Amazon data center. Photo credit: New York Times
An energy-services deal between Dominion Virginia Power (DVP) and Amazon Web Services (AWS) is a “first-of-its-kind agreement” that could accelerate the integration of renewable energy into the electric grid, according to a recent analysis by the Rocky Mountain Institute (RMI), an organization dedicated to unlocking market-based solutions to combat climate change.
“This is a turning point in the electricity industry,” says Hervé Touati, head of RMI’s Business Renewables Center, which streamlines and accelerates corporate renewable energy procurement. “By offering these services to Amazon to help the company manage its purchased power, [Dominion] is . . . working directly with a corporation like no utility has done before.”
Amazon, the world’s largest cloud provider, has set a goal of supplying its data centers with 40% renewable energy by the end of 2016. The company has signed power purchase agreements (PPAs) for four utility-scale renewable energy projects in the Eastern U.S. In the past, electricity generated from these projects would have been fed into the PJM regional grid at the wholesale market price, while data centers in Northern Virginia consumed energy from a different part of the grid, paying the retail rate of electricity based on Dominion’s power mix, which includes coal, nuclear, natural gas and renewables.
Now Dominion may administer the scheduling and settlement activity related to Amazon’s wholesale market activities, while Amazon pays a market-based retail rate that closely matches the wholesale market rates of its renewable energy projects. Aligning the production and consumption of renewable energy more exactly reduces market risk for Amazon.
States the analysis:
