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Why Cisco is buying solar energy

June 23, 2015, 10:00 AM UTC
Photograph by Tim Rue — Bloomberg/Getty Images

Tech giant Cisco Systems plans to buy energy from a solar farm that power company NRG Energy plans to build in California’s Sonoran Desert. The move is the latest by a tech company to invest in clean energy as tech firms seek to green their image, compete to retain young eco-conscious employees and reduce the environmental impact of their energy use.

The solar panel farm will be built in Blythe, Calif., near the Arizona border, on 153 acres of land. When completed by the end of 2016, it will provide Cisco with 20 megawatts of solar energy, enough to power 14,000 average American homes.

NRG Energy’s project development arm, NRG Renew, will build and operate the solar panel farm. Cisco will buy the energy from the site for twenty years at a fixed rate. The project is expected to employ 200 workers in the construction phase.

The deal will contribute to Cisco’s goal to get a quarter of its electricity from clean energy by 2017. Cisco joins other tech firms like Google, Apple, Facebook and Amazon that have made ambitious pledges to buy renewable energy.

Earlier this month Amazon announced plans to buy energy from a solar panel farm to be built in Virginia. Apple plans to spend $850 million buying solar power over 25 years from a solar farm in California. Google has invested close to $2 billion into wind and solar farms, mostly in the U.S.

Piotr Jaczewski—Getty Images/Moment Open

Part of this trend is due to the lowering costs of clean energy. In certain regions, energy from wind farms and solar farms is as cheap as energy from fossil fuels. The price of solar panels and large wind turbines has plummeted in recent years.

The trend is also about flexibility and control. Entering into a several decade contract to buy clean energy at a low fixed rate could actually save companies money in the long run — particularly if grid power prices rise, or are volatile, over that time period.

The moves are also about image. Many of the tech companies have headquarters in California and are looking to attract and retain employees partly through environmental and philanthropic programs. Competition for young workers is particularly fierce in Silicon Valley. Consumer facing tech companies like Google and Apple are also trying to cultivate an environmentally-friendly image to their customers despite operating energy-hungry data centers.

The clean energy deals are also about mitigating risk. Many tech companies are embracing clean energy as a way to lower their overall carbon emissions. Down the road, carbon emissions could become a liability if an external price was imposed on carbon through a carbon tax or other policy.