Utilities, Finance, Industrial, Sourcing Renewables, Wind - November 14, 2016
Microsoft inks its largest wind energy purchase
Microsoft Corp. has announced its largest purchase of wind energy to date with the signing of two separate, innovatively structured agreements that work toward its goal of increasing the level of renewable energy used to power its data centers.
Combined, the agreements represent 237 MW of wind energy, meaning.
Under one agreement, Microsoft contracted with Allianz Risk Transfer to fix its long-term energy costs and purchase the environmental attributes connected with the new, 178-MW Bloom Wind project in Kansas. Financial details of the agreement were not disclosed, though Microsoft said it utilized a new structure developed by Allianz to offset high upfront costs associated with the creation of large-scale wind projects.
"Microsoft is the first buyer to participate in this structure, which has the potential to bring clean energy projects online at a faster pace," the company said in a Nov. 14 announcement.
Separately, Microsoft contracted with Black Hills Corp. subsidiary Black Hills Energy under a long-term agreement to purchase 59 MW of renewable energy certificates from the Happy Jack and Silver Sage wind projects, which are adjacent to Microsoft's Cheyenne, Wyo., 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 data center, the company said.
The agreement with Black Hills Energy was made possible through the creation of 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, which Microsoft worked with Black Hills to develop, received approval from the Wyoming Public Service Commission in July.
"We are constantly looking for new ways to approach energy challenges and avenues of engagement with our utility partners," said Christian Belady, general manager of cloud infrastructure strategy and architecture at Microsoft. "The team worked closely with [Allianz] to come up with a completely new model to enable faster adoption of renewables. Likewise, the tight engagement with Black Hills created the opportunity for Microsoft's data center to become an asset for the local grid, maintaining reliability and reducing costs for ratepayers. This kind of deep collaboration with utilities has great potential to accelerate the pace of clean energy, benefitting all customers, not just Microsoft."
The company said in a post on its website that the type of collaboration used to create both agreements may be increasingly necessary as corporate demand for renewable energy continues to surge:
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.The agreements are Microsoft's third and fourth wind energy agreements, joining the 175-MW Pilot Hill wind project in Illinois and 110-MW Keechi wind project in Texas. Additionally, in March, Microsoft signed an agreement with Dominion Resources Inc. subsidiary Dominion Energy Inc. to bring 20 MW of solar energy onto the grid in Virginia.
At a recent conference in New York, Microsoft Chief Environmental Strategist Rob Bernard said the rapid acceleration in cloud computing has been the single-biggest driver of the company's increased focus on energy.
"In order to solve energy challenges, in terms of supply and management, and carbon, the approach we're taking is to go after obvious and nonobvious opportunities," Microsoft Chief Environmental Strategist Rob Bernard said in a statement. "An obvious approach might be to contract for green power through traditional PPAs (power purchase agreements). A less obvious approach to reduce stress on the grid and infrastructure is to reduce the energy load we put on the grid by using our own power generation resources, and use data to drive efficiency and optimization. Our goal is to take an approach that works not only for us but also can serve as a model for other companies."
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