Three years into an effort to power its global operations with round-the-clock carbon-free energy by the end of the decade, Google LLC is almost two-thirds of the way there.

Already one of the largest corporate buyers of renewable power, the Alphabet Inc. subsidiary is coming off of a record year in 2022, when it signed 20 new clean energy deals globally amounting to 2.8 GW.

That included an almost 1-GW solar purchase in Texas as well as its first power purchase agreements (PPAs) in the UK and Spain. The deals took its total portfolio to about 10 GW across more than 80 agreements.

The newly contracted capacity helped Google achieve 64% round-the-clock carbon-free energy across its global datacenters and offices last year. The tech giant, which has a presence in almost 60 countries, aims to reach 100% by 2030.

Google started purchasing renewable power in 2010, "way before it was trendy," according to Caroline Golin, the company's head of energy market development and policy, and is now second only to Amazon.com Inc. as the largest corporate buyer of clean energy.

"When we did our first deal, our goal was to deploy renewable energy on the grid. We were trailblazers," Golin said in an interview. "What we've learned over time ... is that focusing on that single goal was missing the overall purpose a bit. We weren't seeing the forest for the trees."

That realization helped shape Google's ambitious goal, set in 2020, to run its entire global operations on carbon-free energy on an hourly basis.

Three years earlier in 2017, the company had already matched 100% of its electricity needs with renewables purchases. However, because the grids where Google operates run on a mix of resources, it was still forced to rely on fossil fuels at certain times of the day.

"They were the first to say that's not good enough," said Dan Thompson, principal research analyst at 451 Research. "You're seeing a continual push toward a more granular view of what companies are consuming versus what they're bringing on the grid."

Indeed, Google's focus today "is not to deploy megawatts but to get ourselves to a higher hourly decarbonization score," Golin said. "That completely changes the game when you think of a procurement strategy."

An ambitious pursuit

Google's pursuit of 24/7 carbon-free energy has been easier in some regions of the world than in others.

In places like Finland, Denmark and Chile, along with US states Iowa, Nebraska, Oregon and Oklahoma, the company has already hit at least 87% carbon-free. By comparison, Japan, Taiwan and Singapore are each at 18% or less.

Measuring a region's progress relies on two primary metrics: first, a carbon-free energy score, where Google's hourly electricity consumption is matched with carbon-free energy resources, either under its own PPA contracts or from the grid. The other is avoided emissions, where Google looks at the carbon emissions impact of the company's procurement decisions.

If it is to meet its 2030 target, Google now has seven years to take its global carbon-free energy score from 64% to 100%.

That task is complicated by rising power demand from its datacenters, which increased by 3 TWh, or 18%, in 2022, and Google's decision to include facilities operated by third parties in its methodology beginning in 2022. The latter change means Google's carbon-free score actually decreased in 2022, from 66% a year earlier, but it would have remained relatively flat otherwise.

"It seems ambitious for sure. Everyone seems to agree that it's the last 10% that is really the big challenge," Thompson said in an interview, pointing to parts of Asia, South America and Africa where cleaning up power markets is more difficult.

Following in Google's wake

Google describes its 24/7 carbon-free energy target, along with its wider aim to reach net-zero emissions across its entire value chain by 2030, as "moonshot" goals.

"Achieving 24/7 [carbon-free energy] is far more complex and technically challenging than annually matching our energy use with renewable energy purchases," the tech giant said in its 2023 Environmental Report. "No company of our size has achieved 24/7 [carbon-free energy] before, and there's no playbook for making it happen."

Still, the company sees its effort as being part of a bigger picture.

"If we decarbonize our footprint then we will create the wake by which others can do the same," Golin said.

Tech giant Microsoft Corp. and datacenter operator Iron Mountain Inc. are among the other industry players to follow Google in setting 24/7 carbon-free energy goals, while the US federal government announced a similar ambition for its own consumption.

"The positive influence [Google has] been able to have on the datacenter industry has been interesting and I think we can confidently say has moved a market," Thompson said.

Google has also created what it called the Carbon-Free Energy Manager model, through which utilities and other energy service providers could help buyers assemble a stack of renewables projects.

Instead of companies simply signing their own PPAs, the manager model allows them to replicate Google's ambition to match its consumption on an hourly basis. Contracts can also be designed to keep pace with a company's growing electricity demand.

"That requires a ton of iterative learning back and forth," Golin said, adding that the 24/7 approach gives buyers "round-the-clock price security."

451 Research is part of S&P Global Market Intelligence.

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