We take a closer look at Intel's "green" power

IT IS A FINE DAY when the big boys realize that their mission and structure aren’t the dominant goals of society anymore. Instead of re-writing their mission and doing a top to bottom evaluation they, instead, choose the easy way out, pay to play. It’s called buying your green credentials, and Intel did it in a big way this week.

It was perfectly timed to show off at the Green Grid conference next week. As a sector, sustainable businesses are the ones fairing the best in the stock markets in these times of downturn. Most people can see the future. Businesses that benefit the ecological system and related communities are the ones that will be there in the future. Intel, maybe, has taken the first step down this path but where is the rest of their roadmap to sustainability? How much conservation have they invested in at their fabs and datacenters?

Buying your way out of the problem of sustainability is not and never will be the final answer. It is, at best, an intermediate step. Has their corporate thinking changed? Are they designing cradle-to-cradle products? Do they have lifecycle costing of their products? Do they provide this information publicly? Do they lean on their partners to provide the same?

From what we can see on their website they have taken the first baby steps in this direction. We say baby steps because… well… read the rest of the story.

A bit of background. A number of US states have been acting independently and have been mandating that a certain percentage of energy from their utilities are produced using various renewables. For example, in Minnesota the legislature extended the waste storage amount and operating life of a local nuclear power plant in exchange for the utility investing in 825 MW of wind capacity by 2012. This type of quid pro quo is unique, but many states, like Texas, have simpler mandates. This mandate applies to Austin Energy, one of the suppliers of RECs that Intel bought power from. Texas has a mandate for 5,880 MW of renewable energy by 1/1/2015. For the rest of the states you can look here.

Many utilities did not want to pay the costs of choosing a new technology for producing their power. In many cases those costs were offset with power purchase programs or Renewable Energy Credits (RECs). You as an individual customer can purchase power at a slightly higher price to help off-set such investment costs, but you are not given a choice when the utility builds a new coal fired power plant. The funny part is that wind, one of the renewable sources, is actually downright cheap today, comparatively speaking. And it can be forecast, not a bad deal if you’re a utility.

So comes along a small market and some intermediate players like Sterling Planet, one of Intel’s suppliers. They will aggregate the Renewable Energy Credits and re-sell them to businesses that need to green their credentials. Intel was smart in sending a large message to a very small market. And they got the boost of the EPA’s new advertising vehicle for a bonus round.

Unfortunately, the EPA’s website doesn’t supply much in the way of transparency. They indicate that Intel will be getting energy from Austin Energy, PNM, and Sterling Planet Because they purchased credits in aggregate we don’t know which state mandates will be fulfilled by their investment. We don’t know if they’re helping out companies in the same places as their fabs.

Sterling Planet seems to be a good operation (see their White Tags energy conservation program) but there isn’t a full breakdown of where the renewable energy is being supplied.

So a couple of questions remained, and Intel answered many of them. Why didn’t Intel bother to provide some direct investment, instead of buying their way to green? Bill Calder, a very nice Intel spokesman, indicated that there just isn’t enough green power available at a reasonable price to cover all of their fabs, offices and datacenters. However, they were the largest purchaser of wind power in Oregon where several of their larger fabs are located.

This answer is scary. If they need that much energy they should be looking at some serious conservation methods (and be quite worried about future energy price volatility). A simple recommissioning of an average US office building will result in an efficiency gain averaging 15-20 per cent in office and retail spaces. If Intel needs more power than is available, at a reasonable price, on the renewable market, then why don’t they negotiate with the power company? Tell the power company that if the utility provides x megawatts of wind and y megawatts of solar that Intel will purchase all of that power at a fixed price over the next 10 years or 20 years for that matter. That would be a huge boost to direct investment of renewables and provide stimulus above and beyond what the states are mandating. It would also benefit Intel with stable sources of energy and stable prices. They hadn’t been asked that question by a journalist before and so didn’t have a direct answer.

If they can’t purchase green power cost effectively then who is negotiating for them? We, at the Inq. don’t know. A block purchase, over a long-term of a specific power source could significantly protect their business investments from seriously volatile power supplies. If I were their investor, I’d expect a company that is so energy intensive to protect the long-term ability to do business by negotiating such a contract. But, I’m not on their board, as you might have noticed.

The bottom line: Intel bought some mighty nice green credentials. Sadly, it wasn’t direct investment that moves the technology forward like Google chose. Why? Intel is buying within a market created from a legal mandate to produce renewables, the energy already has to be produced and produced in the environmentally-friendly manner as mandated. They are not buying any additional renewable energy production not already mandated, just “sending the market a message”. Leave the direct investment for Google, it seems to be looking farther into the future. µ