What It Really Means When Google and Apple Say They Run on 100% Renewable Energy
The role of RECs, the concept of “additionality”, and their impact on the earth
Apple, Amazon, Google, Facebook, and Microsoft — five companies that arguably make up “big tech” — say they are either already powered by 100% renewable energy or are close to getting there.
Together, these companies own and operate more than a hundred data centers (each the size of multiple football fields), close to a thousand offices, and countless other buildings, making them some of the most power-hungry companies in the world. Given this, running on 100% renewable energy is a significant achievement.
But there are plenty of critics who argue that these claims are misleading. Some say carbon offsets might do more to assuage guilt than they do to help the environment. To understand where these arguments come from, let’s start with the basics.
What is renewable energy?
Energy that is produced using natural resources like sunlight, wind, water, plants, geothermal heat, and biomass is classified as renewable or green energy.
But electricity infrastructure is not typically designed in a way that makes it possible to draw only “green energy” from the grid.
Once a solar or wind farm produces electricity, it is not directly sent to consumers, but rather sent to the main grid, where it mixes with electricity produced from other sources to form an “electricity pool.” This renders the green energy supplied to our buildings essentially indistinguishable from other sources of electricity.
Given that over 80% of U.S. energy demand is met by fossil fuels, it’s highly likely that the buildings of many of the companies that claim to use 100% renewable energy are, in fact, drawing from a grid that supplies energy produced by fossil fuels. After all, data centers are running 24/7 while the availability of wind and solar energy is intermittent.
“The plain truth is that the electric grid, with its mix of renewable and fossil generation, is an extremely useful and important tool for a data center operator, and with current technologies, renewable energy alone is not sufficiently reliable to power a data center,” admits Google.
Then how can companies claim they use 100 percent renewable energy?
Renewable Energy Certificates (RECs)
In the United States, a plant that sells renewable energy to the grid is also awarded a Renewable Energy Certificate (REC) for every megawatt-hour (MWh) of clean power that it generates. The company that owns that plant can then sell these RECs to other companies — this is intended to incentivize the development of clean power sources, and allows the purchasers to claim that the renewable energy was generated on their behalf.
Suppose a company consumes 500 MWh of electricity a year and they buy 500 RECs a year. That company is now eligible to claim that it is “powered by 100% clean energy” as long as it doesn’t resell the RECs.
This also means that a company connected to a grid that supplies 100% fossil fuel–generated electricity can say that it runs on 100% clean energy simply by buying RECs from green power plants located in some other part of the country. The term used to describe companies engaging in practices like this is “greenwashing.”
But there’s a problem here. RECs are supposed to be a revenue source for renewable energy producers that helps them produce more renewable energy. But that is not always the case.
This makes RECs so cheap that they do not add any meaningful revenue source to renewable energy producers— and they make an insignificant contribution to additional investments in green energy. Buying RECs also does not mean that companies are reducing their use of fossil fuels or avoiding carbon emissions.
“In short, it’s best to think of buying RECs not primarily as a blow against fossil fuels or carbon emissions, but as a (modest) blow for clean energy,” Vox once wrote.
So does this mean the claims by companies like Google and Apple hold no real merit and have no positive environmental impact?
The concept of additionality = RECs + new green energy production
Big tech companies are aware of the impact of RECs and are even more aware that it is difficult to get away with greenwashing.
These tech companies still need RECs to make “green energy” claims, but instead of just buying them from existing projects, they focus on creating new sources of renewable energy. This is known as “additionality.”
Google reached the 100% renewable energy milestone for its global operations in 2017. On its way there, the company also became the world’s largest corporate buyer of renewable energy. As of April 2018, the company said it had contracts to buy 3 gigawatts of wind and solar energy.
“Our carbon-free energy portfolio will produce more electricity than places like Washington D.C. or entire countries like Lithuania or Uruguay use each year,” Google CEO Sundar Pichai wrote in a blog post last year.
But Google doesn’t just buy RECs to meet its goals. The company focuses on creating new renewable energy from projects it directly funds.
How Google buys and uses renewable energy
- Google buys electricity from renewable energy projects on the same grid as its facility by signing power purchase agreements (PPAs). In this process, Google also receives the RECs for this electricity.
- But Google cannot directly power its data centers with this green electricity. Google has to sell it to the grid at the local wholesale price.
- Google’s data center/facility draws power from the local grid paying market rates. This electricity also contains fossil fuel generated electricity.
- The company then applies its RECs to make renewable energy claims.
How is this process different than just buying RECs?
By signing PPAs, Google facilitates the demand and creation of new renewable energy rather than using its huge profit pile to gobble up existing renewable energy and RECs.
These long-term PPAs (generally 20-year agreements) also guarantee the project developer a stable and sizable source of funds that RECs are not nearly able to provide.
Google has created infrastructure investments worth over $3.5 billion through its PPAs. If the company just bought RECs to cover its 11,000 GWh electricity consumption in 2018, it would have spent merely $55 million (if we assume the cost of REC is at $5, a higher-end estimate).
Google says its ultimate goal is to bring everyone access to green energy and not just its company — you can read more on how it plans to do this in its white paper.
How do Apple’s clean energy claims measure up?
In 2018 Apple announced that it too is was globally powered by 100% renewable energy.
The company now has 28 operational renewable energy projects and 15 more in construction around the world, including the new, fully solar-powered headquarters in Cupertino. Together, these projects are expected to generate over 1.5 gigawatts of clean, renewable energy and have reportedly reduced its greenhouse gas emissions by 64% since 2011.
But Apple’s “100 percent renewable energy” claim only covers its direct operations and not its vast supply chains.
The iPhone maker seems to be on the same path as Google in creating additionality. Apple claims that by setting up its own power projects or signing PPAs with energy companies in the same grid, it facilitates the creation of new renewable energy and keeps the RECs that it makes. “We want to put new, clean power on the grid so that we’re not sucking up all the clean energy that’s there,” says Lisa Jackson, Apple’s VP of environment, policy, and social initiatives.
In cases where Apple is not able to buy or generate renewable energy in the same grid as its facility, the company buys RECs from elsewhere. But to avoid greenwashing, it ensures that one of its own projects produces energy equivalent to the RECs.
Still, Apple’s “100% renewable energy” claim currently only covers its direct operations and not its vast supply chain. This is a major point of contention because many of the company’s products are manufactured by third-party suppliers who continue to use “brown” energy. But Apple has been working on getting its suppliers on board. As of 2019, more than 44 suppliers have agreed to join the company’s efforts. “Apple has a long history of taking suppliers and getting to world class together and this is just part of being world class,” says Lisa Jackson.
By the end of the 2020, Apple and its supplies are expected to bring 4 gigawatts of clean energy online. Although this will cover one-third of the electricity used by Apple’s global suppliers, it still has some way to go to meet its next goal: make its entire supply chain run on renewable energy.
How are other tech companies doing?
Tech giants like Facebook, Microsoft, and Amazon are aligned with Google and Apple in their approach towards renewable energy.
Facebook is set to meet its 100 percent renewable energy goal this year and with its agreements to buy over 3 gigawatts it will become one of the largest purchasers of renewable energy.
Amazon, one of the world’s largest carbon emitters, has also set 2030 as the deadline to run on 100 percent renewable energy.
In 2018, U.S. corporations set a new record for the number of renewable energy PPAs signed: over 121 companies signing PPAs surpassing 13 gigawatts of renewable energy production. And over 228 companies around the world have joined the RE100 initiative, which commits them to going 100% green.
RECs have earned a bad reputation in the past, and as a consequence, real progress and the “100% green energy” claims made by many companies have all been perceived in perhaps an unfair negative light. But if we look deeper into the claims, we can see which companies have made only REC purchases and those that are really contributing to the creation of new renewable energy.
The trend towards additionality has a real, tangible impact on shifting our energy sources towards renewable energy, and it suggests that at least major companies, if not governments, are moving fast to make meaningful changes to protect our cherished earth.
Update: An earlier version of this story misstated what year Apple announced that it is globally powered by 100% renewable energy. Apple first made this announcement in 2018. An earlier version of this story also listed renewable energy statistics that referred to Apple’s 2018 environmental reports. The story now refers to the 2019 reports.