Editor's Note: To learn about eBay's data center design using Bloom Energy's fuel cells, be sure to check out VERGE@Greenbuild, November 12-13.

Dean Nelson, who oversees data centers for eBay, told me recently that he had two big business problems to solve: getting control of the company's power costs and finding an alternative source of energy to the coal used to power the electricity in its Utah data center. 

Nelson and his boss, CEO John Donahoe, have just taken one big step towards solving both problems. The company announced on Thursday that it will expand a data center in South Jordan, Utah, by acquiring fuel cells from Bloom Energy, a private company that already supplies fuel cells to eBay headquarters in San Jose.

The data center installation will deliver six megawatts of energy. That’s a lot. eBay says the project will be “the largest non-utility fuel cell installation” in the US. For its part, Apple is building a 4.8 MW Bloom Energy fuel cell project at its data center in Maiden, North Carolina.

The fuel-cell installation costs more than grid electricity in Utah, eBay says, but the company expects the price of electricity in the state to go up, Nelson told me.

“The rates will go up, no matter what,” he says, in part because existing cheap coal plants will have to be phased out to meet new EPA rules.

Major announcement

This is a major announcement for a couple of reasons. First, it’s the latest in a series of commitments to clean energy from data center owners who until fairly recently would locate their data centers purely based on cost.

"They’ve got low power costs today,” Nelson told me, “and that’s a driver for companies to come.”

That’s one reason why eBay has data facilities in Utah. It’s a state where the grid is powered by cheap coal.

The source of the energy had been troubling to the business, however.

"We love being in Utah," Nelson told me. "But Utah was our biggest problem because the electricity comes mostly from coal."

Similarly, Apple, Google and Facebook all have built data centers in rural North Carolina because the area offers low cost land, generous tax breaks and cheap, coal-fired power.

Photo: The eBay headquarters in San Jose, Calif. operates a 500 kW fuel cell installation on site. Photo courtesy of eBay.

Next page: Competition for the "cleanest and greenest"

Now, instead of a race to the dirty bottom, there’s a competition around who can build the cleanest, greenest data centers. Google led the way -- the company has been carbon neutral for years, and invested heavily in renewable energy (See my blogpost, Why Google invests in clean energy).

Credit, too, belongs to Greenpeace, which has rated global IT companies on their commitment to reduce emissions from data centers, in a classic “rank ‘em and spank ‘em” campaign that remarkably even caused the notoriously-secretive Apple to talk about its data center plans.

As Adam Lesser of gigaom reported:

If there was one takeaway, it’s that even companies as opaque and powerful as Apple feel they have to communicate that they are taking strides toward sourcing clean energy for their data centers. Greenpeace reported that data center power consumption will grow 19 percent this year alone as the global power draw for data centers tops 31 gigawatts, equal to about 45 coal power plants.

The other interesting thing about eBay’s move is its commitment to the relatively new technology of fuel cells. Fuel cells are essentially large batteries, powered by natural gas, which isn’t burned but generates electricity through a chemical process. It’s the largest installation to date for Bloom Energy, a much-hyped company funded by Silicon Valley venture firm Kleiner Perkins. It other customers include Bank of America, Walmart and Caltech.

In a press release, eBay says its fuel cells will run on biogas–either methane from landfills or animal wast which further lowers their environmental footprint. As I understand it, eBay may not literally use the biogas in Utah, but it will buy enough elsewhere to drive the market and, in effect, lower its reported emissions.

The company also says:

The new Bloom Energy project will be eBay’s fifth and largest renewable energy installation. eBay operates a 650 kilowatt (kW) solar array and a 500 kW Bloom fuel cell installation at its San Jose headquarters, as well as a 100 kW solar array at its Denver data center. In April of this year, eBay installed a 665 kW solar array spanning 72,000 square feet atop its LEED® certified Utah data center.

Meantime, eBay plans to buy renewable energy from the grid in Utah to power its expanded data operations. To do that, the company had to lobby to change the law in Utah to permit non-utility customers to buy power directly from renewable energy producers.

The cloud, thankfully, is getting cleaner.