Southern utilities stand in the way of making the Internet greener — report

By David Ferris, Kristi E. Swartz | 05/12/2015 09:00 AM EDT

Big tech companies like Google and Facebook are on the way to powering their data centers with renewable energy, but an obstacle stands in their path: the biggest utilities in Virginia and North Carolina, according to a new report from Greenpeace.

Big tech companies like Google and Facebook are on the way to powering their data centers with renewable energy, but an obstacle stands in their path: the biggest utilities in Virginia and North Carolina, according to a new report from Greenpeace.

Data centers are located all over the country. But they are concentrated heavily in Virginia and are growing rapidly in North Carolina. With huge, 24/7 power demands, data centers are among the largest utility customers in both states.

Greenpeace pointed out that the principal power companies — Dominion Power in Virginia and Duke Energy Corp. in North Carolina — get the overwhelming majority of their electricity from coal and natural gas plants and that their own documents indicate that they plan to continue to do so for years to come.


Their renewable options are priced higher than fossil fuel power, Greenpeace said, and make it difficult for their large customers to buy renewable alternatives, like power from solar and wind farms, from other providers. Greenpeace periodically reports on energy use in the data sector.

"For Internet companies that want to go green, they’ve got a major obstacle, which is utilities," said David Pomerantz, a climate and energy campaigner at Greenpeace and a co-author of the report. "Utilities are not used to moving at the pace of the IT [information technology] sector, and in lots of parts of the country, the utilities are resistant to giving companies more options, and specifically more renewable options."

For their part, Duke and Dominion both said yesterday that they are rapidly growing their portfolios of solar and wind and are actively trying to offer electricity from cleaner sources. Duke has said it will close several coal units to comply with U.S. EPA rules regarding mercury and other air toxins.

Data centers are a hot-button issue in the world of high tech. These storehouses for the world’s data use giant amounts of electricity and are expanding rapidly as businesses move their data to the "cloud." Consumers are running their digital lives online and using vast amounts of data to stream video through services like Amazon and Netflix.

According to a study cited in the report, managing data accounts for 7 percent of global electricity usage, a figure that could climb to as high as 12 percent by 2017.

Meanwhile, the companies that run data centers, especially the household names like Apple, Microsoft and Amazon, are under pressure from their customers to use renewable sources of electricity in order to head off the problems caused by burning fossil fuels in a changing climate.

Google, Facebook and Apple have committed to one day getting the entirety of their electricity from renewable sources and have recently made substantial progress, according to the International Business Times. But the fossil fuel electricity of North Carolina and Virginia holds a strong appeal: price.

The single largest expense of running a data center is electricity. North Carolina and Virginia have among the lowest commercial rates for electricity in the country, according to data from the U.S. Energy Information Administration.

Google declined to comment for this story. Facebook couldn’t be reached for comment, and Amazon, the world’s largest cloud company and a major data-center anchor in Virginia, referred requests to its energy page.

Dirt and data in Va.

Virginia is home to more data centers than any other state, according to sources cited in the Greenpeace report. Six of Dominion’s 20 largest customers are data centers, and a single county, Loudoun, claims that 70 percent of all global Internet traffic passes through it.

Despite some more solar-friendly proposals, the Greenpeace report criticizes Dominion for "not making a significant increase in its investment in renewable energy over the next 15 years."

A company spokesman argued differently, pointing to the company’s plans to develop 400 megawatts of large-scale solar projects scheduled to produce electricity by 2020. The company also touted its solar projects outside of Virginia.

Dominion started a Schedule RG program for large commercial and industrial customers to increase the amount of renewable energy they use, an amount that is above what the utility currently provides. However, Dominion has not had any customers subscribe to the program, said spokesman David Botkins.

He said one reason may be Dominion’s low commercial and industrial rates. A typical commercial rate is roughly 18.4 percent below the national average. Rates for Dominion’s industrial customers are 39.6 percent below the national average, according to figures supplied by the utility.

Additional renewable energy programs include a "Green Power Program" for all customers, including commercial and industrial ones.

At the state level, Virginia’s quadrennial energy plan, released last October, opened the door to third-party financing arrangements for solar and proposed doubling the current 50-megawatt cap on the amount of solar distributed generation that can be installed through such a long-term agreement (EnergyWire, Oct. 2, 2014).

Other solar incentives include increasing the amount of distributed generation that can be owned by "customer-generators." It also would raise the amount of distributed energy that can be operated before a "standby charge" applies to compensate utilities.

Big brands in N.C.

North Carolina has a growing cluster of data centers. While the numbers are not as large as those in Virginia, the data centers include some well-recognized names, including Google, Facebook and Apple.

While all three companies seek to get all their power from renewable sources, "Duke Energy only generates 2% of its electricity from renewable sources currently, and North Carolina law prevents customers from buying power from anyone other than Duke Energy. Duke’s goal for as far out as 2029 increases its renewable energy share to a mere 4%," the report read.

Some policies, such as the inability for customers to buy solar directly from a private solar company in what’s known as a third-party purchasing agreement, are standing in the way of large companies in meeting their own green energy goals, according to Greenpeace.

What’s more, the state’s renewable energy mandate hangs in the balance after a bill to freeze the requirement passed the North Carolina state House and is now headed to a Senate committee.

A Duke Energy Corp. spokesman argued that the utility works with large companies to help them meet their sustainable energy goals.

"We know there are large customers who are wanting more renewable energy," Duke Energy spokesman Randy Wheeless said. "We know that market. We’re trying to respond to what customers are asking for, and that is to try to find reasonably priced renewable energy that meets their goals."

Wheeless also touts Apple as an example of a company that worked with Duke to have on-site generation. The company is building a 17.5-acre solar farm, its third large-scale solar system in the state. Along with fuel cells, the solar farm is expected to meet the center’s energy needs.

Duke has a Green Source Rider program that state utility regulators approved in December 2013. The program applies to new renewable energy load that is going onto the grid either because a company is moving to North Carolina or because it is expanding its operations there, Wheeless said.

Under this program, Duke will solicit the market to find out how much renewable energy — solar or another type of sustainable fuel — will cost a company to add to its electricity mix. This means large customers have the availability to get all or half of their electricity from alternative energy, but they also will pay more.

Duke has not signed any customers to this program yet, but Wheeless said the company is hopeful that it will do so by the end of the year. Duke plays a role in recruiting companies and with offering competitively priced renewable energy options to large customers.

"There’s a lot going on here, and that’s why we don’t have anyone signed up, yet," he said. "We have had some good discussions with companies — I can’t name any — and we feel very comfortable that by the end of the year that someone will be involved in that program."

Data centers typically fall under Duke’s industrial class of rates. The utility’s average industrial rates for North and South Carolina range between 7.75 and 8.28 cents per kilowatt-hour, Wheeless said. The U.S. average is around 10.26 cents per kWh.

"North Carolina has a lot of advantages, and we think that low electric rates are one of them," Wheeless said.

An alternative path

Pomerantz, an author of the Greenpeace report, said that Duke and Dominion should look to utilities that have partnered with data-center companies on renewable energy.

He mentioned Google’s partnership with MidAmerican Energy Holdings Co. in Iowa to supply 407 megawatts (MW) of wind energy, and Apple’s deal with NV Energy in Nevada to supply its data center with electricity from solar and geothermal sources.

Dominion and Duke "can try to get out in front if it and offer it themselves, and if they don’t, they’re at significant risk of those operations finding other ways to power themselves," Pomerantz said.