Putting Alphabet’s Renewable Power Push In Perspective
Running Eemshaven on solar power
In July this year, Alphabet’s (GOOGL) Google announced that it was purchasing all the electricity generated from the Netherlands’ largest solar park to power a data center complex it opened in the country in 2016. The Dutch data center complex, Eemshaven, cost Google about 600 million euros, and is one of the four data centers the company operates in Europe (EFA).
Rotterdam-based energy producer and supplier Eneco is providing the solar electricity to power Google’s Eemshaven data center. The deal with Eneco fits with Google’s ambition to power all of its data centers around the world entirely with renewable energy by the end of this year.
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Why Google is investing in renewable energy
For renewable energy, Google is sourcing electricity generated from wind farms and solar panels. But why is Google keen on running entirely on renewable electricity? Whereas the need to reduce its impact on climate change is obvious, there is also an economic benefit.
Since wind and solar electricity supply prices don’t fluctuate as much as most fossil fuels, converting to wind and solar power implies that Google can eliminate cost uncertainties to plan its future better.
Coping with rising traffic acquisition costs
With better planning, Google can not only escape many unexpected expenses, but also be in a better position to take advantage of growth opportunities. Google’s 2Q17 results show that it is spending more on traffic acquisition costs for its advertising operations. If the company can eliminate some cost uncertainties, it can manage its expenses better and deliver better profits to its shareholders.
Google is in a tight race with Facebook (FB) for the control of online advertising. Amazon (AMZN) and Verizon (VZ), two non-traditional advertising companies, are also aggressively vying for a larger share of online advertising. Google needs to be efficient to stay competitive.