Here’s the real reason that I think Google (s GOOG) entered into a contract earlier this month to buy clean power from a wind farm in Iowa: data centers.
Since the beginning of this year Google has maintained that its plans for Google Energy — a subsidiary that the Federal Energy Regulatory Commission (FERC) approved in February to be able to buy and sell energy on the whole sale markets — largely has to do with offsetting Google’s carbon footprint. It sounds reasonable. Google has plans to go carbon neutral.
But in other statements Google has made to us, particularly in this video interview we did with Google’s Green Energy Czar Bill Weihl at Green:Net 2010 in May, it becomes clear that Google Energy is also ultimately about being able to procure energy, specifically clean energy, to power its data centers. Economically that’s a smarter explanation, as according to estimates from a report from MIT and Carnegie Mellon, Google spends about $38 million annually on electricity for data centers.
Google’s Weihl told us in an interview (embedded below), and which I go into in more detail in this article for GigaOM Pro (subscription required), that one reason Google obtained the ability to buy and sell clean power is so Google could enter into a power purchase agreement contract with, say, a wind developer. Google would agree to buy the wind power before the wind farm was built, helping the developer get a better interest rate for the financing of the plant.
But since Google’s data center facilities already have their own power sources, Google would then sell the power from the wind farm on the whole sale market until one of its data center power contracts expired and Google could use the wind power more directly, like negotiating with the local utility to resell it to them.
So, as Weihl put it, Google isn’t just “wasting,” it. Yep, wasting it, like using it to offset Google’s carbon footprint. To read my entire story, check it out on GigaOM Pro (subscription required).