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Google: 'Renewable energy looks a safe bet – and better by the day'

5 MINUTES | Francois Sterin, director, global infrastructure at Google, talks to Darius Snieckus about the internet giant's renewable energy strategy

Late last year technology giant Google confirmed its status as the world's largest corporate backer of clean energy when it revealed that it would reach 100% renewable coverage of its global operations in 2017.

Francois Sterin, Google's director, global infrastructure,  talked to Recharge about the company's strategy and its view of the corporate renewables market.

As the global leader in corporate renewable energy, and as the first corporation to achieve 100% renewables, what outreach work is Google doing to encourage other major companies to follow your lead? 

 We do a lot of outreach and we try to lead by example, as illustrated by our 2017 100% renewable energy target.

But we are also joining forces with other corporates, whether to buy renewable energy output, as we have done with [DSM, AkzoNobel, and Philips for] the Krammer wind farm in the Netherlands, or through groups like the [corporate energy buyers' body] RE100 in Europe and the Corporate Renewable Energy Buyers' Principles in the US.

We also pledged at the Clean Energy Ministerial in San Francisco to work with governmental policy makers to remove barriers to allow corporates to have greater access to renewable energy.

All these initiatives benefit Google, but also more widely benefit corporate renewable energy buyers as a whole.

Do you get any sense of how the corporate renewables market will grow in 2017?

Clearly this market has grown a great deal in recent years, in the US from 100MW of corporate PPAs [power purchase agreements] in 2012 to 3.2GW in 2015. This trend has come from the fact that most Fortune 500 companies have [a] renewable energy goal that is fairly solid – around 60% [of them] based on our latest data.

Will this continue to be solid and continue to grow? The underlying demand is there.  What is needed is a favourable policy framework to enable consistent investment to happen.

"Renewable energy makes good business sense. Electricity is our largest operating expense in our data centres"
Francois Sterin, Google

In Europe, the [EU's] European Energy Directive will be fundamental going forward; in the US there could be some changes in regulation and we cannot predict the outcomes of this, of course.

We totally advocate for more corporate renewable energy on the grid, and we hope that government regulatory frameworks will support the underlying drivers that corporates have. 

Does Google expect 2017 to be another year in which US corporate energy will outpace renewables procurement by utilities?

In 2015 [in the US] corporate wind PPAs were at around 2GW, which was more than 50% of wind installed that year.

The trend going into 2017 is solid from a demand perspective. In Washington, from my understanding, there is strong bipartisan support for regulation that will support this trend. Ultimately it depends on the appetite of the investment community. 

The cost [of renewable energy] is definitely going down very quickly, in the case of solar by 80% in the last five years and 60% for wind over the same period. But not all state regulation is going to support renewable energy power purchase to the same extent right now. We are in a transition phase. 

Is it easier for corporations to buy/build renewable energy in certain markets? Do you see any markets where barriers to entry may be taken down in 2017? 

Europe has stood out so far in the corporate energy deals done in the UK, the Nordics, and to a lesser extent the Netherlands. This market should remain strong whatever the near-term changes in regulation.

But 2017 is unclear...at this stage. New corporate energy markets – Mexico, China, and others – based on hearsay have real promise, but have not materialised yet.

Google to reach 100% renewable energy milestone in 2017

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We keep hearing about corporate PPAs being one of the key drivers for many renewables markets, and there is an understanding that this sort of deal is going to help to make many industrial-scale projects financeable in the future.  

Compared to five years ago there is a much better understanding globally that this is the direction of travel, but there is a lot to be done still [in these new markets].  

Is Google saving money by going 100% renewable, or is it more of a hedge against future price rises?

Renewable energy makes good business sense. Electricity is our largest operating expense in our data centres. We need to be cost-competitive and we are not willing to pay whatever price for [power].

You can hardly predict what energy markets will do in 10 years, of course. But when we look at the longer term forecasts, renewable energy looks a safe bet, and better by the day as the LCoE [levelised cost of energy] of wind and solar continues to drop.

I expect that in ten years we will look back and see that our model was right. Renewable energy is a hedge at the same time because we typically go for fixed-term contracts that have no fuel costs associated, or indeed 'swings' in costs.

This is very beneficial when you are managing a global power portfolio [and] a key attraction for us and for corporates more widely, [providing] stability of price and hedging value. 

 Do you see the rise of climate-sceptic politics in the US and some parts of Europe (eg: Trump, Brexit, Le Pen, Hungary, Poland) having an impact on the growth of corporate renewables?

Whatever political party is in power in a country, we will continue to believe in renewables and continue to support the build-out of wind and solar. And many corporates are aligned to our view.

"Whatever political party is in power in a country, we will continue to believe in renewables"
Francois Sterin, Google

We are starting to see what a major impact renewables can have on a country's economy – and [be] a good investment in the future in general. This is a very strong underlying current that we hope will carry through beyond any electoral result.

We want to go further than 100% renewable energy purchase on an annual basis to a 24/7 zero-carbon grid.

There are challenges and a lot of work to be done not least because of uncertain political contexts, but we are very keen to expand the renewable energy agenda, as are a growing number of other corporates. 

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