You Probably Missed the Other Way Microsoft Is Cutting Expenses

Reducing its workforce is only one way that Microsoft is saving money.

Jul 22, 2014 at 11:33AM

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Source: Microsoft


The number getting the most attention is 18,000 -- the count of Microsoft (NASDAQ:MSFT) employees around the world who will soon be looking for a job thanks to new CEO, Satya Nadella, and his attempt to right a ship that had been led astray by previous CEOs Steve Ballmer and Bill Gates. What's getting much less attention is an alternate way in which the company is looking to control costs -- adopting renewable energy.

What's the deal?
Announcing  that it has entered into a 20-year power purchase agreement, or PPA, with EDF Renewable Energy, Microsoft will purchase wind-generated power from the Pilot Hill Wind Project, a 175 MW facility located about 60 miles south of Chicago. According to management, this is not only Microsoft's largest wind project, but it is "one of the biggest corporate wind purchases from a single facility." The purchased-power will more than supply the power needs of the company's Chicago data center.

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Source: RES Americas

This is the second deal in which Microsoft has decided to use wind power to meet its energy needs. In 2013, Microsoft entered into a 20-year PPA with RES Americas to purchase 100% of the wind power generated at the 100 MW Keechi Wind project. Expected to be operational in 2015, the facility is powered by 55 Vestas (NASDAQOTH:VWDRY) V100 turbines.

Head in the cloud
Presumably, this won't be Microsoft's last renewable energy project as it increasingly moves toward more cloud-based solutions. Other companies have already moved in that direction. Apple (NASDAQ:AAPL), for instance, uses wind-generated electricity to help power its data center in Prineville, Oregon. Similarly, Apple's data center in Newark, California sources some of its energy needs from local wind power projects. These facilities are just two of many that are powered by renewable energy -- and more are to follow. Apple has set the ambitious goal of powering all of its facilities and retail stores by renewable energy.

Google (NASDAQ:GOOG) is another company using wind energy in order to power its massive data centers. Last year, Google entered into a 10-year PPA with wind farm developer, O2, regarding a soon-to-be-built, 72 MW facility in northern Sweden. Google will use the purchased-power to run its Finnish data center. In general, Google claims to have signed seven contracts for 1040 MW of wind energy -- just one step in its stated goal to power 100% of its operations with renewable energy.

A third company giving the thumbs-up to wind energy is Facebook (NASDAQ:FB). Although its target of sourcing 25% of its power from renewable energy sources by 2015 is less ambitious than Apple and Google, it is a significant show of support for solar and wind power nonetheless. Last November, the social network entered into an agreement with MidAmerican Energy. Facebook will purchase the wind-generated power from MidAmerican's 139 MW Wellsburg wind farm in Iowa to power a new data center in Altoona. Construction of the facility is under way, and it is expected to be operational by the end of the year. 

The Foolish takeaway
Microsoft's deal with EDF is just the most recent example validating the value that wind power offers companies that operate major data centers. This bodes will for turbine manufacturers, like Vestas, which will be called on to supply the equipment for future projects -- projects that will help companies like Apple and Google meet their targets of powering their facilities with 100% renewable energy.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Scott Levine has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Google (C shares). The Motley Fool owns shares of Apple, Facebook, Google (C shares), and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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