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Amazon Web Services is throwing wind power into the mix of energy sources for its data centers, which could have beneficial cost implications for cloud users down the road.
Amazon Web Services (AWS) has not disclosed what it expects to save on wind power, but recent market estimates of wind power prices compared with natural gas and coal show a distinctly lower price for wind.
A September 2014 report from financial advisory firm Lazard, "Levelized Cost of Energy Analysis - Version 8.0" shows wind energy can cost as little as 1.4 cents per kilowatt hour, which converts to $14 per megawatt-hour. Without government subsidies for renewable energy, wind costs 3.7 cents per kilowatt-hour, or $37 per megawatt-hour.
By contrast, natural gas was found to cost 6.1 cents per kilowatt-hour, or $61 per megawatt-hour. Coal came in at 6.6 cents per kilowatt-hour, or $66 per megawatt-hour.
Amazon expects to source 500,000 megawatts of power annually as part of its power purchase agreement with Pattern Energy Group LP, according to its blog post. Even at the non-subsidized market price, this would save at least $12 million per year over fossil fuel sources.
Amazon claims cost savings and efficiencies get passed on to customers. The savings on wind power isn't huge for a company Amazon's size, but even minor changes in price can be meaningful for cloud consumers at scale.
Kris BliesnerCTO, 2nd Watch, Inc.
"In light of Amazon passing cost savings onto customers, of course we'd be [happy] to see that, but I suspect that might take a bit to materialize," said Jim O'Neill, CIO for HubSpot, a digital marketing company based in Cambridge, Mass.
AWS partners say the renewable energy efforts aren't a major selection criterion for most companies right now, but as Amazon expands into the enterprise, more of its customers will ask questions about it.
"As Amazon sells to people in more regulated environments who might have to report on carbon footprint, such as government agencies, this doesn't hurt," said Kris Bliesner, CTO of 2nd Watch, Inc., an AWS reseller and premier partner based in Liberty Lake, Wash.
Greenpeace maintains watchful eye over AWS data centers
The news of the wind farm investment follows an April 2014 report by Greenpeace, "Clicking Clean: How Companies are Creating the Green Internet," where Amazon was ranked among the worst Web companies in terms of clean energy usage. AWS said in a press release this week that it had committed to achieve 100% renewable energy usage for the global AWS infrastructure, in November 2014, and already has three regions that are carbon-neutral -- US West (Oregon), EU (Frankfurt), and AWS GovCloud. No timeframe was given for when 100% renewable energy will be achieved.
While this is a good step for Amazon, "The massive size and rapid growth of Amazon Web Services' infrastructure makes clear that Amazon's Indiana wind farm ought to be the first of many similar investments," Greenpeace said in a statement.
The Greenpeace statement also pointed out that roughly half of AWS servers are based in its US-East region in Virginia, where the local utility, Dominion, provides just 2% of its electricity from renewable sources, 37% from coal, 41% from nuclear and 20% from gas.