Facebook and the Customer-Centric Utility

About a year ago, the Smart Electric Power Alliance (SEPA) published a member brief that truly resonated with me, titled Can Electric Utilities Meet the Renewable Energy Goals of Corporate Customers? In compelling fashion, the authors presented the challenge utilities face in meeting ever-increasing corporate demand for renewables. According to the global initiative RE100, more than 160 companies have committed to obtaining 100 percent of their energy needs from renewables, including two-thirds of the Fortune 100. Many others, both large and small, have also set renewable targets.

Interviewing the energy directors from several large corporations, SEPA gleaned vital insights, such as this clear directive from one of their sources:

In other words, the utilities that “get it” can work with the renewable energy industry to deploy a valuable resource – clean, renewable power – while enhancing their ability to recruit, retain and expand their relationships with hundreds of companies that have sustainability goals.

The utilities that don’t? As another energy director interviewed for the SEPA brief remarked, they run the risk of “bleeding load” and losing their most valuable asset: customer loyalty.

100-percent renewable comes to Georgia

Fast forward a year, and my company, Silicon Ranch, recently announced a landmark deal with Facebook to supply 102.5 megawatts (MW) of solar energy to help support its 970,000 square foot Newton Data Center in Georgia. Facebook is in the RE100 and has committed to supporting its operations with 100-percent renewable energy by the end of 2020.

Our utility partner on this project is not, as one might expect, the large investor-owned utility in the state, but rather an electric cooperative, Walton Electric Membership Corporation (EMC).

“Partnering on the project with a customer-focused, consumer-owned electric cooperative helped to inspire the collaboration,” said Silicon Ranch CEO Matt Kisber.

The freedom of customer choice

When Facebook announced it had chosen Newton County, Georgia as the site for its state-of-the-art facility, it highlighted access to renewable energy as a crucial factor.

“We are committed to powering our data centers with 100-percent clean and renewable energy, and finding strong partners that can help us achieve that ambitious goal is a key part of our selection process,” said Rachel Peterson, vice president of data center strategy at Facebook.

Georgia is a “customer choice” market, which means that any commercial and industrial (C&I) customer with more than 900 kilowatts of load at initial full operation has the freedom to choose its utility provider. This customer-friendly provision allowed Facebook to select the right utility partner to help it achieve its ambitious goal.

What Facebook discovered as it evaluated prospective utility providers was that Georgia’s EMCs have the capacity and expertise to meet the renewable goals of large corporate buyers.

“Simply put, we wouldn’t have gotten the call from Facebook if our EMCs hadn’t already demonstrated genuine leadership in terms of their commitment to renewables,” said Green Power EMC President Jeff Pratt. Green Power EMC was created in 2001 by Georgia’s EMCs to procure renewable energy on their behalf.

“Our cooperatives share Facebook’s corporate values; not only their renewable energy goals but also their ‘concern for community,’” Pratt said.

“Honesty, flexibility, and imagination”

The more you know about co-ops and their culture, the more you understand why Walton EMC was able to provide an innovative solution for Facebook. Co-ops are the very essence of customer centricity because they are owned by their customers. Walton EMC impressed Facebook with its demonstrable renewable procurement credentials, and with its strong reputation for service to both its customers and its community.

But the real clincher, said Walton EMC CEO Ronnie Lee, was “partnering with them on a power supply arrangement that can serve as a positive economic and environmental template for future industrial developments throughout the nation.”

According to Robert Rentfrow, Walton EMC’s Senior Vice President of Power Supply, Facebook was seeking a solution that would enable it support its data center with 100-percent renewable energy.

“The biggest obstacle we faced was developing a rate and service structure different from any other in the electric industry today,” Rentfrow said. “We pride ourselves on being a power provider that thinks outside the box. Facebook gave us the opportunity to prove just that.”

Working in partnership with its wholesale energy supplier, Morgan Stanley, Walton EMC was ultimately able to customize a solution that met Facebook’s unique and specific requirements. But Rentfrow says a much broader team was required to execute it successfully.

“It took more than a year to bring together all of the entities necessary to make this deal happen,” he said. “From energy traders, transmission providers, solar developers, lenders and lawyers, everyone had to play a specific part in a very specific way to make this partnership a success.”

Though the challenge was daunting, Rentfrow said his team was always confident it could deliver what Facebook wanted. The keys to the partnership, he says, were “honesty, flexibility, and imagination.”

“While everyone held a similar objective of benefiting their own interests, each was willing to bend and accommodate wherever possible to ensure the overall success of the project,” he said. “Everyone involved took pride in the partnerships that evolved over time and in seeing Facebook’s facility get off the ground.”

An economic development strategy where “everybody wins”

The aforementioned SEPA brief posed the question whether utilities can meet the renewable energy goals of corporate customers. The Facebook deal in Georgia demonstrates that indeed Georgia co-ops can, and that the rewards for doing so are considerable.

For Silicon Ranch, it means we have been able to contribute to a partnership that will produce the largest solar development to date in the state of Georgia and the largest solar transaction in the nation for a distribution cooperative. The solar investments will generate more than 800 construction jobs and bring hundreds of millions of dollars in economic benefit to rural communities and local school systems.

Silicon Ranch CEO Matt Kisber, who previously served eight years as Tennessee’s Commissioner of Economic and Community Development, says that co-ops are well-positioned to make renewable energy a cornerstone of their economic development strategy.

“America’s leading businesses are making access to renewable energy a key factor in their location decisions,” Kisber said. “The ability of co-ops to be nimble, creative, and customer-centric means they will play an increasingly critical role as an economic development driver for the rural communities they serve.”

Green Power EMC’s Pratt says the successful recruitment of Facebook in Georgia validates the core principle of “cooperation among cooperatives.” The key, he says, is that the Georgia co-ops weren’t reactive but rather took a proactive, progressive approach to energy procurement. They listened to their members and worked together to develop a winning economic development strategy.

I asked Rentfrow what advice he would give other utilities about how to succeed with economic development in today’s environment. “Large commercial customers, like Facebook and others in technical, internet-based businesses, are being led by innovative, intelligent people who have specific objectives when it comes to how their business impacts the environment, the surrounding community where they locate, and the people who work and live near their facilities,” he said. “They are very conscious of the consequences of their location decisions. Companies that are willing to think creatively will have a better chance of landing a Facebook-type deal than those who still think traditionally. It truly is a new day, and opportunities await for those who are willing to embrace them.”

Or as my friend Mark Cayce, the CEO of an Arkansas co-op that Silicon Ranch helped on behalf of an important corporate customer, puts it: “When you start working on one good thing for the right reasons, other good things happen… working together as a unified team everybody wins.”