Apple is no longer just a tech company with a commitment to powering itself completely from renewable energy. It is now officially licensed to sell clean electricity too, in an rare move that could save the company hundreds of millions of dollars in energy costs and corporate taxes.

The California tech giant last week won federal approval to start selling electricity, on top of its iPhones, iPads, MacBooks, watches and headphones. Rather than buying solar and wind electricity from another operator, like most technology firms do, Apple can also sell the juice from its own clean power plants.

The iPhone maker is part of a growing group of companies pledging to run most or all of their operations on renewable energy. Microsoft, Facebook and Amazon, for example, have also invested in wind farms and solar plants to help power their data centers and warehouses — a move that cuts both greenhouse gas emissions and energy and tax bills.

While apps, files, emails, Pokémons and other digital trappings seem to exist only in the cloud, the facilities needed to store and process that data are extremely energy-intensive.

The Apple Store in New York City's Upper West Side. Image: kena betancur/Getty Images

Data centers use anywhere from 10 to 50 times the energy per floor space of a typical commercial office building, according to the U.S. Department of Energy. In the U.S., these spaces account for roughly 2 percent of the nation's total energy consumption.

Internet-focused companies are facing pressure from environmental groups and their shareholders to power data centers not with coal or natural gas but with emissions-free alternatives. The activist group Greenpeace, for instance, ranks these companies as dirty or green in its annual “Click Clean” report.

In response to such scrutiny and their growing energy footprints, more companies in tech and other sectors are investing in renewables.

Image: GREENPEACE

Last year, large corporations signed contracts to buy a record 3,200 megawatts of clean energy capacity. That equals about half of all the “power purchase agreements” signed in 2015, in an industry usually dominated by utilities.

“It's a dramatic change from even five years ago,” Jenny Heeter, senior energy analyst at the National Renewable Energy Laboratory (NREL) in Golden, Colorado, told Mashable.

The tech sector's focus on renewables has been a big boost for the broader U.S. transition to cleaner energy sources.

In 2014, the IT industry bought about 8.3 million megawatt-hours of renewable energy, about 17 percent of all the electricity sold in New York State, according to federal energy data .

By 2020, the tech sector could buy between 18.5 million and 37 million megawatt-hours of renewables, NREL estimated. That's more than 16 percent of all the electricity used in California.

“We have seen more and more companies making these 100-percent renewables goals and looking for ways to buy renewables,” Heeter said. “It’s definitely becoming a large market.”

Greening Apple

Apple’s latest effort to sell clean electricity — not just buy it — is relatively unique in the tech industry. Among its peers, only Google’s parent Alphabet has federal approval to sell wholesale power, which it won in 2010.

The strategy has three key benefits for the tech giants: It bolsters their green credentials and cuts their environmental footprint; it gives them independence from the broader U.S. electric grid; and it eases a portion of their total tax burdens.

“It is a big step, and not all companies want to be in the energy business,” Heeter said.



“We don’t expect that would be a common strategy for all IT companies,” she added.

On Aug. 4, the U.S. Federal Energy Regulatory Commission (FERC) authorized Apple’s subsidiary Apple Energy LLC to sell wholesale energy, power capacity and other services needed to provide reliable electricity.

The FERC filing "supports our plan for 100 percent renewable energy," Apple told Mashable.

Apple said it sought federal approval so it could sell wholesale power from its California Flats Project with First Solar, a major U.S. solar company, and the utility Pacific Gas & Electric.

Apple CEO Tim Cook in February 2015 announced an $850 million deal to buy 130 megawatts of solar power capacity over 25 years from the project in Monterey County.

That should power all of Apple’s California stores, offices, headquarters and a data center. But it's still a tiny slice — 0.01 percent — of America's total power capacity of nearly 1.2 million megawatts, according to U.S. Energy Information Administration estimates.

California Flats will eventually encompass 2,900 acres of land and more than double in size, to 280 megawatts of solar capacity. Apple will then own all of the project's output.

With the project, Apple will pay less per unit of electricity than it pays now to buy from a utility company.

The move should save the company "hundreds of millions of dollars" in avoided energy costs, Lisa Jackson, Apple's vice president of environmental initiatives and former head of the U.S. Environmental Protection Agency, said at Wall Street Journal's ECO:nomics conference in March 2015.

Apple consumed 966 million kilowatt-hours of electricity in 2015 across all its U.S. and global facilities, the company estimated in its 2016 Environmental Responsibility Report.

The company said it also planned to use its power-selling abilities for other future projects.

The MacBook producer already owns a handful of large solar projects in the U.S., including a 20-megawatt facility in Nevada and a 50-megawatt solar plant under construction in Arizona.

Additionally, Cook has pledged to make the company’s new “ spaceship ” headquarters in Silicon Valley into the “greenest building on the planet.”

The building, still under construction, will run exclusively on renewables when it’s finished in late 2016, Cook said.

Apple says the company is 93 percent reliant on renewable energy supplies worldwide, marking progress toward its goal of being a 100 percent renewable energy company.

Still, the company faces plenty of obstacles in its quest for environmental stewardship, including the heavy energy usage of its overseas manufacturing facilities and the lack of recycled materials in its products.

The dilemma isn't unique to Apple. Many major tech companies have set clean energy goals and released their consumption data, yet some of these numbers may not be completely accurate, according to several studies.

For example, in its 2015 "Click Clean" report, Greenpeace graded Amazon Web Services an F for transparency.

The Utility Approach

For corporate behemoths like Apple and Google, each with market caps of more than $500 billion, there can be financial benefits to owning clean energy projects outright, rather than just signing long-term power contracts.

Companies with a sufficiently large tax liability can tap into a pair of federal incentives designed to encourage more investment in clean energy.

The Investment Tax Credit gives tax breaks to owners of residential and commercial solar projects that is worth 30 percent of project costs. The Production Tax Credit gives wind farm developers 2.3 cents for every kilowatt-hour of electricity that the turbines produce.

The tax breaks not only help make clean electricity cheaper; they also chip away at huge corporate tax bills.

For companies that own solar and wind farms, however, they may not need to use 100 percent of the electricity their projects produce. And if they have excess supplies, then it makes sense for their subsidiaries to sell the extra electrons into the wholesale market and generate revenue, NREL's Heeter explained.



“It gives them some extra flexibility … and the ability to make sure that any excess electricity is sold into the market, instead of not being used,” she said.

Google said its subsidiary, Google Energy LLC, buys and sells power in the wholesale markets in areas where it can’t directly supply its data centers with renewable energy.

The Ivanpah Solar Electric Generating System, owned by Google, NRG Energy and BrightSource Energy, sits in the Mojave Desert in California. Image: Ethan Miller/Getty Images

But other companies aren’t likely to take the leap toward selling energy, either because it doesn’t make financial sense or they don’t want the extra hassle.

The strategy requires a substantial investment in time and resources. Google and Apple, for instance, both created separate subsidiaries to run their energy operations. Applying for regulatory approval is also a long, expensive process laden with paperwork.

“It’s not an easy process, and many companies see it as not really their core business,” Heeter said. So although major IT firms are investing heavily in renewables, most are unlikely to see federal regulatory approval.

Purchasing Power

The more common approach for companies is to sign long-term power purchase agreements with another developer, which Google and Apple also do.

The deals are generally considered less risky and cumbersome than owning a power plant outright.

“You’re just buying the output. Then it’s up to somebody else to manage how those renewables get put on the grid,” Heeter said.

Microsoft, for example, has signed two 20-year power purchase agreements: one to buy 175 megawatts of wind energy from a project in Illinois, and the other to buy 110 megawatts from a North Texas wind farm.

With those agreements, and by buying wind, solar and hydropower straight from the grid, Microsoft has been able to power 44 percent of its data centers with renewable energy, the company said.

“But this means we have the opportunity to do even more,” a Microsoft spokesperson said.

The Redmond, Washington-based software giant recently announced a new goal to power 50 percent of its data centers with clean power by the end of 2018.

When asked if Microsoft would create a Microsoft Energy, a spokesperson said: "We’re committed to playing a role in accelerating the transition to a clean energy infrastructure, whether that is through the purchase of a project, or backing projects through long-term purchase commitments."

Facebook said it powered 35 percent of its data centers with renewable energy in 2015 and also aims to reach 50 percent by 2018.

Facebook's data center in Prineville, Oregon. Image: Facebook

Two of Facebook’s data centers in Iowa and in Sweden are powered by renewable energy. Data centers currently under construction in Ireland and Fort Worth, Texas will be entirely powered by wind energy.

Facebook declined to comment on whether the Menlo Park-based company has plans to create a subsidiary for energy selling like Apple and Google.

As for Amazon — which is drawing more and more of its profits from powering the internet through Amazon Web Services — the e-commerce giant set a goal to power 40 percent of its facilities with renewables by the end of this year.



The company oversees three wind farms — in Indiana, North Carolina and Ohio — and one solar farm in Virginia.

Other tech giants have taken new steps into renewable energy and have committed to a 100 percent goal. This year, Salesforce signed two power purchase agreements with wind farms in Texas and West Virginia.

“As a cloud company, it is our responsibility to seek out clean energy sources to power our data centers,” said Patrick Flynn, director of sustainability at Salesforce.

This post was updated to reflect the correct figures for electricity use in New York State and California.