How Google Is Helping Warren Buffett Go Green

Google today made its biggest renewable energy purchase yet, agreeing to buy 407 megawatts of carbon-free electricity to be generated by a massive wind project under construction by Warren Buffett’s MidAmerican Energy in Iowa.

Given that electricity generated by the wind farms goes into the Iowa power grid, what Google is actually buying are the renewable energy certificates associated with that power production. Still, the bottom line remains the same as Google is guaranteeing revenues for MidAmerican.

The 407 megawatts is the equivalent amount of power consumed by the first and future phases of Google data center in Council Bluffs, Iowa. The company has been on green energy buying spree in  recent years and now has signed deals for more than a gigawatt of electricity. At peak output, that’s would be enough energy to power several hundred thousand American homes.

Corporate buyers of wind and solar energy have become increasingly important as utilities meet mandates to purchase a certain amount of the electricity they distribute from renewable sources and turn to cheap natural gas. Ikea, for instance, last week acquired a 98-megawatt Illinois wind farm.

No company has been as aggressive as Google, though, when it comes to making big-ticket purchases of renewable energy. And Google, which holds a federal license to buy and sell electricity through its Google Energy subsidiary, has not been a passive consumer. Last September, for instance, it purchased the entire output of a 240-megawatt Texas wind farm so it could sell the electricity to the wholesale market that services its Oklahoma data center.

“Google’s interest in renewable energy along with others was a factor in deciding to expand wind generation in Iowa,” Julie White, a spokeswoman for MidAmerican, told The Atlantic in an email.

The acid test of Google’s interest will come over the next year if Congress once again declines to renew the Production Tax Credit (PTC), which pays wind producers a premium for the electricity the generate. The industry has boomed and busted over the past 15 years as Congress has repeatedly allowed the PTC to expire before renewing it at the 11th hour.

Or not. The PTC expired once again at the end of 2013 but Congress offered the industry a grace period by agreeing to pay a premium for electricity generated by projects as long as construction began in 2013. That prompted a building boom in 2013 but once those projects are completed over the next year or two the industry could go over the cliff once again unless the PTC is renewed.

So, will Google continue to invest in wind energy absent the PTC or up its investment in other sources of renewable energy, such as solar?

“We believe that government incentives like the PTC play an important role in fostering  private investment in clean energy,” Google spokeswoman Kate Hurowitz said in an email. “That said, the PTC is one of many factors that goes into our decision-making process when entering into these agreements.”