Tech companies that want to use clean energy in their data centers are facing obstacles from utilities, particularly in states where coal is king.
Despite news about Google and Apple investing in clean energy to power their huge data centers, Internet companies’ renewable energy efforts are being held back by slow-moving, monopolistic utilities and sclerotic state policies, according to a report by Greenpeace released Tuesday.
Utilities in regions that have large coal industries — like Duke Energy in North Carolina and Dominion Resources in Virginia — are the biggest obstacles to tech companies buying more clean power from the local grid, the report said.
A year and a half ago, some of these fossil-fuel-heavy utilities seemed to be making major progress in offering Internet companies (and industrial customers) the chance to buy clean power. Duke Energy in North Carolina introduced a first-of-its-kind experimental program to do just that. The state’s utility commission approved the plan just a short time later.
But according to Greenpeace’s report, Duke Energy’s green energy program hasn’t gained any traction. Customers have balked at paying the extra costs, or “administrative fees,” charged by the utility. The surcharge goes beyond the cost to the utility for the necessary clean power infrastructure.
Duke Energy tacks on an additional two cents per kilowatt-hour for its green energy program, according to the report, which could add up to millions of dollars annually for a big customer. Google, Facebook, Apple and others have massive data centers in North Carolina and helped to push Duke Energy into initially creating its clean energy program.
Likewise, Dominion recently started testing a clean energy program. But Greenpeace noted that it, too, has no customers because of the higher cost and limited amount of clean energy available. For example, one large data center can use more clean electricity than Dominion has available. Amazon, which Greenpeace has consistently lambasted for its lack of transparency about its clean energy programs, has a number of data centers in Dominion territory.
While the Internet companies seemed willing to pay some premium years ago, the price of solar and wind has dropped dramatically over the past two years. As a result, clean energy contracts can be competitive or sometimes even cheaper than fossil fuel power in certain regions.
Apple’s CEO Tim Cook and Vice President of Environmental Initiatives Lisa Jackson have said that their company’s investment in a California solar farm will likely provide Apple with significant savings over 25 years. The company is locked into a low solar energy rate in the face of rising grid electricity prices.
Other utilities are having better success finding data center customers for their clean energy purchasing programs, Greenpeace noted. Programs in at least ten states let customers like Apple buy clean energy. While Arizona utility Arizona Public Service has put a premium on electricity from its clean energy program, the extra cost is still low enough that it signed up data center customer IO.
Google, perhaps, has the most to lose with the roadblocks from utility companies. Because it generally wants to avoid building and owning its own clean energy projects, Google has limited flexibility in where it gets its electricity. Apple, on the other hand, has aggressively worked with solar companies to build its own solar projects, sometimes bypassing the utility for almost everything other than the grid connection. Apple indirectly initiated perhaps the biggest pressure on Duke Energy to launch its green power plan in North Carolina after Apple built three huge solar farms and a fuel cell farm there.
Blaming utilities for the slow progress is easy to do, of course. But some of the problems also have to do with government policies in coal-heavy states. Meanwhile, solar companies like SolarCity, chaired by Tesla founder Elon Musk, are challenging utilities for business. Figuring out how to charge for and manage individual solar energy systems on customers rooftops can be difficult for an incumbent utility that has mostly focused on centralized power plants that rely on fossil fuels.
Greenpeace recommended that Internet companies continue to pressure utilities like Dominion and Duke Energy, as well as state legislatures. Only then, will the landscape for clean energy improve for companies that want to use it.
At the end of the day, it’s all about the money. Last year, six of Dominion’s twenty largest customers were data center operators, the Greenpeace report said. If state policymakers want to attract data centers to their regions — which tend to be solid, energy intensive, long-term customers, as well as “cool” well-known consumer brands like Apple, Google of Facebook — then it would be in their best interest to offer data center companies clean energy that they’d be more willing to buy.
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