From Amazon to Etsy, Silicon Valley fights Donald Trump’s plan to save coal
The hunger for cheaper and cleaner electricity has set Silicon Valley on a collision course with the Trump administration working to keep coal plants afloat by raising electricity prices
New York: Selling custom nose rings, crocheted bunnies and hand-carved Santas is energy-intensive stuff.
Just ask Etsy Inc., the go-to marketplace for crafts that doubled its electricity use in two years to feed power-sucking data centres that keep the $2.8 billion-a-year business running. It’s one of the many technology giants including Amazon.com Inc. and Alphabet Inc.’s Google demanding cheaper—and cleaner—electricity as their data demands grow.
This hunger for power has set Silicon Valley on a collision course with the Trump administration, which is working up a plan to keep coal plants afloat by raising electricity prices. As a rare source of demand growth, these tech firms have become formidable advocates for clean energy. They’ve contracted enough renewable energy to displace at least 12 coal generators, and some are paying millions to sever ties with utilities to find their own supply.
Big Tech is no longer “afraid to throw around their weight or their ability to influence—some might say bully—their local utility or local governments in what they want to get,” said Lucas Beran, a senior research analyst on IHS Markit’s data centre and cloud team.
It’s easy to see why the companies have become such advocates. Power used by all the nation’s data centres is set to climb 4% from 2014 to 2020, according to an energy department report. Server farms now draw enough electricity to light up Las Vegas and the rest of Nevada, twice over. Etsy alone used 10,679 megawatt-hours last year—enough to supply 1,000 homes.
While coal still accounts for about a third of US electricity, it’s losing ground to cheaper natural gas, wind and solar. Hundreds of mines have shut in recent years, and President Donald Trump campaigned on a pledge to revive them. His administration is now calling on the Federal Energy Regulatory Commission to enact a plan that would subsidize coal-fired power plants.
In a letter last month, Etsy called on regulators to reject Trump’s plan, which it described as a barrier to “making creative entrepreneurship a path to economic security”. Separately, a group that includes Amazon and Microsoft Corp. said the administration is overlooking the potential of renewable power, grid technology and energy storage, warning that the proposal would create “burdensome out-of-market costs on consumers like our companies”.
Their push for clean power extends well beyond Washington. Alphabet has called on utilities to create “buy-as-you-go” renewable energy programmes. The demands of modern electricity consumers have outgrown the standard utility business model designed “for a bygone era”, it said in a white paper last year. The Mountain View, California-based company, which runs the world’s largest online search engine, has signed contracts to buy 2.6 gigawatts of renewable energy that it said will lead to $3.5 billion of investments.
The fight to transform power supplies is just the latest instance of technology companies flexing their political muscle and green image. Earlier this year, the industry opposed Trump’s decision to remove the US from the international Paris climate accord. Many including Google, Microsoft and Facebook Inc. pledged to continue the battle against global warming.
Meanwhile, building solar and wind farms is now less expensive than keeping coal generators online in parts of the US, and solar power is set to become the world’s cheapest source of electricity. Renewables account for about 15% of the US power mix, compared with almost nothing two decades ago.
The quest to be green hasn’t been easy. Microsoft still finds it difficult to get renewables at a fair price when drawing up long-term contracts with utilities, said Michelle Patron, the company’s director of sustainability. A customer of Microsoft’s size, she said, should support “the scale of demand, the certainty they need to bring on these larger renewable projects”.
Utilities aren’t opposed to investing in renewable power. But technology companies are demanding supplies in quantities that could disrupt the reliability of transmission systems, said Matt Mooren, an energy analyst with PA Consulting Group.
Electricity is notoriously hard to store, so for the most part, it must be used instantaneously. Solar and wind farms don’t work when the sun isn’t shining and wind isn’t blowing. That creates a juggling act for utilities that must maintain a steady flow of power to customers. Industry consultant Lazard estimates a grid can handle about 30% of its power coming from renewables. Beyond that, utilities need backup systems like batteries or conventional power plants.
Even so, the technology industry won’t let up on its demands, said Mark Mills, a senior fellow at the free-market think tank Manhattan Institute who authored the 2013 study “The Cloud Begins With Coal.” Improvements in the efficiency of servers have slowed just as demand for data has taken off, he said. Information stored in data centers globally will quintuple by 2020, according to Cisco Systems Inc.
Switch Inc., a Las Vegas data-centre provider agreed to pay $27 million last year to leave its Nevada utility in a bet that the company could find cheaper renewable energy elsewhere. Microsoft paid almost $24 million to bypass a Washington utility and find power on its own.
In September, a group of tech firms including Adobe Systems Inc. pressed Dominion Energy Inc. for more renewables in Virginia—a hot spot for data centres—noting that the companies represent the utility’s biggest source of future demand growth. Less than a month later, Dominion agreed to add clean power for a new Facebook data centre, paving a potential path for others.
The pressure on utilities to source more renewables is only going to increase as large companies strike deals like this, said John Powers, who works for a Schneider Electric unit providing clean energy products to businesses. The company pointed to one group as proof: The Employers for Renewable Energy describes itself as a coalition advocating for companies to move to states that don’t “stifle” their desire for clean energy.
Tech companies have a lot of leverage now over state governments and utilities that are “drooling” over the power use from data centers as demand from other industries flat-line, said Gary Cook, a senior analyst at Greenpeace who specializes in information technology.
And they’re not waiting on government to effect change.
In West Virginia—the heart of America’s Coal Country—potter Joy Bridy makes everything from mugs to sauerkraut crocks that she sells on Etsy. Her operation is powered by solar panels that Etsy helped her get.
Despite her state’s deep roots in coal, she backs the company’s fight for more renewable energy.
“That’s the way the ball’s rolling,” Bridy said. “The sooner we all get with the program, the better it will be.” Bloomberg
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