Power Marketer Google?
February 9th, 2010 by Fereidoon Sioshansi, EEnergy InformerGoogle has a habit of surprising its competitors. The fast moving company is known for launching into new forays not always knowing where it may end up. In this sense, it is not only the competitors who are trying to read what the company’s latest move may entail.
In early January, Google submitted an application to the Federal Energy Regulatory Commission (FERC) seeking approval to become a power marketer. There are approximately 1,500 entities in the US who have FERC’s blessing to operate as power marketers. Most are utility companies, power generators or pure traders, companies who buy and sell power at wholesale prices and serve as intermediaries between generators and large consumers. Some are large energy-intensive electricity users such as Alcoa and Safeway with hundreds of supermarkets across the country. But why Google?
Google is closed mouthed about its full intentions, only acknowledging that as a power marketer it could “better manage (electricity) supplies for its own operations” and have “greater access to renewable energy resources.” Both are reasonable reasons to seek official power marketing status. In 2007, as part of its slogan to do no harm, the company announced its intention to become carbon neutral, hence the interest to find and buy low cost renewable energy.
First, Google installed a 1.6 MW solar PV array on its headquarters roof in Mountain View, California, among the largest commercial installations of its kind at the time. Then, following an audit of its internal energy usage, the company announced that its data centers were the most efficient in the world without divulging how many data centers it operates or how much energy they use.
In the early days of the Industrial Revolution, steam engines, factories belching out black smoke, mills, canals and railroads were considered the quintessential sign of progress and prosperity. In today’s information-based economy, it is large data centers, routers and cloud computing facilities that really count. And as the industry grows and matures, companies invest in such facilities not only to serve their own data or computational needs but those of others.
The global Internet infrastructure business is estimated to be worth nearly $30 billion in 2009, expected to exceed $50 billion by 2012, according to Tier 1 Research. Microsoft’s latest mega data center in Dublin, Ireland – among the biggest computing and storage facilities in Europe – occupies 300,000 sq. ft., cost a reported $500 million to build and uses over 22 MW of capacity at peak – as much as a small city. Microsoft is reportedly adding some 10,000 servers per month to keep up with the growing demand for its services.
Google, Amazon, Yahoo and a host of others also own and operate formidable data centers of their own, leasing their surplus capacity to anybody who needs massive data storage, computing power, or related customer-services associated with managing and maintaining large data files such as customer credit card records, insurance or banking services.
As the size and significance of these facilities grow, so do their electric bills – which explains why Dublin was selected by Microsoft’s latest investment. The cool Irish climate cuts down on the center’s cooling load. Just as energy-intensive industries like aluminum smelters have historically looked for secure, stable and cheap electricity prices, today’s data centers increasingly search for inexpensive power supply as a major criteria in locating their next cloud computing or data storage facility.
There is speculation that Google operates some 2-3 dozen large data centers globally. Assuming that each uses 10-20 MW, we may be talking about a potential range of 240-720 MW to make all those fast search engine results possible. Viewed from this perspective, it makes perfect sense for Google to become a power marketer. It’s FERC application says the company wishes to have the right to “act as a power marketer, purchasing electricity and reselling it to wholesale customers” and trading “in the bulk power markets,” which means that Google would have the option to potentially resell power acquired from wholesale markets to customers other than itself.
Niki Fenwick, a company spokesperson says Google “could go directly to a renewable energy projects for our operations.” When asked about what else could be in the offing, she said there was currently “no plans” to sell its energy management services to others or to become a speculative energy trader, but she ventured that Google’s green team was “not sure what they were going to do,” and neither does anybody else.
It is expected that FERC would grant power marketing license since it does not see Google as enjoying dominant market power nor engaging in manipulating market prices or engaging in devious behavior – criteria that FERC uses to grant or deny power marketing status. But FERC is likely to ask for further clarification of the company’s intentions and/or may put certain restrictions on Google’s license.
Google’s competitors will be watching, especially since Google has become active in the energy space with the launch of its PowerMeter project, previously reported in this blog (Why is Google playing in my sandbox?).
Fereidoon Shioshansi
This post is extracted from EEnergy Informer, February 2010 issue.
March 3rd, 2010 at 6:35 pm
Part of me feels that google are trying to muscle in on too many markets, after dominating search, they’re looking at becoming a major player in communications with their mail, their Buzz and their new phone, not to mention the operating system their due to launch soon. Saying that, google are doing what many large companies have done to reduce their energy expenditure and to make the ‘carbon neutral’ claim to win green support. It’s no bad thing… in fact, in the current economic climate, it’s sensible!
March 26th, 2010 at 3:18 am
Interesting. As long as they go for green power I don’t see any problems with google competing with conventional power utilities. I think google’s activities could even help to make the transformation to a renewable energy system faster.
April 1st, 2010 at 4:10 pm
Google is doing a good job going so green. We are using Google services and we are happy that they have a good sense of the environment. Go Google Go!