An area encompassing several cities in Northern Virginia, just outside of Washington, D.C., is quite possibly home to the world’s largest concentration of data centers. Be it Amazon, Netflix, Facebook, Google, or Uber, every major tech company with a large-scale internet platform either operates its own data centers in what we refer to as the Northern Virginia data center market, leases space from the numerous data center providers there, or uses cloud servers running in one or several of those facilities.
Economic development officials in Loudoun County, where the bulk of Northern Virginia’s data center capacity is located, claim that 70 percent of global internet traffic passes through county borders daily. Regardless of whether or not that’s actually true, the region is clearly one of the internet’s biggest and most important nerve centers (read up on how it came to be that way here). And, as the nature of such nerve centers dictates, it is only growing bigger. The bigger the ecosystem, the more players want in.
But, as this already massive cluster of internet infrastructure continues snowballing, environmental activists are starting to ring alarm bells about the sources of energy that keep it chugging along. As Greenpeace pointed out in its latest Clicking Clean report that came out earlier this week, Dominion Resources, the utility serving the region, gets only 1 percent of its generation capacity from sources Greenpeace considers renewable and 2 percent from hydroelectric plants. The rest of the utility’s capacity is split about equally between coal, nuclear, and natural gas.
The Green Cloud Conundrum
This is why Northern Virginia – like other hot US data center markets, such as Chicago and to a lesser extent New Jersey – presents a conundrum for cloud and data center companies. Business considerations like proximity to fiber infrastructure and a critical mass of interconnection partners are at odds with corporate sustainability goals.
Many internet giants have commitments to power 100 percent of their operations with renewable energy. Amazon Web Services made such a commitment in late 2014. As it continues expanding data center capacity around the world – and especially in Northern Virginia, which is already home to its biggest cloud region – Greenpeace is questioning its ability to deliver on that commitment in a way that will make a big-enough dent in carbon emissions the company is responsible for.
More often than not, the best place to build a data center is not the best place to build a wind farm or a photovoltaic plant. The most popular answer to this conundrum among hyperscale internet companies has been decoupling Renewable Energy Credits from energy generated by a renewable plant in one place and applying them to compensate for dirty energy consumed by a data center in another. In Greenpeace’s point of view, however, this approach does not offer a sufficient-enough impact, since the data center is still generating energy demand on a grid powered by dirty energy.
“You can’t pretend like doing one-off (renewable energy) deals in the middle of the country should count for operations in South Carolina or Georgia, where those electrons never meet,” Gary Cook, Greenpeace’s senior corporate campaigner and the new report’s lead author, said in an interview with Data Center Knowledge, referring to big wind and solar deals several internet and data center companies have made to meet their sustainability goals.
Read more: Cleaning Up Data Center Power is Dirty Work
The greatest impact is achieved when renewable energy is consumed on the same grid it is generated on, and both Amazon and Microsoft have succeeded in helping to bring more renewable generation capacity online in Virginia, where their cloud data centers can use it. Amazon has signed Power Purchase Agreements for wind and solar in the state, and Microsoft has struck a deal where it will help finance a 20MW solar project in return for RECs it will generate.
Greenpeace commended both companies for taking these steps but pointed out that both cloud giants continue dramatically increasing demand on the grid in Northern Virginia, where (like in many other markets around the country) the ultimate problem is that renewable energy options are limited. “These efforts further underscore the need for both better options for customers to buy renewable energy and a greater willingness on behalf of companies to ensure such deals are designed to have a greater impact,” Greenpeace said in its new report.
Easier Said than Done
In addition to weather, one of the biggest obstacles to buying renewable energy on the same grid as your data center is the way many energy markets are structured and operated. Existing rate structure, regulations, and the need to balance supply and demand on the grid make bringing additional generation capacity online extremely complicated. Recently, there have been examples of hyperscale data center operators getting around this obstacle, however, and one of them is Amazon, in Virginia. Last year, the company negotiated an arrangement with Dominion and local regulators whereby it will essentially buy energy from its wind and solar projects on the same section of the grid at rates close to wholesale market rates rather than the uniform retail rates the utility charges all its customers.
In an emailed statement, an AWS spokesperson pointed to the company’s renewable-energy commitment and progress it has made to date: “By April 2015 we hit 25 percent renewable, closed 2016 at 45 percent renewable, and have set a goal to reach 50 percent by the end of 2017.”
By signing large-scale power purchase agreements, AWS has enabled 10 renewable energy projects in the US, which it expects to generate a total of 2.6 million MWh annually “onto the electric grid powering AWS data centers,” the statement read. Four of the 10 projects are already online.
Dominion plans to extend the special rate it created for Amazon to other clean energy buyers in its territory up to 200MW, a move Greenpeace called an improvement but added that the biggest impact would be achieved by opening the market to energy providers other than Dominion. That would allow developers to sell 100 percent renewable energy directly to customers. While allowed under state law, Dominion and other utilities have aggressively fought attempts to make such changes, which would effectively disrupt their monopolies, according to Greenpeace.
And that’s the reason Greenpeace considers advocacy one of the most important parts of companies’ efforts to operate on clean power. A lot needs to be changed about the way energy markets operate today in order to truly build an internet powered by renewable energy, and as big customers utilities love to serve, data center operators are in a strong position to negotiate for those changes.
Additional reading: How Renewable Energy is Changing the Data Center Market