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Google Sees Renewable Energy Tariffs as New Utility Product

Google Inc. (GOOG), which has invested more than $1 billion in renewable energy projects and buys wind- generated electricity, said utilities should offer large customers more options for using clean power.

“What’s needed is a new tariff structure that allows companies to request and purchase renewable energy directly from their utilities,” the Mountain View, California-based company said in a statement today.

Google, the operator of the world’s largest Internet search engine, is funding projects ranging from rooftop solar power at homes to desert solar-thermal systems and two of the world’s largest wind farms. It also buys wind power from two facilities in Oklahoma and one in Iowa and has installed solar panels on its corporate headquarters.

Each of those investments has limitations and “can be cumbersome,” particularly the power purchase agreements, because Google resells the electricity on the wholesale market after retiring the associated green-energy credits, according to the Google statement.

“While the renewable facility output is not being used directly to power a Google data center, the PPA arrangement assures that additional renewable generation sufficient to power the data center came on line in the area,” Google said. “The downsides are that these PPAs require us to actively manage purchases and sales of power on the wholesale energy markets, which can be a complex process,” it said.

Duke’s Program

More than 60 percent of Global Fortune 500 companies have renewable energy or greenhouse gas reduction targets, though utilities aren’t doing enough to satisfy demand, Google said. “Even though companies want renewable power and are willing to pay for it, the product is not being offered,” it said.

Duke Energy Corp. (DUK), the largest U.S. utility owner, is developing a program in North Carolina that would sell clean energy directly to large customers that opt into the service without raising prices for other ratepayers. The proposal will be filed with state regulators within 90 days, and Google plans to participate, the company said in an e-mailed statement announcing a $600 million expansion of its data center in Lenoir, North Carolina.

“We’re really trying to expand ways to drive more investment in renewable power, and this is a mechanism for doing that,” Michael Terrell, Google’s senior policy counsel for energy and sustainability, said yesterday by telephone. “We’re really hoping that this concept is something that catches on and is enacted in many states,” he said.

Utilities owned by Dominion Resources Inc. and NV Energy Inc. (NVE) have introduced similar proposals, according to Google.

To contact the reporter on this story: Andrew Herndon in San Francisco at aherndon2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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