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Microsoft Wants Clean Energy for South African Data Centers

Nathaniel Bullard (Bloomberg View) — The two new data centers that Microsoft Corp. plans to build in South Africa will one day provide cloud computing services to the entire African continent. The power they use, however, will be generated and consumed entirely within South Africa’s grid.

While a decade ago that would have meant buying electricity from the utility regardless of generation source, Microsoft today expects to have a variety of options. Given its commitment to renewable energy, the company may prefer to use wind and solar energy. But in South Africa, that power might not end up being entirely clean.

Many big companies — and big purchasers of power, such as the U.S. Department of Defense — are choosing renewables. Since 2008, the top 10 buyers of zero-carbon power alone have created billions of dollars’ worth of long-term demand for wind and solar power, Bloomberg New Energy Finance has seen. Of those companies, five are American technology companies with their own data centers, and one (Equinix) is an American data center operator.

Google, the biggest buyer of clean power, was also early to the game, making its first corporate clean-energy purchase in 2010. Microsoft signed its first clean-energy contract in 2013.

What technologies do these five big U.S. tech companies prefer? Both wind and solar, but so far mostly wind. Since 2010, they’ve bought more than five times as much wind as solar. The proportion may be changing, though. So far this year, 60 percent of their power buys have been solar.

Buying clean power can be relatively easy. In South Africa, however, things are a little complicated. In the U.S. and elsewhere, companies can simply buy clean energy from any utility that has a certification program ensuring the power comes from a zero-carbon source. Companies can also contract for power from an outside clean-energy source. But with South Africa’s utility, Eskom, there are obstacles.

South Africa has no renewable-energy certificate program, so the only way for Microsoft to guarantee clean power is to build its own source — and that might not provide enough power to meet its demand.

Or the company could sign an agreement with an independent clean-power producer and pay Eskom a “wheeling” charge to deliver it, but Eskom hasn’t been signing any new power-purchase agreements.

That leaves buying power from Eskom itself, with no assurances that it comes from wind or solar. Eskom is an institution with a history of power blackouts, numerous scandals, and a less-than-stellar local reputation. In South Africa, it’s going to be a challenge for Microsoft to get clean power from a not-so-clean utility.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. It also does not necessarily reflect the opinion of Data Center Knowledge and its owners.