How Google, Facebook and other Energy-Intensive Companies are Purchasing Renewable Energy

Nearly half of Fortune 500 companies have made renewable, greenhouse gas and/or energy efficiency commitments, according to “Power Forward 2.0,” a report from the World Wildlife Fund.

To reach these goals, operators of energy-intensive facilities, like manufacturing plants or data centers, are creating agreements to directly purchase renewable energy from utilities. Rather than being locked into a predetermined rate schedule, these deals offer corporations the benefit of using their size as leverage to negotiate their own pricing for renewable energy. The utility, in turn, gains a large customer.

According to a new joint report from the Retail Industry Leaders Association (RILA) and the Information Technology Industry Council (ITI), “Corporate Clean Energy Procurement Index: State Leadership and Rankings,” these types of agreements exist in six states, but are most common in Iowa. The full report is available for download at cleanedge.com.

Iowa leads in this category because of the state’s large amount of renewable generation—more than 35% of the state’s overall electricity generation is from wind. This allows Iowa’s utilities to meet renewable energy demands from customers that utilities in other states would be unable to fulfill.

For example, Google and Facebook have agreements in Iowa to buy a combined 548 MW of wind-generated electricity directly from the local utility, MidAmerican Energy, a Berkshire Hathaway subsidiary. This massive amount of energy, at the time of the deal, represented more than 3% of all electricity generating capacity in the state, according to the RILA and ITI report. It allows companies to run their data centers on 100% renewable energy.

Having successfully negotiated these deals, and seeing the potential of replicating the agreements with new customers, MidAmerican Energy and the state’s second-largest utility, Alliant Energy, are investing even more in wind—which is an almost limitless resource in Iowa. Together, they have announced plans to invest an additional $4.6 billion in new wind energy capacity.

Iowa’s government is incentivizing these utility investments because policymakers see wind energy as an economic differentiator for the state. They are betting that as renewable energy becomes more of a priority for manufacturers, few states will be able to match Iowa’s low cost of doing business, educated workforce and abundance of accessible, renewable energy.

Read more about Iowa’s bet on wind and what else the state offers.