Google has announced an investment in six solar photovoltaic projects to its portfolio. The projects, located in California and Arizona, have a combined electric generating capacity of 106 megawatts. This deal illustrates the trend of renewable energy investments by data centers and other tech companies.
The projects are under development by Recurrent Energy. Five are located in Southern California, while the sixth is in Arizona. Google and investment firm KKR invested $400 million in the projects; Google's share is reportedly $80 million. The partners will sell the power produced by the facilities to local utilities including Southern California Edison.
Google announced that this represents its fourteenth investment in renewable energy since 2011. In 2010, the Federal Energy Regulatory Commission granted market-based rate authority to Google subsidiary Google Energy LLC, enabling it to sell power at wholesale. Google has since entered into long-term agreements to purchase power from wind farms and other renewable generators.
Other tech companies are pursuing similar strategies. Earlier this month Microsoft announced a deal to purchase energy produced by a Texas wind farm for its data center in San Antonio. In September, eBay received market-based rate authorization from the Federal Energy Regulatory Commission, allowing it to sell surplus power from its generators to the grid.
For consumers like Google with significant demand for power, developing on-site electric generation or entering into a long-term power purchase agreement can be cost-effective, either by reducing the cost of energy or by reducing its exposure to price volatility. Investments in renewable energy can also position companies for improved sustainability and "green" their public images. For these reasons, the trend of tech company investment in renewable energy infrastructure will likely continue for the foreseeable future.