Managing Risks with Renewable Energy

Companies are turning to energy sources like wind and solar as a way to handle rising energy costs and the specter of power outages.

Faced with rising and volatile energy prices and the specter of potential power outages, eBay decided last year that it was time to step up its use of renewable power sources.

With its data centers comprising about half of the company’s energy consumption, eBay’s sustainability team determined it made sense to focus on those facilities. First, it would consolidate the company’s eight U.S. centers into three situated in Utah, Arizona and Nevada. In addition, it would add onto the existing Utah center to create a 30-megawatt facility powered entirely by renewable energy, to be completed by mid-2013.

McIntire won’t say how much UPS has invested in these efforts, but it has received plenty of federal and state incentives to help. For example, working with a truck manufacturer, UPS received payments from the state of California, the entry point for the natural gas corridor, including $60,000 each for 30 tractors and $40,000 for an unspecified number of electric package cars.

At eBay, Nelson and his colleagues figured that since the electricity used to manage data made up a substantial portion of the company’s total power usage, that’s where they should start. What’s more, with a warehouse of servers at the service of more than 100 million customers at any given time, avoiding power outages was of critical importance. Such events mean a loss of about $2,000 per second for the company, according to Nelson.

At other companies, decisions are made at a lower level. About a year ago, the corporate service team at Summit, N.J.-based Celgene, evaluated the drug development company’s facilities in North America and decided to start with an effort to have its headquarters completely powered by green energy by the end of this year, buying from a supplier of wind, solar and hydroelectric power.  Still, if it came to a larger, corporate-wide plan, “the corporate services team would present a plan to our leadership, who would make a final decision and roll it out to the company,” says Vincent Barilla, executive director of facilities at Celgene.

Introducing renewable energy comes with a variety of challenges, of course, but they may differ from company to company. For example, while compliance with regulations tends to be a headache for everyone, according to Ernst & Young, some companies’ strategies may mean they have to address their own, idiosyncratic issues. Take eBay. The company’s plan called for a local utility to serve as the backup energy provider for its Utah center. Trouble was, Utah law didn’t let non-utility consumers buy and transmit power from producers of renewable energy. But Utah generates its power almost entirely from coal, an energy source that didn’t jibe with eBay’s sustainability standards. “It’s very dirty power,” says Nelson.

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