One can debate whether Facebook is good for society, but it sure seems to be good for Los Lunas, New Mexico. Tax revenue in the town south of Albuquerque has skyrocketed since the social media giant began building a $1 billion data center there in 2016. About 1,100 people report to work at the construction site each day. When it’s finished in 2023, the data center will employ 300 folks. And, after the coronavirus struck, Facebook pledged $150,000 in aid to the local school district and cash grants of up to $5,000 for small businesses in the town of 15,000.
But Facebook’s biggest impact here — one that will last well beyond the data center’s construction — might be on the power grid. New Mexico’s largest utility is building eight wind and solar projects to fulfill Facebook’s power purchase agreements, which are contracts to buy renewable energy over the next couple decades. By requiring its data centers to run on clean power, Facebook has accelerated New Mexico’s transition away from fossil fuels. And it’s a trend playing out across the West, even as federal policies favor legacy energy sources.
When it comes to utilities expanding renewable energy generation, “power purchase agreements are essential,” said Karl Cates, a policy analyst at the Institute for Energy Economics and Financial Analysis. These contracts typically last for 20 or 25 years, giving utilities a guaranteed revenue stream for new solar and wind projects. “It says to them, OK, we have something that’s predictable here, and it gives us confidence in our business model.”
Cates and his colleagues recently wrote a report about Facebook’s already substantial impact in Los Lunas. Gross receipts tax revenue there is up 86 percent since pre-Facebook days, and many of the data center construction jobs have gone to high-paying union positions. Meanwhile, Facebook’s power purchase agreements helped kick-start a renewable energy boom in the state. All told, Facebook will help finance $800 million worth of wind and solar installations that can generate 396 megawatts of power. Public Service Company of New Mexico, or PNM, will supply electricity to the site, and the share of its portfolio sourced from renewable energy is expected to grow from 15 percent in 2016 to 43 percent in 2023. More than one-third of PNM’s renewable energy capacity is tied to the Facebook purchase agreements.
Cates told me the Los Lunas effect can be replicated throughout the West, particularly in towns hard-hit by the decline of coal. For one, areas like the Powder River Basin in Montana and Wyoming or the Four Corners region have the transmission infrastructure needed to connect renewable projects to the grid. These rural areas also have the necessary space for data centers that cover hundreds of acres.
Places better known for farming — like Quincy, Washington — or former timber towns such as Prineville, Oregon (home to another Facebook site) have become data center hubs. Apple, Microsoft, Alphabet, and Amazon have data centers scattered around the West, and demand for more is surging — every time you’ve logged on to social media or streamed Netflix over quarantine, you’ve utilized their services. Market research firm Gartner predicts cloud computing, the service facilitated by these remote data centers, will be a $354 billion industry by 2022 — a 56 percent increase over three years.
There are, of course, drawbacks. The areas where tech giants like to build these data centers often trip over each other to offer companies the largest tax breaks. As the Albuquerque Journal reported, New Mexico essentially waived Facebook’s property taxes for 30 years so the company would choose to build in Los Lunas instead of Utah. Not to be outdone, Utah later landed its own Facebook data center — at the cost of up to $750 million in tax subsidies.
Less questionable is the role power purchase agreements play in the transition to clean energy. Sure, shareholders push companies to adopt environmentally friendly policies, but those pleas are easier to make when clean power is dirt cheap. Corporate power purchase agreements more than tripled from 2017 to 2019, according to Bloomberg New Energy Finance. The 19.5 gigawatts companies bought last year accounted for more than 10 percent of all new renewable capacity added globally. The companies at the top of the list? Google, Facebook, Microsoft, and Amazon.
“Corporations have purchased over 50GW of clean energy since 2008. That is bigger than the power generation fleets of markets like Vietnam and Poland,” Jonas Rooze, the lead sustainability analyst at BNEF, said in a statement. “These buyers are reshaping power markets and the business models of energy companies around the world.”
One such energy company: PacifiCorp. The West’s largest grid operator has already built solar farms tied to Facebook’s Oregon operations, and it’s not stopping there. The company is soliciting bids to build an enormous slate of wind and solar projects, pandemic be damned. The Casper Star-Tribune reports that construction continues on PacifiCorp’s wind farms and transmission lines in Wyoming.
To be clear, the clean energy sector is struggling just like, well, every sector during the pandemic, but federal aid has been targeted toward fossil fuel companies. That might be counterintuitive for places like Farmington, New Mexico, though. The natural gas sector near this Four Corners town is tanking, and its enormous coal-fired power plant is scheduled to close in 2022. It’s towns like this, Cates told me, that are ripe for a little data-and-solar rejuvenation. “In the past, these places had an extractive, one-note economy,” he said. “This is a model for economic diversification.”
