Microsoft is latest tech giant to buy Midwest renewable energy

Source: Jeffrey Tomich, E&E reporter • Posted: Thursday, July 17, 2014

Microsoft Corp. yesterday announced an agreement to buy 175 megawatts of wind energy from an Illinois project south of Chicago to power its data center in the city.

The agreement is the latest in a string of contracts between renewable energy developers and technology giants looking to take advantage of relatively inexpensive wind power from the Plains.

Redmond, Wash.-based Microsoft will buy output from the Pilot Hill wind farm in Kankakee and Iroquois counties in Illinois under a 20-year power purchase agreement with EDF Renewable Energy Inc. EDF is purchasing a 96 percent stake in the Illinois farm from Orion Energy Group LLC and Vision Energy LLC. Specific terms weren’t disclosed.

Microsoft said the wind farm will generate more than enough energy to run the company’s Chicago data center and is scheduled to begin operation in the first quarter next year.

The Pilot Hill agreement is the software giant’s largest wind energy purchase to date. It is similar to a wind power agreement signed last year under which the company locked up 110 MW from the Keechi Wind Farm about an hour northwest of Fort Worth, Texas (ClimateWire, Nov. 5, 2013).

The project is financed in part by Microsoft’s internal carbon fee, assessed to business groups based on their energy use, primarily in the form of electricity and air travel.

Brian Janous, director of energy strategy for Microsoft, said the company “is focused on transforming the energy supply chain for cloud services from the power plant to the chip.”

Originally proposed in 2008, the scope of the wind project (originally about 400 MW) has been reduced from what had been proposed. The project was put on hold for several years following the recession.

Ryan Pfaff, EDF Renewable Energy’s executive vice president of development, said in a statement that the power purchase agreement provided the financial certainty needed to begin construction.

The Microsoft agreement is one of several in recent months by technology heavyweights securing long-term commitments for wind power to run energy-hungry data centers.

“It is encouraging to see leading corporations investing in the U.S. wind sector based not only on their desire to positively impact the environment, but also because it simply makes good business sense, as the cost of wind energy continues to decline, and with the support provided by the production tax credit,” Pfaff said.

In April, Google agreed to buy up to 407 MW of wind for its Council Bluffs, Iowa, data center from MidAmerican Energy Co. wind projects that will begin operation by the end of next year. And Facebook announced last fall that a new Altoona, Iowa, data center will be powered by a 138 MW wind farm in nearby Wellsburg.

Though not a technology company, Swedish retailer Ikea Group agreed in April to purchase the 98 MW Hoopeston wind farm under construction in Illinois that will produce the equivalent of 18 percent of the energy that Ikea uses globally.

The wind farm, which will produce 380 gigawatt-hours of energy annually, is expected to be operational in the first half of 2015 and will be run by Apex Clean Energy Inc.

The Microsoft and Ikea projects, in particular, also come at a time when wind purchases by utilities in Illinois have stalled as a result of an unintended conflict between state laws. Solving the problem is a top priority for clean energy advocates in the state, but a legislative solution has proved difficult so far (EnergyWire, April 23).