Economic

Renewable Energy in Real Estate: Data Centers Lead the Way

Data centers have made significant investments in energy efficiency, but our insatiable appetite for data continues to grow. Renewable energy can reduce our data’s carbon footprint.

Buildings consume 40 percent of global energy and create 30 percent of global energy-related greenhouse gas emissions; they are a big part of the climate change puzzle. Energy heats and cools our buildings and it keeps the lights on. Obvious energy reduction strategies are better insulation, LED lighting, and smart thermostats. The energy needs of our data, and the solutions, are less obvious. We’ve moved our music, our movies, and more of our lives into the “cloud”. But our data isn’t actually stored in a cloud. It resides in real buildings we call data centers, which have a large and growing carbon footprint.

Data centers now use over one percent of global electricity. And because the internet never shuts off, power is required 24 hours a day, seven days a week. Using so much global energy puts a spotlight on what types of energy is being used at technology companies and the data centers that house internet services across the globe.

In 2010, the advocacy organization Greenpeace campaigned for technology companies to use more renewable energy. Their “Clicking Clean” program initially gave many tech firms low scores. Leading brands like Google, Apple, Microsoft, and Salesforce began making commitments to switch to renewables. And data centers, who provide many of the storage, routing, and networking functions for the big tech firms, started figuring out how to give their customers what they want.

The Path to Renewable Energy

Reducing Energy Use Through Efficiency – Ten years ago, data centers consumed 100 to 200 times more energy more than similar sized buildings Fortunately, companies recognized that “nega-watts”- the electricity they don’t consume – are both the cleanest and the cheapest energy available. Data centers have made massive gains in efficiency through processor-efficiency improvements and reductions in idle power. These technological advances help servers process 550 percent more data for only six percent more energy. Incremental efficiency improvements can only get us so far when our demands for data continue to grow exponentially. Vert looks for companies that are innovating ways to switch to renewables.

Collaboration is critical to greening the grid. Companies like Equinix, Digital Realty and Iron Mountain have played a crucial role as data center leaders in the pursuit of renewable energy. Equinix wanted to help their technology tenants by joining the RE100, an alliance of companies committing to using 100 percent renewables that includes the big tech firms, Google, Apple, and Microsoft. Digital Realty and Iron Mountain collaborated with Facebook and Amazon as part of the Renewable Energy Buyers Alliance (REBA). REBA is organized by four non-profits, including Rocky Mountain Institute, World Resources Institute, World Wildlife Fund and Business for Social Responsibility (BSR). REBA coordinates customers, suppliers, and policymakers to identify barriers to buying clean and renewable energy and develop solutions to meet growing demand.

It is great to see public companies collaborate with their competitors, with their customers, and with non-profits to drive adoption of more renewables. Companies rely on RECs and PPAs because a city, a county, or a state’s local energy mix is still not green enough. These financial instruments are structured for innovation to circumvent whatever obstacles legacy utility companies have in place. Ultimately, for the grid to get greener, utilities will have to change and for that, new regulation and policy is needed. Investors have a critical voice here. By supporting companies that are committed to renewables, pressuring those that aren’t, and asking more from utilities and regulators, investors can amplify the multi-stakeholder approach to transition to a low carbon economy.

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