The buzz surrounding the proposed Facebook data center in Los Lunas has mostly centered on the potential economic impact of bringing the social media giant to New Mexico. But some say an equally exciting aspect of the project is the “green rider” contained in a contract between Facebook and the state’s largest utility.
“It’s a good, balanced model for how other companies could come into this state and have all their energy needs provided by renewables,” said Steve Michel, attorney for Western Resource Advocates, an intervening party when the contract was before state regulators.
Facebook is deciding between Los Lunas and West Jordan, Utah, for the site of its new $250 million data center, and is expected to announce its decision this month.
On Aug. 17, the state Public Regulation Commission approved a special services contract between Facebook and Public Service Company of New Mexico for the utility to supply the company with renewable energy for all of its electricity requirements.
The green rider creates a legal mechanism for PNM to acquire renewable energy on Facebook’s behalf and then to be compensated by Facebook for those resources. Under the rider, the data center’s energy would come primarily from three solar facilities built by PNM and funded by Facebook.
When the facilities produce more energy than the data center uses, PNM would credit Facebook at the market price of energy acquired from the Palo Verde Nuclear Generating Station in Arizona. Should the solar facilities produce less energy than the data center requires, PNM would power the site with its existing infrastructure at a rate that includes a fee that is fixed for 10 years, according to a different part of the contract.
PNM’s regulatory filings show Facebook could pay the utility up to $31 million a year for electricity.
“The green rider expands economic opportunity for renewables, which are less costly than coal and nuclear and are fixed, meaning the rates don’t increase, for (a) decade,” Mariel Nanasi, executive director of New Energy Economy, wrote in an email. “This is the kind of price stability and security businesses are looking for,”
Even if Facebook doesn’t locate its data center in New Mexico, said Michel, the green rider demonstrates to other companies that the regulatory process can be streamlined for large customers seeking to power their operations through renewable energy. PNM requested an expedited review process for the project, and the commission approved the contract 40 days after PNM’s application was filed.
“The real attractiveness is that it’s a way to satisfy customers, developers and utilities,” said Michel. “There aren’t many things that do that.”
Peter Gould, attorney for New Mexico Industrial Energy Consumers, said although he doesn’t believe the green rider would be an appropriate template for all businesses, he does think it could be beneficial to the state.
“We’ve got to find different creative ways to jumpstart the New Mexico economy,” said Gould. “Maybe this is one of them.”