Amazon to build solar power stations to supply data centres with renewable energy

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Amazon has announced it will partner with Japanese trading house Mitsubishi to build solar power stations in Japan and procure renewable energy from them to supply electricity to its data centres for ten years.

Amazon will directly contract with power generation operators. This contract is a corporate power purchase agreement (PPA) that enables the company to procure stable electricity from exclusive renewable energy power stations for the long term, without buying it from electric companies.

It is believed that this type of power sourcing is less vulnerable to price fluctuations. Although renewable power is expected to be more expensive than traditional sources, it will add to the overall renewable energy supply, and the environmentally friendly approach is expected to resonate with consumers and data centre customers.

West Holdings, a solar power company, is developing the power stations and will build 450 of them in the Tokyo Metropolitan area and Tohoku region. Mitsubishi will collect electricity generated there and supply it to Amazon’s data centres, logistics centres.

Individual property owners will also invest in solar power facilities. West Holdings will charge them for installation, but they will recoup their investments in 10 years with electricity sales to Amazon. Mitsubishi will be responsible for creating the system for aggregating electricity and will collect a portion of the electricity sales as commissions.

The total electricity generated will be 22,000 kilowatts which is equivalent to the electricity consumed in 5,600 houses. The power stations will start operations by 2023.  Amazon aims to make 100 per cent of the electricity used for its corporate activities renewable by 2025. The retail and tech giant is using corporate PPAs around the world as a means to procure large amounts of electricity reliably. The Japanese government is also looking to encourage the widespread use of PPA by reducing or exempting transmission costs.

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