Clean Energy is Just Smart Business for Leaders like Apple, Google
Recently, Apple announced plans to spend nearly $2 billion on European data centers set to run entirely on renewable energy, and invested $848 million to secure power from 130MW of First Solar’s California Flats Solar Project under a 25-year power purchase agreement. Google also agreed to replace 370 wind turbines installed in the 1980s with 24 new, more efficient and bird-friendly turbines at the Altamont Pass in the San Francisco Bay Area. Moreover, there has been recent speculation Apple may be working on an electric vehicle to challenge Tesla’s dominance in that market.
These developments are impressive on their own, but they are also part of a new trend among major corporations – whose primary focus is not energy generation – proactively pursuing clean energy projects. So, why are they doing this?
For corporations whose businesses do not rely on fossil fuels, aligning themselves with clean power is proving a prudent move both financially and for public relations.
Clean power portfolios
Of companies whose primary operations do not focus on power generation, Google is one of the most proactive in the world in terms of generating, using, and financing clean power. According to Bloomberg New Energy Finance’s (BNEF) database, its activities include:
Also proactive, Apple’s activity regarding clean energy includes:
Outside of tech, Wal-Mart and other non-power companies are proactively pursuing clean energy. Wal-Mart owns and/or uses electricity from solar and wind plants that amount to upwards of 380MW of capacity. By 2020, the company aims to be powered 100 percent by renewable sources.
Home Energy Management Systems (HEMS)
In June 2014, Apple launched HomeKit, an app that makes people’s lives easier by enabling them to control numerous smart devices without having to manage a growing number of different apps from individual manufacturers. According to Bloomberg New Energy Finance (BNEF),
“An example of HomeKit’s capabilities Apple provided when describing its integration with Siri – Apple’s virtual assistant – is for ‘setting a profile for simultaneously switching off the lights, locking the doors, and turning down the thermostat, then activating this profile at bedtime by telling Siri ‘good night’.”
BNEF further posits that Apple’s launch of HomeKit “kicks off a battle for the ‘connected home’ ecosystem,” with Google as a strong competitor.
In January 2014, Google acquired Nest for $3.2 billion, the second largest deal at the time for an energy smart technology company. Through connecting to the cloud to access energy usage and weather data, Nest predicts,
“Usage patterns and behavior of its customers [will enable] deeper savings even for customers who do not program the thermostat manually. It can also interact with utility time-of-use pricing where available and integrate with local utility demand response and peak rebate programs to help manage demand.”
Beyond Apple, Google, and utilities, home automation technology has existed for decades, and companies such as iControl Networks, Control4, Vivint, and many others provide a variety of products and services. Apple’s and Google’s entry into the connected home market, however, dramatically stiffens competition and signals accelerated growth in this space.
What’s the significance?
The economics of using, investing in, and generating clean energy are sound. Apple and Google are first and third in the world, respectively, in terms of market capitalization. These are corporate giants dominating a capitalist system that prioritizes the bottom line. These companies see financial opportunities in the budding connected home market, and they perceive clean power purchases as financially savvy. If they didn’t, they wouldn’t do it.
More specifically, according to BNEF, the motivation behind Apple’s recent $848 million solar purchase “is not just corporate sustainability, but financial. With current incentives available to solar, the levelised cost of electricity for a plant in California could be in the range of low $70s/MWh, perhaps even lower… This cost likely undercuts the retail electricity price currently paid by Apple in the Bay Area.”
Furthermore, the positive public relations benefits of positioning a company as clean and environmentally friendly cannot be understated. This point was underscored this past fall when Google and Facebook joined Microsoft, Amazon, Yahoo, and Yelp as tech giants leaving the American Legislative Exchange Council (ALEC), a front group and model bill factory for many corporate interests including oil, gas, and coal. A large reason Google left ALEC, according to Chairman Eric Schmidt, was the following:
The facts of climate change are not in question anymore. Everyone understands climate change is occurring, and the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place. And so we should not be aligned with such people — they’re just, they’re just literally lying.”
Exiting ALEC has not been limited to tech juggernauts. Corporations with American brands, such as Wal-Mart, General Motors, Coca Cola, Pepsi, and McDonalds have also left.
For a long time powerful people have depended on fossil fuels for making their fortunes, but affordable alternatives are changing that dynamic. For the many successful corporations whose fortunes are not tied to fossil fuels, clean energy’s increasingly favorable economics and socially responsible brand are proving to be attractive.
By: Peter Sopher