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Here’s the first deal from “Google Energy,” Google’s (s goog) subsidiary that raised a lot of eyebrows earlier this year when it was approved to buy and sell electricity on federally regulated wholesale markets. Google said this morning that starting on July 30, Google Energy will begin buying clean power from 114 MW of wind energy via a wind farm in Iowa owned by NextEra Energy Resources.
Google says it won’t actually be using the clean energy in Iowa to power any of its operations, but plans to instead sell that power back to the grid operator there in exchange for Renewable Energy Certificates (RECs). Google can then use these RECs (which are commodities that can be traded on markets) to offset its carbon emissions from its operations, and help with its pledge to become carbon neutral. For months, Google has said it will use Google Energy and its recently gained ability to purchase and sell electricity to help it reach carbon neutrality.
Google didn’t disclose at what price it’s buying the wind power from NextEra, but it’s a 20-year contract which offers Google a fixed rate over that time. Wind power is about the most economically clean power available right now, and Google isn’t the only company to create an entity to help it find low cost and clean power. Wal-Mart created Texas Retail Energy, which allows the company to procure its own power and get the lowest-cost electricity for its warehouses and retail stores.
To me, Google’s wind power purchase agreement is a way of experimenting with clean power and Google Energy. If you remember back in May, Google invested $38.8 million into 169.5 MW worth of wind projects developed by NextEra Energy Resources in North Dakota. That was the search engine giant’s first direct investment in a wind power project, and the money came out of Google Inc., in contrast to previous investments out of its philanthropy arm, Google.org.
More than using clean power for RECs, the interesting thing will be whether or not Google eventually makes these kind of clean power purchase agreements to power its data centers directly. Google’s green business operations manager Rick Needham told me back in May that Google also “created Google Energy so we can have more flexibility in procuring power for Google’s own operations, including our data centers.” And for years Google has been searching for ways to both reduce and add clean power into the mix of the massive amount of energy to power its servers.
Google, through its philanthropic arm Google.org, has also invested more than $45 million in clean energy technologies, including advanced wind, solar thermal and enhanced geothermal systems. Check out my timeline of Google’s Energy deals here.
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