Facebook, Google and Yahoo are the new kings of wind power.
The Internet giants are making good on using a key tax credit for renewable energy in securing cheap electricity from wind to boost their bottom lines.
Of all the new contracts for wind power signed in 2014, 23 percent were from the technology sector and a range of other corporations.
The wind industry says the new trend of companies — as opposed to utilities — buying wind to support their electricity-dependent industries is expanding the industry, helped by a major wind tax credit.
The tax credit was extended by Congress last year, allowing wind farms to take advantage of the subsidy as long as they are built and operational by 2017. But the credit remains politically vulnerable going into an election year.
Nevertheless, the interest from the nation’s technology sector stems from a variety of factors, including company-wide sustainability programs to support environmental practices and low-carbon resources. But a principal motivator is the price and the ability to sign long-term power agreements with wind generators that can guarantee them the same low price of electricity for three decades.
The “fixed price” of electricity is driving them, said the American Wind Energy Association’s deputy director of industry data analysis, Emily Williams. The fixed price is low, about 5 cents per kilowatt hour, and provides a “hedge against fossil fuel volatility” which can go higher. Fossil fuels cannot typically provide that kind of price certainty 30 years out, she says.
The technology companies’ demand for electricity is the fastest growing in the U.S., Williams said. That is due to the number of data centers dotting the nation, which demand huge amounts of electricity to store the data most consumers take for granted in using an iPhone or any other media device. Energy Department officials say data centers are one of the largest new sources of demand for electricity in the country.
Data and technology centers require a large supply of 24-hour-a-day, seven-day-a-week electricity, and the wind allows them to acquire the cheapest form of power available, Williams says. The production tax credit has helped keep that price low.
Still, the amount of energy generated from wind is minuscule compared with fossil fuels. And the price of natural gas remains at historical lows, which is putting pressure on all forms of electric generation and beating some out of the market.
The government’s Energy Information Administration says the number of gas-fired power plants is increasing. However, Williams noted that fossil power plants have to account for fuel costs, where wind energy does not — its fuel is free. The fuel cost is a principal component of any generator’s cost to produce electricity. This does not include maintenance or employees’ salaries, just the wind that turns the turbines.
Although the price of natural gas is low now, many believe it could climb higher, and depending on infrastructure constraints could be much higher in some regions, experts say.
Williams says in previous years the largest purchasers of wind were utilities at 60-65 percent. The new demand from corporations represents about 23 percent of new market demand.
The wind association believes this is a “long-term trend driving new demand for wind…into the foreseeable future,” Williams said.
The wind association will detail the new trend in its 2014 U.S. Wind Industry Annual Market Report slated for release April 15 in Houston. The annual report will provide updated market data, including industry job numbers, state-by-state comparisons, investment numbers and market rankings.
A big part of the report will be devoted to the new growth from corporations signing long-term contracts. Outside the technology firms, other corporations include Ikea, Wal-Mart, Microsoft, Dow Chemical and Anheuser-Busch.
