Bloomberg Businessweek - USA (2020-03-02)

◼ TECHNOLOGY Bloomberg Businessweek March 2, 2020

16

PHOTOGRAPH BY ACKERMAN + GRUBER FOR BLOOMBERG BUSINESSWEEK. *ON-SITE POWER PURCHASE AGREEMENTS NOT INCLUDED. POWER FIGURES IN MEGAWATTS OF DIRECT CURRENT. DATA: BLOOMBERGNEF

says Gabriel Chan, a professor at the University

of Minnesota who studies energy policy. “The state

can go too far and give Google too much, but no one

knows what the numbers are actually,” he says. “It

really does neuter a third party from being able to

say if this is in the state’s interest.”

A week after state regulators approved Xcel’s

rate deal with Google, Xcel announced that as part

of a plan to stop all coal operations in the upper

Midwest, it would begin a four-year phased decom-

missioning of the Sherco plant in 2026, years ear-

lier than previously anticipated. That’s a win for

the environment, but a blow to Becker. After the

announcement, Pruszinske issued a statement ask-

ing for state aid. “The coal plant is closing earlier

because of a little less political resistance because

of the arrival of Google,” says Chan.

This isn’t the first time Google has located near

a coal plant. In 2016 it opened a data center on the

site of a former coal plant in rural Alabama, lured by

more than $80 million in tax breaks and an undis-

closed discount on its electricity. By 2017, Google

was preparing for a massive infrastructure expan-

sion. Over the next two years, it would spend about

$22 billion opening new data centers across the U.S.

Its energy needs, the biggest operating cost for data

centers, were set to balloon.

Google also wanted to boost its reputation as the

largest corporate buyer of renewable energy. It put

itself on a renewable path a decade ago, when Larry

Page, then Google’s chief executive officer, issued a

memo calling for the company to become carbon

neutral. (Google was way ahead of cloud comput-

ing leader Amazon.com Inc. on this front. Amazon

says it expects to be carbon neutral by 2040. Google

says it became a zero emitter in 2017.)

Technology companies were far and away the

biggest customers for renewable energy credits

last year, signing power purchase agreements for

6,400 megawatts of solar and wind—more than tri-

ple the No. 2 industry, communications, according

to BloombergNEF, which studies renewable energy

markets. Google accounted for about 2,700MW of

clean energy commitments, with Facebook Inc. next

at 1,100MW. Most of Google’s total came from what’s

called a “reverse auction,” a timed, public bidding

process in which it demanded that wind and solar

developers compete to underprice one another.

Google, Facebook, and Microsoft have all

reached their 100% renewable energy targets in the

past few years. Their demand for electricity, how-

ever, has kept climbing at an average of 22% a year.

With utilities eager to land large customers in an era

of flat electricity demand, more deals like Becker’s

are almost certainly in the offing.

Utilities and state regulators might find it hard

to justify millions in undisclosed rate discounts

for mostly automated data centers. It’s easier to

make the case for factories that provide a lot of

jobs. But Google paid Oxford Economics, a com-

mercial research firm, to produce a report about

the economic impact of Google’s data centers.

Oxford concluded that six data centers opened

from 2006 to 2008 had proved a boon for local

communities: a total of $1.3 billion in economic

activity and 11,000 new jobs in just a few years.

Google had ultimate control over the information

researchersused.A footnotedisclosedthatonly

1,900ofthe11,000peopleweredirectlyemployed

byGoogle,andthereportdidn’tclarifyhowmany

ofthemwerefull-timeworkersinhighlypaidtech-

nicalpositionsasopposedto,say,temporarysecu-

rityguards.

Thereport’sreleaseinearly 2018 coincided

withGoogle’sactivenegotiationsforlanddeals,

taxbreaks,andratediscountsinsmalltowns

acrosstheU.S.,includingBecker.Anobscure

GooglesubsidiarycalledJetStreamfirstshowed

upinfilings with Minnesota regulators in June 2017,

along with a Google shell company called Honey

Crisp Power LLC, a nod to Minnesota’s popular

apple. In December 2018, Xcel laid out the myste-

rious companies’ demands for rate discounts and

access to renewable energy credits from a feder-

ally subsidized wind farm in South Dakota. In the

heavily redacted 143-page filing, Google was not

Googleis hardlytheonlycom-

panytoshielditsidentityasit

negotiateswithlocalgovern-

mentsandutilities.Theprac-

ticeis becomingstandard

amongthetechnologyindus-

try’sbiggestcompanies.

Asit buildsoutitsdata

centerfootprint,Facebook

consistentlyconditionspoten-

tialdealsontheutmost

secrecy.Whenit firstcame

toAltoona,Iowa,in 2013,the

companyshroudeditsiden-

tityunderthecodename

“ProjectSequelant.”Laterit

usedanobscuresubsidiary,

SiculusInc.,whennegotiat-

inga dealwithlocalpoliticians

whohadtosignhighlyrestric-

tivenondisclosureagree-

ments.By2018,Facebookhad

builtfourmassivedatacen-

tersinAltoona,inexchangefor

$26millionintaxbreaks.

In2019,Facebookcame

backformore,andmostlocal

citizenshadnoclue.When

theagendafora CityCouncil

meetingwasreleasedin

earlyMay,it includedanitem

abouta developmentagree-

mentwithSiculus,butnofur-

therinformation.Localofficials

deniedmediarequestsfor

theidentityofthecompany,

claimingit wasprotectedby

“attorney-clientprivilege.”

It wasn’tuntilthedayof

theCityCouncilmeeting—

attheactualmeeting—when

politicians could finally say

Siculus was Facebook, and it

wanted $40 million more in tax

breaks. Local citizens had only

12 minutes to read the details

before it was approved. “We

treat our preliminary discus-

sions as confidential because

it is a competitive process,”

says Facebook spokeswoman

Melanie Roe. �Mya Frazier

A Facebook

By Any Other Name

▼ Top corporate

offsetters, by megawatts

ofrenewable energy

purchasedin 2019*

◼Solar

◼ Wind

BHP Group

607

QTS Realty

Trust 541

Walmart

541

AB InBev

310

Facebook

1.1k

Amazon

925

Microsoft

762

Ball

388

Starbucks

292

Google

2.7k