Power Purchase Agreements allow utilities to build renewable resources

Long term commitments spur growth in alternative energy production.

wetherhillwindfarm-wikimediacommons.jpg
Wikimedia Commons

With its agreement with SunEdison in Texas, Hewlett-Packard has allowed the utility to go ahead with the construction of a 300 MW project, its South Plains II wind farm. HP will use 112 MW of that generation capacity to allow HP's five data centers in Texas, which cover over 1.5 million sq ft of raised floor space, to meet their carbon reduction goals.

HP won't necessarily be powering their data centers directly from the wind farm; instead the 12-year commitment to the investment in the long term power purchase agreement (PPA) allows them to offset any non-renewable energy generation used to power their data centers.

Wind farm projects have become de rigueur in the high profile data center business. Google, Amazon, and Microsoft have all made recent announcements relating to their investments in what is called utility-scale energy purchasing focused on renewable wind energy. This PPA is HP's first foray into this business segment.

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The math works this way: HP will reach its 2020 carbon reduction goals five years ahead of schedule, even though the facility is not yet built. The world of carbon credits and energy emission is a delicate and complicated balance of green power purchasing and offsetting less green resources.

As cynical as this might sound, here's the bottom line: Without the long term PPAs from major consumers of power, these green power generation facilities might not get built. Data centers require consistent dependable power sources. By investing in alternative energy sources such as wind power -- which have previously required large government subsidies in many cases in order to get the projects off the ground -- IT customers are picking up the burden of getting these facilities built and the power they generate added to the public grids, minimizing the need for less green alternatives.