Google adds 20 year 114 MW Renewable Energy Purchase to its Green Data Center strategy, is electricity hedging a future for data centers?

Google's Urs Hoelzle posts on Google's Official Blog their Google Energy LLC renewable energy purchase.

Reducing our carbon footprint with the direct purchase of renewable energy

7/20/2010 07:12:00 AM

When we decided in 2007 to voluntarily become carbon neutral, our intent was to take responsibility for our carbon emissions and promote sustainable environmental solutions. We approach this goal in three ways. First, we minimize our energy consumption; in fact, we’ve built some of the world’s most energy efficient data centers. Second, we seek to power our facilities with renewable energy, like we did in Mountain View, CA with one of the largest corporate solar installations. Finally, we purchase carbon offsets for the emissions we cannot directly eliminate.


We just completed a substantial 20-year green Power Purchase Agreement that allows us to take responsibility for our footprint and foster true growth in the renewable energy sector. On July 30 we will begin purchasing the clean energy from 114 megawatts of wind generation at the NextEra Energy Resources Story County II facility in Iowa at a predetermined rate for 20 years. Incorporating such a large amount of wind power into our portfolio is tricky (read more about how the deal is structured), but this power is enough to supply several data centers.

The wind farm, which began operation in December 2009, consists of 100 GE 1.5MW XLE turbines.

Google is not buying this power for its data centers.  Google is reselling the power on the spot market.

In this case, we’re buying renewable energy directly from its source – the wind farm. We cannot use this energy directly, so we’re reselling it back to the grid in the regional spot market – but retiring the RECs associated with the power. By obtaining RECs through the purchase of green power, our deal has a greater impact on the renewable industry than simply buying “naked” RECs from third parties; our long-term commitment directly frees up capital for the developer to build more wind projects.

With Google's cash reserves and long term view they have figured a better way to use their money than buying Renewable Energy Credits (REC).

Buying renewable energy directly from the developer impacts the development of renewable energy projects in ways that are more meaningful than the purchase of Renewable Energy Certificates (RECs) from third parties. RECs allow energy consumers to identify and track power made from eligible sources of renewable energy. They have value and are typically bought and sold independently of the electricity from which they are generated.

Most data center operators have discounted renewable energy as they look at the local availability.  With Google Energy LLC, Google is changing the game in the same way that Southwest Airlines added fuel hedging to its strategy being an airline.

Hedging fuel

Southwest has a longtime program to hedge fuel prices. It has purchased fuel options years in advance to smooth out fluctuations in fuel costs.[citation needed]

In 2000, Southwest said it had "adjusted its hedging strategy" to "utilize financial derivative instruments... when it appears the Company can take advantage of market conditions." Additionally, the company hoped to "take advantage of historically low jet fuel prices."[25] Southwest’s decision proved to be a prescient and, for a time, an extremely profitable effort.[citation needed]

To lock in the low historical prices Southwest believed were occurring at that time, Southwest used a mixture of swaps and call options to secure fuel in future years while paying prices they believed were low. The company also stated that with this new strategy, it faced substantial risks if the oil prices continued to go down. They did not. Previously, Southwest had been more interested in reducing volatility of oil prices. Now, they hoped to reap large gains from oil price appreciation.[citation needed]

In 2001, Southwest again substantially increased its hedging in response to projections of increased crude oil prices. The use of these hedges helped Southwest maintain its profitability during the oil shocks related to the Iraq War and later Hurricane Katrina.[citation needed]

Google can make a move few can do.  The idea of long term renewable energy purchase allows Google to be a player in defining the future energy market.

Would you bet against Google in this area?

We depend upon large quantities of electricity to power Google services and want to make large actions to support renewable energy. As we continue operating with the most energy efficient data centers and working to be carbon neutral, we’re happy to also be directly purchasing energy from renewable resources.
Posted by Urs Hoelzle, Senior Vice President, Operations

Urs Hoelzle is making his mark in the data center industry that hopefully many others will follow.

How many of you think of the value of RECs you own and can resell?  Urs knows the future value of Google Energy's REC portfolio.  It will be interesting to see Google's next move.

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I built my datacenter in 5 minutes sticker

I blogged about the Amazon Web Services stickers AWS is offering, and I had an envelope full of stickers when I returned from my trip to DCD SF.

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I took the "I built my datacenter in 5 minutes" sticker and put it on my laptop along with "work hard. have fun. make history."

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Can your company compete against a bunch of start-ups who are building data center capacity in 5 minutes leveraging Amazon's purchasing power?

Sometimes it is speed of action that wins.

Being able to quickly add and remove capacity is a strategy to green a data center.  This method allows AWS to resell the capacity you don't need which is more efficient, cost effective, and lowers the environmental impact of compute resources.  What does your company do with its idle compute resources?

At DCD SF there was a cloud computing discussion that would have been interesting to get Amazon Web Services as a presenter.

Executive Roundtable: Game Changers – The Impact of the Cloud, Unified Computing and Applications
Managing the Scale of Data Processing, Applications, Content Storage, Data Communications, Risk, Compliance, and Governance
Wael Diab, Technical Director, Broadcom
Tom Mornini, CTO and Co-founder - Engine Yard
James Hughes, Principal Architect – Core Network Product Line – Huawei Technologies Co. Ltd (USA)
Stephen Worn, CTO & Managing Director - DatacenterDynamics

I'll see if the AWS folks would be interested in participating in a DCD event.

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Building a better social network, attending DataCenterDynamics

I haven't blogged much the last few days as I was immersed in networking opportunities related to Data Center Dynamics San Francisco.  This is my 3rd Data Center Dynamics event in SF, but probably at least my 10th, attending events in Seattle, NY, Chicago, and London.  At each event my social data center network gets better and I have fun with the DCD gang.

I know the DCD crew well, and ran into one of DCD gang in the bar as I entered the Hilton through the bar, not through the lobby.  We continually joked he was invisible and not here as we saw each other through the event.  I always go the night before to DCD and meet up with the crew to see who is in town and chat.

So, what did I think about DCD SF. First, the networking opportunities are one of the best in industry.  When you see Google, Microsoft, Apple, eBay, Facebook, Intuit, ask.com, VMware, and a bunch of end users networking freely at an event something is working right.  The number of people from each company was interesting.  You can see who was leveraging the networking opportunity to learn more.  And, many had good things to say about the presentations.

One of the subtleties of networking is the quality of your relationships.  Seth Godin posted on the idea of signals.

The management of signals

There are two things we can get better at:

1. Getting accurate signals from the world. Right now, we take in information from many places, but we're not particularly focused on filtering the information that might be false, and more important, what might be missing.

2. Sorting and ranking information based on importance. We often make the mistake of ranking things as urgent, which aren't, or true, which are false, or knowable, when they're not.

Dealing successfully with times of change (like now) requires that you simultaneously broaden your reach, focus on what's important and aggressively ignore things that are both loud and false.

Easier said than done.

I happened to run into Dan Scarbrough at SFO as I was leaving the morning, and this post fit in with some ideas Dan and I talked about.

Dan Scarbrough
Co-CEO

Dan is a co-founder of the DatacenterDynamics Conference and Expo Series and is the Managing Director of the company globally, with direct operational responsibility for the EMEA region. He has been working in Business to Business publishing for fifteen years, holding senior roles within UK based publishing companies including Campden Publishing and Sterling Publishing PLC.

We had an interesting chat on how people are becoming more open in discussing ideas at DCD.  I told Dan, it was interesting how the end users have figured out they can have deep conversations in the exhibit area and outsiders who want to meet them can't get in.  The vendors know if they bother attendees by trying to insert themselves in the conversations, they start off on the wrong foot, by interrupting a meeting.  The amount of vendor hovering is much lower than other data center conferences.  Vendors/salesman still try to get inserted, but they have less than 30 seconds usually as the high value attendees don't make themselves available for random introductions.

Part of the fun I have attending the conference is watching the patterns of interactions. Who is talking to who?  Who is there and who isn't?  Who has changed jobs?  Who is ramping up? Who is laying off?  Who is building? As Seth Godin's post mentions looking for accurate signals, testing facts with others who know, looking for correlations, filtering out the noise and prioritizing is important.

Being an engineer at HP, Apple, and Microsoft it is humorous that  I spend more time on people connections than the technology.

But, getting the people element right is part of being an Industrial Engineer.

Industrial Engineering (often now supplemented as "Industrial & Systems Engineering" or "Industrial & Operations Engineering") is a branch of engineering dealing with optimizing complex processes or systems. It is concerned with the development, improvement, implementation and evaluation of integrated systems of people, money, knowledge, information, equipment, energy, materials and/or processes. It also deals with designing new product prototypes more efficiently. Industrial engineering draws upon the principles and methods of engineering analysis and synthesis, as well as the mathematical, physical and social sciences together with the principles and methods of engineering design to specify, predict, and evaluate the results to be obtained from such systems or processes. Its underlying concepts overlap considerably with certain business-oriented disciplines such as Operations Management, but the engineering side tends to greater emphasize extensive mathematical proficiency and utilization of quantitative methods.

FYI, Stephen Worn,DCD CTO is an industrial engineer as well.

Stephen Worn
CTO / Managing Director North America

Mr. Worn has been involved with industry-leading enterprises and clients around the world for over 20 years as an Industrial FMS and ICT Network and Facilities Engineer; with over eight years in Asia, across the Americas and again back on a pan-European level. Most recently Mr. Worn was the Head of Technology Services for Dimension Data UK, where he was also their acting Practice Manager for Data Centres and Intelligent Buildings.
Stephen has held senior management roles in Nortel Networks as their EMEA Senior Director of Datacentres, at Japan’s Nippon Suisan International, China’s National Center for Industry and Technology, as well as with the Center for Special Economic Zones. Mr. Worn has worked with other Asian multinationals, in addition to his BOD role with OT Partners.
Mr. Worn has supported DatacenterDynamics since its first conference as Chief Technical Advisor and Guest Conference Chairman. He is now Managing Director of North America for DatacenterDynamics as well as Global CTO, and acts as a Moderator at many of the most important events. He holds two masters' degrees.

Also, thanks for my blog readers who found me at DCD SF, it was great to know I can use my blog to connect with others who I may not know, and get to meet face-to-face at a data center event, building a better network.  I made some new connections that definitely fit in my network.

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Quality Control in the Data Center

I was talking to one of my really smart data center friends, and he showed me a list of things that need to be done to manage the date center process.  I looked at the list after he showed me his video feed using my helmet cam idea I wrote about 2 months ago.

May 16, 2010

Shouldn't Helmet Cams be used to document Data Center action?

I've had this idea for a while, and haven't heard of any doing this yet.  Why aren't data center events like maintenance and emergency trouble shooting documented with Helmet Cams?

I saw this article in PopSci that shows a helmet cam on a Dutch Marine boarding a German ship occupied by Somali Pirates.

The helmet camera ideas is working for him and we were laughing that people aren't doing this more.  And, the video was hilarious too.  He's figured out the whole system and he'll share the parts he used when he gets me his own video feed I can share.  He is a believer in the method of open sourcing ideas.

So, back to looking at his list of things that need to be done to manage a data center.  I looked at the list, decomposed the list into fundamental concepts, and started thinking how the pieces could be integrated into a system.

After a minute, it hit me.  "You need to put all these pieces together into a quality control system.  And, give the system to a group independent of the data center operations team to audit operations."  What group?  "Put it in Marketing or Finance so the issues have to go up to CEO/COO if the groups cannot work directly with each other."

One of my first jobs out of college was working at HP in quality engineering and the group reported up to marketing, not manufacturing.  Why?  #1, the quality of your products affect the customer experience.  Who is focused on the customer?  Marketing!  They can make the trade-offs of customer and warranty impact vs. manufacturing cost to affect margin.  Finance could also do this, but I would choose marketing before finance.  The last group you want to do quality control is your group who runs your operations.  You need to think where the group should exist so  they will get rewarded to find problems.

This idea may sound crazy, but luckily we both know the VP of marketing we can float this idea by on his next trip to Seattle.

And, you thought my helmet cam ideas was crazy.  Quality Control in the data center is even more radical.  :-)

PS, when I say my friend is really smart, he fits in with a few friends who I worked with developing software, creating OS features back when we all worked for Apple.  One thing Apple taught us is sometimes when you know what is right you just do it, because there is no data to support your decision as no one has done it before.

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