Apple data centers on 100% renewable power

Apple is spending an eye popping $850 million to build a ginormous solar farm (280 megawatts) that will power their entire California operations. This new solar farm is not to be confused with the 70MW solar farm they’re building in Arizona, the $55 million “under way” third solar farm (17.5MW) in North Carolina, the two 20MW solar farms they’re building in China, or the existing 20MW solar farm near Reno, NV, or the two existing 20MW solar farms in N. Carolina.

The backstory is that in 2010, Apple wanted to buy renewable energy from Duke to power their Maiden N.C. data center. It wasn’t even legal in N. Carolina. In 2011 Apple bypassed the N.C. coal lobby by purchasing 100 acres of land and in 2012 they finished building (est. $100 million) the first non-utility 20MW solar farm. At the same time, they also built a 5MW fuel cell farm. In 2013 they doubled their fuel cell farm to 10MW and built another 20MW solar farm. Apple has since been producing 100% of the power they need in N.C.

While I believe that Tim Cook is sincere about reducing Apple’s carbon footprint, I also think it’s likely that spending over a billion dollars on solar panels is a very good investment. Apple is famously cash rich and by spending today and owning the solar farms, Apple fixes their energy prices at today’s rates for the next 30 years. Apple has taken a large and variable cost and turned it into a fixed cost that is no longer subject to price inflation or fluctuation. What Apple is also purchasing is energy stability.

Apple is also becoming an energy supplier. For the first 10 years, PG&E will purchase 150MW of production and Apple gets 130MW.  In the last 20 years, Apple gets 100% of production. It’s likely that their operations will have expanded to utilize the power (as has the NC data center) but if not, they’ll have little trouble selling their surplus capacity.

While Apple was first in the, “okay then, we’ll build it ourselves” solar game, the even bigger story is that 2014 was the year solar arrived in Main Street USA. In just 2014, nearly 70% of the worlds solar power generation came online with several companies having more installed solar than Apple: Wal-Mart (105MW), Kohl’s (50MW), and Costco (48MW). IKEA is not far behind with 39MW. Apple isn’t even the largest purchaser of solar as Intel, Kohl’s, Whole Foods, Dell, and Johnson & Johnson all purchase more solar power than Apple. What was so special about solar in 2014?

Swanson’s Law observes that solar modules tend to drop in price by 20% for every doubling of cumulative shipped volume. Apple deployed 60MW between 2012-2014 and during that same time, photo voltaic capacity more than doubled. By being out in front and building not just demand, but also solar capacity, Apple helped 2014 be the year of solar grid parity in 3 NE states, California, Arizona, and Hawaii. It is predicted that grid parity will arrive in “many” US markets in 2015 and Deutsche Bank predicts solar grid parity for all 50 states in 2016. With Apple deploying another 407MW of solar In just 2015-2016, that prediction seems like slam dunk.

  • Matt S

    is this thing on?

  • Martin

    It’s a fantastic investment. If you have cash that you can find no use for (literally, in Apple’s case) then buying solar puts it to use. At some point in the future, Apple would face a situation when they are at risk of running a loss. When that day comes, ‘power’ will not be a line item on their balance sheet. Further, they can sell that power and add revenue if their local need disappears.

    • Matt S

      > I would argue that Apple really isn’t an energy supplier at this point.

      Apple pays First Solar $850m to build Apple a solar farm producing 280MW of power. For the next 10 years, Apple uses 130MW and sells the other 150MW to PG&E. After that 10 years, Apple has all 280MW to do with as it pleases. What exactly would you call that 10 year arrangement where the utility (PG&E) is getting that renewable power from Apple (the producer)?

      • Martin

        Apple uses 130MW in the PG&E service area, but Apple has facilities outside of PG&Es service area, and they are still buying power from the local utility there. Presumably the power they’re buying elsewhere cancels out what they’re selling to PG&E. This is no different than carbon credits or green energy credits. Which specific electrons you are buying and selling don’t matter. Perhaps Apple is selling more than they are buying, but I haven’t seen that case made yet.

        • LTMP

          There is one difference with carbon credits. They are much more theoretical in nature, and usually don’t actually perform as promised. That doesn’t make them a bad thing, but the green energy production is much more dependable and measurable.

  • A Guy

    Matt, thanks for the article. I’m really curious about this deal because the price just doesn’t make sense to me. I know (because I work with solar construction companies) that generally speaking a quality solar facility can be built for less than $2 million per MW of capacity (and that is using First Solar panels, which are really high quality). I’ve never done anything of the scale of 280MW, but I would assume there are some economies of scale in a deal that size. So I would guess (and this is an educated guess) that a facility this size could be built in the US for well under $600 million. When I saw the $850m I assume that was the total committed price to buy electricity under a PPA getting confused with an actual upfront payment. Maybe the land needs a huge amount of civil work to flatten it sufficiently. Or maybe they are putting in a complicated tracking system (that would raise the price compared to fixed tilt, which is the price I’m more familiar with). Have you seen an article with more specific details?

    • Matt S

      Hello A Guy, I haven’t seen anything more specific either. My own back of the envelope calculations reflected that Apple’s 2012 cost-to-build was $5/MW and their 2014 cost was very close to $3/MW. I don’t find it too surprising that this projects cost is $3.04/MW) as that is very very close to the $3.15/MW they’re paying for that third solar farm in N.C.

      As for being “more” than industry average cost, keep in mind that this is Apple. They’ve got more cash than they can profitably put to use (witness: massive stock buybacks) so if there’s a long term benefit (especially if measured in dollars) to spending more today, Apple would certainly do so.

      • A Guy

        It must be at least a single-axis tracker system to be this expensive. It still seems like a lot of money. But Apple will get about 30% of that back in the form of the Investment Tax Credit. And then they will take accelerated depreciation. So they will get some nice tax savings for a few years. These are consistent prices that Apple is paying, but they seem high. As you say, Apple may be telling the developer to spare no expense. Assuming they put that facility in a nice sunny place in California and they use at least a single-axis tracker, that facility is going to generate A LOT of energy over the next 30 or so years.