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How Microsoft’s Latest Wind Energy Purchase Will Enable Faster Adoption of Renewables

wind turbineMicrosoft yesterday announced its largest wind energy purchase to date, bringing its total wind energy investments in the US to more than 500 megawatts.

The two new agreements represent 237 megawatts of wind energy.

In a blog post about the wind energy purchases, Microsoft president and chief legal officer Brad Smith says the latest investment keeps the company on track to meet the energy goals it set last spring. Earlier this year, Microsoft said about 44 percent of the electricity consumed by its datacenters comes from wind, solar and hydropower. The company also committed to raising this to 50 percent by 2018 and to 60 percent by early in the next decade.

Microsoft has contracted with Allianz Risk Transfer (ART) to fix its long-term energy costs and purchase clean energy from a new, 178-megawatt Bloom Wind project in Kansas. The project is the first to use a novel structure developed by ART that is designed to offset high upfront costs associated with the creation of large-scale wind projects.

Smith says it will enable faster adoption of renewables. “It does so by lowering costs, reducing risks and improving certainty,” he writes. “By partnering with ART to deliver this new financial deal structure, we hope to help serve as a model that spurs other markets to accelerate the rate at which wind and solar energy projects come online.”

Microsoft is the first buyer to participate in this structure.

In addition, Microsoft has contracted with Black Hills Corp. subsidiary Black Hills Energy, under a long-term agreement, to purchase 59 megawatts of renewable energy certificates from the Happy Jack and Silver Sage wind projects, which are adjacent to Microsoft’s Cheyenne, Wyoming, datacenter. The combined output of the Bloom and Happy Jack/Silver Sage projects will produce enough energy on an annual basis to cover the annual energy used at the datacenter.

Microsoft and Black Hills Energy also worked together to create a new tariff, available to all eligible customers, that allows the utility to tap the local datacenter’s backup generators, thereby eliminating the need for Black Hills Energy to construct a new power plant. The tariff received approval from the Wyoming Public Service Commission in July.

In another blog post, Microsoft’s Athima Chansanchai says this type of collaboration will likely become increasingly necessary to meet the growing corporate demand for renewable energy.

“According to the Business Renewables Center at the Rocky Mountain Institute, corporations have become the majority purchasers of new wind power,” she writes. “Partnering with utilities like this establishes a two-way exchange of energy. Customer-sited assets become optimized for what the grid needs, tapping into distributed generation as a resource for planning instead of as an afterthought. They become part of utilities’ resources for greater integration of renewable energy.”

Microsoft, which has been carbon neutral since 2012, has been a major purchaser of and advocate for renewable energy.

In April, Microsoft, along with fellow tech giants Amazon, Apple and Google filed a court brief endorsing the Clean Power Plan, which they say will help big electricity users such as them cut costs and risks associated with fossil fuels and “develop new approaches that support renewable energy.”

In 2015, these four high-tech firms collectively used over 10 million megawatt-hours of electricity to power their operations, which includes over 50 data centers in 12 states. The companies say this will grow as the number of data centers increases.

Microsoft has also implemented an internal carbon fee, which it uses to fund low-carbon projects such as internal efficiency upgrades, power purchase agreements and green power instruments, and carbon offset projects. It also saves Microsoft more than $10 million per year.

“For the current fiscal year, the carbon fee fund is approximately $20 million,” Tamara ‘TJ’ DiCaprio, Microsoft’s senior director of environmental sustainability said in an earlier interview.

In 2013 Microsoft published its carbon fee playbook, an overview on how it implemented its internal carbon price that includes a five-step process to guide other companies on how to put it into action at their own businesses.

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