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Posted 23/02/2015

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Google Wind News Should Make Utilities Sweat


Google has searched the world for wind projects to invest in. But this month it did one of its highest profile deals on its own doorstep.

The tech giant this month revealed plans to power its Googleplex HQ in California using energy from an 86MW wind farm by developer NextEra. The internet giant has committed to a 20-year deal to buy half the energy from the project, which is due to complete in 2016.

There are two big positives we see in this deal.

First, it is a great show of support for US wind. The industry is battling with the government to get it to extend the production tax credit, and Google’s support shows that it hasn’t been swayed by spurious claims that wind farms are both dangerous and unreliable.

Second, these types of deal are great for developers and investors. Long-term deals like these give project backers the financial certainty they need to push ahead with schemes. it means that large corporates are taking control of their future energy needs.

But what we are really interested is seeing what effect these deals will have on utilities. It is good news for wind developers that corporates are dealing with them directly, but it also means that utilities are losing these corporates as customers. How will utilities respond?

After all, Google is by no means the only large corporate to sign this type of deal. The announcement came just a day after Apple announced a 25-year deal to buy power from a 130MW solar farm, which is due to complete next year, to power its Californian operations.

Amazon has been investing in wind farms to run its data centres; Microsoft did a 20-year deal last June to buy the energy from a 175MW wind farm; and, in the UK, telecoms firm BT last June signed 100MW of power deals to help run its UK operations.

This is not just about control-freakery. Big corporates are under pressure to show they are ‘green’, and the easiest way to do that in their energy deals is by taking direct control. It is clear to us that they do not want this in the hands of utilities who are reliant on fossil fuels.

This is a huge challenge for utilities. We await their response with interest.
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A Word About Wind talked to Googles head of corporate finance Kojo Ako-Asare about the companys wind strategy in the Hidden Investment Opportunitiesreport last June.

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