Author: Sarvesh Mathi compilation: Wang Zhizhi The original link: https://onezero.medium.com/wh…
Five companies — Apple, Amazon, Google, Facebook, and Microsoft — are representative of Big Tech — and they all say they are 100 percent renewable, or close to it.
Together, these companies own and operate more than 100 data centers (each the size of more than a football field), nearly a thousand offices and countless other buildings, making them some of the world’s most power-hungry companies. Given this, it would be a major achievement if they could run on 100% renewable energy.
But many critics say these claims are misleading. Some say the use of renewable energy is more about assuaging guilt than helping the environment. To understand where these arguments come from, let’s start with the basics today.
What is renewable energy?
Energy produced from natural resources such as sunlight, wind, water, plants, geothermal and biomass is classified as renewable or green energy.
But it is often impossible to design power infrastructure in a way that relies solely on “green energy”.
Electricity from solar or wind farms is not sent directly to consumers but to the main grid, where it is mixed with electricity from other sources to form a “power pool”. This makes the green energy supplied to our buildings essentially indistinguishable from other sources of electricity.
Given that more than 80% of America’s energy needs are met by fossil fuels, many of the companies that claim to be 100% renewable are likely to have buildings powered by a grid produced by fossil fuels. After all, data centers operate 24 hours a day, whereas wind and solar power supplies are intermittent.
“The simple fact is that the grid, which is a mix of renewable energy and fossil fuel generation, is a very useful and important tool for data center operators, and with current technology, renewable energy alone is not enough to power a data center.” And Google says, “Well, that’s a pretty obvious fact.
So why do these companies claim to be 100% renewable?
Renewable Energy Certificates (RECs)
In the United States, factories that sell renewable energy to the grid receive a Renewable Energy Certificate (REC) for each megawatt-hour of clean electricity produced. The company that owns the plant can then sell the certificates on to other companies — in order to encourage the development of clean energy and to allow buyers to claim that the renewable energy was generated in their name.
Suppose a company consumes 500 megawatt hours of electricity per year and they buy 500 RECs per year. That company is now eligible to claim to be “100% clean energy powered” as long as it doesn’t resell the RECs.
It also means that if a company is connected to a grid that is 100 percent fossil fuel powered, it can say it is 100 percent clean energy by simply buying RECs from green power plants located elsewhere in the country. The term used to describe companies that do this is “greenwashing”.
But there’s a problem. RECs should be a source of revenue for renewable energy producers to help them produce more renewable energy. But that’s not always the case.
The RECS market, which is independent of the electricity market, is currently oversupplied in most US states, allowing the cost of RECS to be as low as $0.80 /MWh.
The average American family consumes 11 megawatt hours a year. If the family buys 11 RECs at the premium price of $5 per REC, they can claim to be 100% renewable for just $55 a year.
This makes RECs so cheap that they do not add any meaningful source of revenue to renewable energy producers – and their contribution to additional investment in green energy is negligible. Buying RECs also does not mean that companies are reducing their use of fossil fuels or avoiding carbon emissions.
“In short, it is best to view the purchase of RECs not primarily as a blow to fossil fuels or carbon emissions, but as a (modest) blow to clean energy.” Vox once wrote.
So does this mean that the claims made by companies like Google and Apple have no real meaning and no positive impact on the environment?
The concept of additionality = RECS + green new energy production
Big tech companies are aware of the impact of RECs, and even more aware that it will be hard to escape the effects of greening.
These tech companies still need RECs to make their “green energy” claims, but instead of just buying RECs from existing projects, they are focusing on creating new renewable energy sources. This is called “addition.”
In 2017, Google reached the 100 percent renewable energy milestone in its global operations. Along the way, the company has also become the world’s largest corporate buyer of renewable energy. As of April 2018, the company said it had signed contracts to buy 3 GW of wind and solar power.
“Our carbon-free energy portfolio will generate more electricity than a place like Washington, D.C., or an entire country like Lithuania or Uruguay uses every year.” Google CEO Sundar Pichai wrote in a blog post last year.
But Google doesn’t just buy RECs to achieve its goals. The company also focuses on creating new renewable energy from projects it directly funds.
How does Google buy and use renewable energy
- Google buys electricity from renewable energy projects on the same grid as its facilities by signing a Power Purchase Agreement (PPA). In the process, Google can also get these power RECs;
- But Google cannot directly power its data centers with this green power. Google must be sold to the grid at the local wholesale price;
- Google’s data centers/facilities get power from the local grid and pay market rates. That electricity also includes electricity from fossil fuels;
- The company then applies its RECs to renewable energy subsidies.
How is this process different from simply buying RECs?
By signing the PPA, Google promotes the demand for and creation of new renewable energy, rather than gobbling up existing renewables and RECs with its huge profit pile.
These long-term PPAs (typically 20-year agreements) also guarantee the project developer a steady and substantial source of funding that RECs cannot provide.
Google has generated more than $3.5 billion worth of infrastructure investments through its PPA. If the company were to simply buy RECs to meet its 11,000 GWh electricity consumption in 2018, it would only cost $55 million (if we assume that the REC costs $5).
Google says its ultimate goal is to make green energy accessible to everyone, not just its companies.
How will Apple’s clean energy claims be measured?
In 2018, Apple announced that it, too, uses 100% renewable energy globally.
The company now has 28 renewable energy operations around the world and 15 more are under construction, including a new, entirely solar-powered headquarters in Cupertino. Together, these projects are expected to generate more than 1.5 gigawatts of clean renewable energy and are said to have reduced greenhouse gas emissions by 64 percent since 2011.
But Apple’s “100% renewable” claim covers only the part of its direct operations, not its vast supply chain.
The iPhone maker seems to be on a path to creating addition with Google. Apple claims to have promoted the creation of new renewable energy by building its own power projects or signing PPAs with energy companies within the grid, and to have retained its own manufactured RECs.” “We want to put new, clean electricity on the grid so we don’t suck all the clean energy away.” “Said Lisa Jackson, Apple’s vice president of environmental policy and social initiatives.
In cases where Apple is unable to buy or generate renewable energy on the grid where its facilities are located, the company buys RECs elsewhere. But to avoid “greening”, it has made sure that the projects it owns produce the same amount of energy as the RECs.
As mentioned above, Apple’s “100% renewable energy” does not include its vast supply chain, which makes it controversial. Because many of the company’s products are made by third-party suppliers that still use “brown” energy.
But Apple has struggled to get its suppliers on board. As of 2019, more than 44 suppliers have agreed to embrace renewable energy.” Apple has a long history of taking its suppliers with it to be world class, and this is just part of being world class.” Lisa Jackson said.
By the end of 2020, Apple and its suppliers expect to generate 4 gigawatts of clean energy. But that still covers only a third of the power used by Apple’s global suppliers, and the company, for example, has a long way to go to reach its next goal: making its entire supply chain run on renewable energy.
How are other tech companies faring?
Tech giants like Facebook, Microsoft and Amazon are catching up with Google and Apple in their approach to renewable energy.
Facebook has said it will meet its 100% renewable energy target this year, and with its purchase of more than 3GW of deals, it will also be one of the largest buyers of renewable energy.
Microsoft has committed to turning its carbon emissions negative by 2030 and eliminating all of its carbon emissions since it was founded in 1975 by 2050.
Amazon, one of the world’s biggest carbon emitters, has also set a 2030 deadline to run 100% of its operations on renewable energy.
In 2018, U.S. companies signed a new record number of renewable energy PPAs: More than 121 companies signed PPAs exceeding 13GW of renewable power generation. More than 228 companies around the world have joined the RE100 initiative and pledged to go 100 percent green.
RECs have not had a good reputation in the past. But if we dig deeper into these, we will find out which enterprises are only doing REC procurement and which enterprises are really contributing to the creation of new energy.
The additionality trend is having a real, tangible impact on our energy shift to renewables, and it shows that at least major companies, if not governments, are making meaningful changes at a rapid pace to protect our cherished planet.
