When we began our sustainability journey a few years ago it was immediately apparent that our data centers consume a lot of electricity – and that electricity consumption is commanding a majority of our carbon footprint. Thankfully, by switching the source of the electricity generation from fossil fuels to renewables we are able to mitigate a lot, if not all, of the associated emissions. However, as a company with global operations which draws power from many different electric grids (all of which have unique energy generation and varying market regulations), we are unable to make the switch to renewables overnight.
When we announced our climate neutral by 2030 target we decided to create a renewable energy procurement plan so that the switch to “green” power could be done strategically and responsibly. In an effort to increase our positive impact, one of our very first decisions was to transfer our customer’s energy consumption within the data halls (the energy that directly powers customer’s servers) to our Scope 2 greenhouse gas accounting (rather than treating it as third-party or Scope 3 emissions). This simplifies procuring renewables on our customer’s behalf and therefore helps them to meet their climate goals as well.
Origination Hierarchy
We know that there are many different forms of renewable electricity, so the first step of our energy strategy was to create an energy origination hierarchy to guide our planning and purchases. We screen all of our renewable energy purchases for generation sources that do no significant harm. Beyond that aspect, we strive to support renewable energy generation projects that are additional (the project would not have happened otherwise), regional (contributing to the same grid where we use the energy), and bundled (where delivery of power remains “bundled” to renewable energy certificates). Therefore, direct power with additionality via a physical power purchase agreement (PPA) is the most desirable procurement option. Where PPAs are not available, we consider Green Tariffs and virtual power purchase agreements (VPPA) with a preference for contracts on the same grid as our demand. Lastly, we may utilize Renewable Energy Certificates (RECs), Guarantees of Origin (GO), Renewable Energy Guarantees of Origin (ReGO), or Emission Free Energy Certificates (EFECs) as a “bridge.”
For example, the time between when we sign a new PPA and when the project finishes construction and begins delivering renewable power might be 1-3 years. In such cases, we may use unbundled RECs to “bridge” the time between signing and delivery. We may also acquire RECs when specifically requested by customers. While we don’t see these unbundled instruments as a long-term solution, if we do need them we prefer RECs and GoOs from the same region as our demand over national or international versions.
We do not intend to achieve climate neutrality with unbundled RECs; instead, we consider them to be a temporary incremental mechanism. Unfortunately, because of the density of power demand for our facilities, onsite renewable generation cannot significantly meet the needs of our facilities.
Procurement Roadmap
Applying the hierarchy above is easiest at new facilities where we can evaluate and source renewable power with the goal of beginning operation with renewable power on Day One. Existing facilities are a bit more challenging. Many of our long-term power contracts at existing facilities were signed prior to the emergence of our climate-neutral ambitions, and we must wait for existing contracts to expire before evaluating new options.
Our roadmap for renewable energy procurement across our existing facilities is:
By prioritizing our transition to renewable energy in this way, we aim to make the most progress in the least time. Hopefully, the U.S. markets currently without ready green power options will develop them as we finish the first three phases, otherwise, we will likely work with out-of-region VPPAs.
Switching to renewable electricity is one of the most impactful steps we can take in our sustainability efforts. In addition to its instrumental role in achieving our climate-neutral commitment, it also helps us reduce our supply chain water and allows us to avoid biodiversity impacts that arise from fossil fuel extraction and transportation. That being said, we recognize that not all renewable options are the same. With this origination hierarchy and roadmap, we’re making our transition to renewable electricity in a deliberate and strategic way. To read more about how our energy fits into our wider environmental strategy, see our Sustainability Report.