Google Helps Buffett Go Green

Google recently made its largest renewable energy purchase, and they agreed to buy 407 MW of carbon free electricity. It is going to be generated by a large wind project under construction by MidAmerican Energy in the state of Iowa. This company is one of the subsidiaries owned by Warren Buffett.

Google is technically buying the renewable energy certificates associated with the power production generated by wind farms in Iowa that go to the power grid. But the bottom line is quite the same. They are guaranteeing revenue for MidAmerican.

407 MW is the overall equivalent of the consumption of power by the first and future phases of the Google data center located in Council Bluffs, Iowa. The company has recently gone on a green energy spree over the last few years. They have even signed deals for more than a gigawatt of electricity in total. At its peak output, this is enough energy to power hundreds of thousands of homes in America.

Corporate wind and solar energy buyers have become very important as the utilities meet the mandates to purchase a specific amount of the electricity that they are distributing from renewable sources and turn to inexpensive natural gas. Just last week, IKEA purchased an Illinois wind farm capable of 98 MW.

There hasn’t been a company that has been as aggressive as Google so far when it comes to purchasing renewable energy at this scale. The Google energy certificate grants the company a federal license to buy and sell electricity, and they have been an active participant in this process. Last September alone, Google purchased an entire 240 MW Texas wind farm in order to sell this energy on the wholesale market that services its data center in Oklahoma.

“Google’s interest in renewable energy along with others was a factor in deciding to expand wind generation in Iowa,” said Julie White, a MidAmerican spokeswoman when speaking to The Atlantic via email.

The Google interest acid test will come next year if Congress decides to decline its renewal of the Production Tax Credit (PTC), which pays the producers of wind a premium for generating this electricity. Over the past 15 years, the industry has busted and boomed because Congress has repeatedly allowed the PTC to expire, only to renew it at the 11th hour.

At the end of 2013, once again the PTC expired but Congress granted the industry a grace period and agreed to continue to pay a premium for electricity that was generated by renewable sources as long as construction started in 2013. That created a massive boom in building during 2013, but once the projects are completed over the next one or two years the industry may go over the cliff again unless they renew the PTC.

The question is if Google is going to continue to invest in wind energy without the PTC, or will they go a different route and look for other renewable energy sources like solar?

“We believe the government incentives like the PTC play an important role in fostering private investment in clean energy,” said Kate Hurwitz, Google spokeswoman. “That said, the PTC is one of many factors that goes into our decision-making process when entering into these agreements.”

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