Google's entrance into the energy market has been a long time coming. Earlier this year, the Internet giant formed an energy subsidiary, dubbed "Google Energy", and soon afterwards Google announced that its first direct investment in utility-scale clean energy would go towards NextEra Energy Resources' wind energy project in North Dakota to the tune of $38.8 million. Now Google reports that it has entered into a 20-year green Power Purchase Agreement with NextEra--and Google plans to sell some of that wind power back to the grid for Renewable Energy Certificates. In other words, Google-owned resources may soon be keeping your lights on.
Beginning on July 30, NextEra will supply Google with 114 megawatts of wind generation from the NextEra Energy Resources Story County II facility in Iowa. Google will continue to buy the energy from NextEra at an undisclosed rate for the next 20 years. But according to Google, the deal is a bit complicated:
In this case, we’re buying renewable energy directly from its source – the wind farm. We cannot use this energy directly, so we’re reselling it back to the grid in the regional spot market – but retiring the Renewable Energy Credits associated with the power. By obtaining RECs through the purchase of green power, our deal has a greater impact on the renewable industry than simply buying "naked" RECs from third parties; our long-term commitment directly frees up capital for the developer to build more wind projects.
So Google and NextEra's agreement is mutually beneficial--Google gets the security of a stable purchase rate for the next 20 years, and NextEra gets a direct cash injection from Google. As we explained months ago, Google's entrance into the renewable energy market isn't a power play. It's just part of the company's attempt to achieve carbon neutrality while helping out green energy providers.