Salesforce, Microsoft, Apple push Virginia utility to use more renewables, less gas

Virginia, Dominion Energy, solar
Dominion Energy
A Dominion Energy solar installation in Virginia.

Salesforce, Microsoft, LinkedIn, Apple and other companies that own data centers in Virginia are demanding that the local utility use renewable energy to meet any increase in power demand from the state’s data centers.

The utility, owned by Dominion Energy, wants to build several small natural gas-fired power plants to supply electricity to northern Virginia’s growing clusters of data centers, according to a company planning document (PDF) that state regulators approved in late June.

But the companies that own the data centers want their operations powered with solar, wind and/or other renewable energy, and don’t want the utility to build new fossil-fueled generators to serve them, particularly as Virginia lags behind other states in renewable power generation.

They are asking Dominion and its Virginia regulators to ensure that the utility uses renewable energy plus storage to meet any expected increase in power demand. The companies argue that renewables plus storage are just as reliable as older fossil-fuel technology but are cleaner, cheaper and are what the companies, their employees and their investors want.

"Our goal is a grid that is powered 24/7 by clean, renewable energy," said Patrick Flynn, vice president of sustainability at Salesforce. "That means we have to think far bigger than the scale of Salesforce, outside of our own four walls and try to play a part in transforming the electricity sector overall." 

Salesforce buys enough renewable energy to match about half the power its global operations use and is working toward a goal of 100 percent renewables by 2022.

Salesforce, Microsoft, LinkedIn (owned by Microsoft), Apple and six other tech companies asked in a May letter (PDF) that any new investments by Dominion’s utility to supply them with power should adhere to their preference for renewable power and use the latest, cleanest and most cost-effective technology.

They carry weight in the state: Estimates suggest that up to 70 percent of the world’s internet traffic flows through Virginia data centers. According to the Northern Virginia Technology Council, the industry generates more than $10.2 billion in annual revenue and accounts for up to 43,000 local jobs.

"A clean, flexible, and dynamic grid — replete with renewable energy and modern energy technologies — is the way of the future," the companies wrote in the letter. "It is vital that the energy investments being made today are forward-thinking and truly serve the best interest of ratepayers, the economy, and the planet for generations to come."

Amazon Web Services, Adobe, Akamai Technologies, Equinix, Iron Mountain and QTS also signed the letter.

Dominion is required to file an updated power plan by May with the Virginia State Corporation Commission.

The utility declined to comment directly on the data center companies’ letter or their request that the utility not build new gas peaker plants to serve data centers’ projected increase. Dominion did say, in a statement, that it "shares the goals of our customers for a low-carbon future," that it plans to add solar, offshore wind and try out battery storage technology with a 30-megawatt energy storage project that is required by Virginia law. The company added, "Cost continues to be an obstacle, but we are working with new technology to try to make it a cost-competitive reality for our customers."

New utility-scale solar-plus-storage projects are cheaper than new gas-fired peakers, according to a November cost comparison by Lazard. The levelized cost of energy from a large new solar-plus-storage project that uses lithium-ion batteries ranges from $108 to $140 per megawatt-hour, while the levelized cost of energy from a new gas peaker plant is between $152 and $206/MWh, according to Lazard.

Environmental and sustainability groups also plan to continue pressing Dominion to tap clean, affordable energy technologies to reduce carbon emissions, fight climate change and respond to customers’ preferences.

"There is significant urgency to tackle climate change," said Alli Gold Roberts, a senior policy manager at Ceres, which has been working with the data center companies to press for renewables in Virginia. "By relying on new natural gas plants, we have the potential to get locked into a technology that prevents us from rapidly reducing emissions and takes away our ability to be nimble and do more creative, innovative things."

Virginia has many options to increase its supply of renewable energy to meet growing power demand from its large customers, according to Ceres. They include:

  • Utility green tariffs: The utility generates or buys renewable power, then sells it to customers at a negotiated rate. There is an issue with utilities sometimes trying to charge customers a premium, despite the lower cost of clean energy.
  • Community solar: Companies can invest in and use the power from solar arrays that are co-owned by other utility customers. Virginia law does not allow standard customer-owned community solar, therefore a policy change would be needed.
  • Utility procurement of clean energy on the wholesale market for customers
  • Customer procurement of renewables directly from generators. Virginia allows the largest power users, with at least 5 megawatts of demand, to bypass their utility and purchase renewables or other electricity from a competitive supplier. However, companies with a smaller footprint aren't allowed to buy renewables directly from a generator, therefore a policy change would be needed.

The data center companies already buy a lot of renewable energy across their entire technology infrastructure, as part of aggressive clean-energy and carbon reduction goals.

Apple powers its global facilities with 100 percent clean energy and is recruiting its suppliers to do the same.

Microsoft buys enough renewable energy ­in Virginia and around the world ­ to match the amount of power all of its facilities use. The company also plans to directly power all of its data centers and other cloud-related operations with 60 percent renewables by 2020. Microsoft generates funds from an internal carbon tax that it uses to help pay for its clean energy.

Dominion’s Virginia utility generates most of its power by burning natural gas (34 percent) and coal (27 percent), while nuclear plants generate about a third, and less than 6 percent comes from renewables, which includes solar, hydropower generated in North Carolina and several plants that burn wood and other biomaterials, according to the utility’s website.

By contrast, California, where Salesforce, LinkedIn, Apple and Equinix are based, generates nearly half the state’s power from solar, wind, hydroelectric dams and other renewables, while 43 percent is generated by natural gas plants and 9 percent from nuclear power, according to the California Energy Commission.

California utilities are early adopters of solar-plus-storage, and they are required to build or contract for a combined 1,325 megawatts of power storage by 2024, under state law. The state also offers rebates to homeowners and businesses that install their own battery storage systems. State lawmakers in 2018 passed a law that calls for California to use zero-emission electricity to supply all power usage by 2045.

The Sierra Club, which advocates for ending coal use and switching to 100 percent renewables, has criticized Dominion’s Virginia proposal, saying that increasing fossil-fuel use will drive up carbon pollution. 

The situation could receive a boost from Virginia lawmakers and officials, who are pushing to cut the state’s greenhouse gas emissions and increase clean energy production.

The Virginia State Air Pollution Control Board adopted a new regulation in April that will reduce and cap CO2 emissions from the state’s large fossil fuels power plants by 30 percent, between 2020 and 2030.