclear power is by far the cleanest option for baseband power. Solar panels have a laundry list of toxic materials used in their production, and he makes the claim it is clean. I’m not here to say nuclear is not without risks and hazards, but on a practical scale. A person will receive more radiation flying in an airplane at 35,000 ft than living near a nuclear power plant. I make the plea to the author to research first then write a follow up.

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  4. It makes more sense for companies that can afford it, to distribute their data centers over a wide geographical network. This can minimize impact of disasters- natural or man-made.

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  5. The fact this author claims solar power is clean, with the laundry list of toxic materials used in their construction is ludicrous. Also, look at the amount of green space which has to be cleared for a solar farm vs nuclear. Solar panels at the end of their life either need to be recycled or they will contaminate the local environment, just like nuclear. Nuclear power is a much greener alternative for baseband power. There is a reason all the oil producing countries are investing and constructing nuclear power. Please provide a balanced view when calling nuclear dirty and solar green.

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  6. Michael W. Perry Friday, July 13, 2012

    These data centers are still new and already the rationale for putting them there may be changing. With fracking technology bringing low-carbon natural gas prices down and assuring supplies for decades, in a decade or less it may be important to locate closer to its sources.

    It may also make sense to generate power on-site both to save transmission costs and ensure reliability. In fact, it may make sense to cluster server farms around a common generating facility.

    Last of all, “clean” energy is best used of electrical power that doesn’t have a lot of energy spikes in it or shifts in voltage and frequency.
    Not only is clean not green, the real impact of so-called ‘green’ is distorted by the sheer silliness of environmentalists.

    Covering thousands of acres of desert with solar cells or sucking megawatts of energy out of the wind has a major impact on both local micro-climates and the global climate. It’s just that environmentalists are too city-bred and fad crazy to realize that.

    Environmentalism is driven more by phobias and buzz words than good sense about the world we live in.

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  7. FWIW, the Tennessee River (TVA) has a network of big hydro-electric dams.

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  8. Hydropower is the cheapest, cleanest, most reliable clean energy. It can be generated in cascades of multiple small stations on a single river with no big impact dams. There is an excellent guide to “sustainable hydropower” made by the World Commission on Dams. Green-motivated banks, investors, aid agencies and non-profits use these and the International Finance Corporation’s sustainability guidelines to keep them on the right track with regard to suitable hydro projects.

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  9. >>Hydro can be as cheap as 3 cents per kilowatt hour<<
    Wish to mention that hydro electric damns have a negative environmental impact even though it is not a clean air issue.

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