Google Shakes Up Corporate Renewable Energy Purchasing

discuss their limitations. How about the fact that even under the best of circumstances, wind and solar are not able to fully decarbonize the company's scope two emissions when we think about it as around the clock and everywhere in the world at a specific place. So what will it take for twenty four seven carbon free energy? Well, that's what Google's goal is by twenty thirty, So it's time to get creative. And here to talk about Google's journey with PPAs and how they plan to innovate with the

help of their energy suppliers is Caroline Golin. She's the global head of Energy Market Development and Policy at Google. Caroline was interviewed by Kyle Harrison, and he is head of sustainability research here at bf NOW. As a reminder, B and EF does not provide investment or strategy advice, and we have a more complete disclaimer that's at the very end of the show. But now let's listened to Caroline and Kyle's conversation. Caroline, thanks for joining us today. Oh,

thank you for having me. I'm really excited for the conversation som and actually, I feel like in many ways, I've been an unofficial member of Google's energy procurement team. So I've been covering corporate procurement at BNF for many years now, and I remember when companies like Google and Apple and Amazon we're signing the first corporate ppa's five, six, seven years ago, and it's really cool to see kind

of how far this space has evolved over time. So maybe my first question for you, and starting from the top, can you walk us through Google's history of clean energy buying kind of how does that fit into the broader sustainability strategy of Google as a whole. Yeah, I'd be happy to And well, then I'm glad we're having a little bit of a team reunion here with this podcast, So you know, i'd start out with saying that sustainability has really always been at the heart of Google's operations.

It's led by the employees. I mean, it's a very important aspect to our employee culture. That's led by our customers. It's a very important aspect to our customers, and it has led you by our leadership. It is important across the board, and at the center of that sustainability initiative has really been a commitment to cleaning our operations. And this has been something that I would say we're two

decades really in the making here. So in two thousand and seven, we had sort of set the goal for our operations to be carbon neutral, and we really met that goal largely by the use of offsets, which is where many companies are today. As we evolved, we recognize that we had a role to play in the energy market and in the communities that we operated in, and those communities that we operate in as usually where our

data centers are. So when we're talking about our operations, we're talking about our data centers or our office buildings, and those are global, right, I like to say, we serve communities from Singapore to South Carolina. And so we made the commitment then to run all of our operations on one hundred percent renewable energy, and we did that largely through an approach which is very common today of

global matching. So it's a bit of an accounting exercise, but we took all of our electricity consumption across all of our data centers and across all of our large office buildings. We aggregated that up and then we said, this is how much renewable energy we need to go out and purchase in the market globally. And we did that, and we were the first corporate to do that. Actually, it's something that we take a lot of pride in and it's something we've been doing year after year after

year after year. And what that meant really was that where there were markets where we could go out and sign PPAs for solar and win, we went out and did that. Right, So you have markets in the United States like MYSO and ERCOT where we could sign large hundred megawatt two hundred megawatt wind and solar deals and we aggregated all that up and that was equal to our total electricity demand for all our data centers and

large office buildings across the globe. Huge, huge deal. The biggest impact I think was that it sort of standardized the corporate PPA and drove down the cost of wind and solar globally. And we did this along with many of our peers. You'll see this along many of the tech company piers, Walmart, Microsoft like. In that sort of process, we learned a lot right. The first thing we learned was, Wow, there are only a few markets in the world where

we can really execute at this scale. That's a problem. When I joined Google a little over four years ago, we only had a handful of data centers in each area of the world. As we grow, as the digital economy grows, we're going to have data centers and office buildings all over the world. Does it makes sense to continue to only purchase in the markets that are available.

The other thing we realized was that by operating in this sort of global annual match paradigm, there were many hours of the day and in some cases complete data centers that weren't actually running on any renewable energy at all, and that a lot of the time we were still very much reliant on fossil fuel. From a philosophical perspective, the goal was to drive renewable energy to get off

fossil fuel, but that wasn't actually happening. So we had to take a step back and really assess, well, what are we trying to do here with our capital, with our influence, with sort of our collective action, and we settled on what we're really trying to do is decarbonize the electricity grid. We want to decarbonize the electricity grid because that is the lifeblood of our economy. That means

that our society can evolve in a clean way. It's a stewardship towards our own operations, but it's also a stewart ship to the communities that we operate in. So how do we actually decarbonize the electricity system? Can we

do that with just this global matching approach? We came to the opinion that we cannot do that with just this global matching approach, and so we set the goal of twenty four seven carbon free energy, And twenty four seven carbon free energy is really the goal that we will operate all of our operations, and again that's data centers in large office buildings on completely carbon free energy

every hour of every day by twenty thirty. And the other caveat there is that all the energy that we will procure to meet that goal has to be generated on the grids where we operate, right, so there is no more buying in Iowa to match our needs in Singapore, or buying in the Netherlands to match our needs in

South Carolina. Right, we have to now source all the clean energy that is going to meet our operational needs where we are, and it has to be every hour of every day has to be met with carbon free energy. And that is a huge, huge shift, and that's the path we're on now. We like to call it our moonshot goal. It's the most aggressive corporate goal out there.

But there are many other companies that are seeing this and also joining in and making similar goals because we all sort of have collectively realize what's the most impact we can drive, and the most impact we can actually drive is the fold carbonization of the grid. So let's put our focus there. Yeah, I think you know that keyword of impact is really important here, right, You hit

on a lot of really important points. There's talking about Google strategy obviously creating that blueprint and trailblazing with that power purchase agreement model and beingf we're tracking power purchase agreement volumes globally and you saw our record thirty one gigawatts of these deals signed last year alone and this year it's going to be a nail writer, but we

could see another record year. But you're absolutely right when you look at the kind of the geographic dispersion of those deals, a lot of this activity is occurring where clean energy is the cheapest. So you see a huge glot of corporate power purchase agreements being signed in markets like Texas right or markets like SPP like you mentioned, where the wind blows a lot and wind powers is

very cheap. But if you actually look at the renewable development queue in the mix of energy generation and some of these markets, they already have a lot of renewables, and so it's thinking a lot more about where can you buy clean energy that makes the biggest impact. And like you mentioned, there are a lot of markets around Asia and parts of Eastern Europe in Sub Saharan Africa that have a much heavier fossil fuel mix and clean energy buying today is much less accessible for a corporate buyer.

I think you're totally right that this twenty four seven carbon free strategy that you just outlined really is going to open the door for a lot more companies to start thinking this way. Maybe another question for you, would you consider this an evolution of Google's clean energy strategy or would you consider it more of a pivot away from kind of that traditional PPA model. I think it's an evolution. Just with any evolution, you have to sort of learn from where you started and learn as you go.

I mean, when we sign the first corporate renewable PPA, or when we set up the first solar program with the utility in the United States, we did so with the same goals that we have now, which is that we want to drive impact, we want to decarbonize the grid. But it was only really through that learning process of going, oh, so you're not going to retire that coal plant even though we added one hundred and fifty megawatts of wind. Okay, wait, you're actually going to bring on natural gas to firm

that solar. Okay, that's not computing in our head, So why is that not computing? And I think the crux or sort of the inherent beauty I like to say of our twenty four seventh goal is it means we actually have to roll up our sleeves and start reforming the regulations, the market structures, and the policies that have guided our elect city system for the past hundred plus years.

This is something we didn't necessarily have to do in one hundred percent are global matching space, because as you said, where we could go to market, we went to market. And we have a phenomenal procurement team, you know, and they have worked their butts off for years signing all these deals. But if we say no, no, no, you can't, we're not going to do that anymore, then we have to say we're going to have to change the markets everywhere we operate. And market reform means regulatory reform, it

means policy reform. It means working with suppliers, It means working with utilities and developers to become more creative, to be more innovative, to say, okay, the structures that have guided us for the past hundred years are insufficient for the future, and so what are we going to do to go faster, to be smarter, to get to that

clean energy transition. That's a much bigger undertaking. And so why I think it's an evolution, it's because we've learned and we've just grown in the way we think about things. We still are meeting our one hundred percent renewable goal, and all of that renewable energy that we're signing is being counted and used towards our twenty four seven goal, but now we're having to work on top of it,

and how do we meet that gap? So even if we're at one hundred percent renewable, which is when we started this goal, even when we were at one hundred percent renewable, we were still only around sixty six percent carbon free on an hourly basis. So what are we doing about that other thirty to forty percent everywhere we are? And that's where it's that evolution in thinking, and that

evolution in thinking is really fundamentally changing all the market structures. Right, We'll still use ppa's for wind and solar, but we've got to do more than that. And you mentioned that there are other companies that are starting to do this as well. Right, How sticky is this kind of carbon free strategy? Are you seeing this catch on with a

lot of companies? Because, like you mentioned, right, Google was the first company to achieve one renewable electricity matching on an anual basis, and we of course have seen more companies go out and do that. And the R one hundred is growing. I think it has close to four hundred members now, But a lot of these companies are not at one percent renewable yet, So how many of those companies are ready for this evolution as you called it.

I'd like to take the conversation a little broader and not just talk about companies, because the way that I look at this is twenty four seven is the end goal, but it's also sort of the paradigm and the framework by which we all collectively work. So whether or not you've set a twenty four seven goal for your company, it's really about are we using our collective action to put in place the market structures, the products, the technologies that we all know we're going to need for a

decarbonized grid. So last year I had the pleasure and was really humbled to work with the UN to launch the twenty four seven Carbon Free Energy Compact. And this is compact that invites every single player in the energy ecosystem to work together towards the full decarbonization of the grid. The one thing about twenty four to seven is that

it is inclusive of other technologies. You know, if you set a one hundred percent our goal right now or any other goal, you are de facto excluding the next generation technologies that everyone knows we're going to need to fully roll off fossil fuel. This makes the tent a lot bigger, and we need the tent bigger. And the compact right now is populated with governments, companies, advocacy organizations, suppliers, other large scale thought leaders on this. We have Iceland

in Scotland and a g as Microsoft New Core. I mean, we have a number of signatories here. They're all there not necessarily because they've set a twenty four seven goal, but because they believe that we need to change the structure to get to a decarbonized it, and so that's what they're committed to do. So one thing that I love about twenty four seven is it is more inclusive.

And so I think for other companies or other organizations that have other goals, that's part of their evolutionary process, right, and as they work, they need to be cognizant and work towards the baseline structures that we're all going to need. I think that we get sometimes in a place where we say, oh, this corporate goal versus that corporate goal,

or this corporate goal towards that corporate goal. As corporates, we have a responsibility to the economy, to the communities where we operate in to drive scaled impact so that not just our businesses, but every single household has the opportunity to run on clean energy. And if we do that collectively, then we are moving towards the right trajectory. And because this transition to clean energy, it's bigger than any of us often talk about, like me, the economic

future of our generation or my children's generation. This is how we are going to evolve as a society, and so we need to really be collectively focused on society, on the public good. That's why I love being in the policy space, That's why I love being in the market design space, because it's really about driving the public good. I hesitate to say this corporate goal versus that corporate goal.

It's really about how are we working together to drive that collective action so that everyone behind us and everyone to the side of us also gets to realize a clean future. I think that's a really smart way of thinking about it, and you're absolutely right that benefits many more parties than just corporate buyers. And I think something else that you hit on there that was super interesting, right.

You mentioned flexible technologies You've mentioned policy, You've mentioned suppliers, So I want to dive a little bit deeper now into kind of the different factors that are really important in executing a twenty four seven carbon strategy twenty carbon free. And I know you said to kind of expand this beyond the corporate buyer, but I did want to specifically

talk about corporate buyers and make an analogy here. And I've been workshopping us for a little while, and what better time to kind of unveil this analogy than a podcast. Of course, to me, I think of clean energy buying, especially from the corporate space, that the evolution of clean energy buying, it reminds me a lot of the evolution

that you would see in a sport like baseball. And we've got two Americans on the podcast here, so maybe you'll pick up on some of this, but I'm happy to kind of explain it more for a broader audience. But if you look at the history of baseball, a lot of people know that the most famous baseball player ever his name is Babe Ruth. What made Babe Ruth so famous was he would go out and he would

hit home runs. So he would hit the baseball outside of the park, and it would get him and anyone else that was on base a run, and that changed the way the sport of baseball was played. Before Babe Ruth came into the league, players intentionally wouldn't hit for power, and they would intentionally hit it within the field. They wouldn't hit home runs, and it was a much more

kind of strategic way of playing the game. And then when Babe Bruth came in and started shattering all these records around home runs, the sport of baseball changed fundamentally, and all of the interests and all a wow factor was going into hitting home runs. And to me, that reminds me of the corporate energy space a couple of years ago. It was all about volume, right who could

sign the most power purchase agreements. But if you look today kind of at in revising history and you look at who were the greatest baseball players of all time, you'll still get a lot of people that will say Babe Ruth. Babe Ruth was a fantastic player all around. But there's a lot more focused now on what we call a five tool baseball player. So it's not just about hitting for power. It's not just about hitting home runs.

It's about getting on base more, it's about running the basis faster, it's about fielding better, right, it's about a better all around baseball player. And what that's doing is it's shining a light on all these other players that maybe used to not get as much attention as Babe Ruth and now they are. And to me, it's very similar to twenty four seven carbon free, right, And you can kind of equate each of those tools to a specific important factor that goes into a twenty four seven

carbon free strategy. So you can think about base running as flexible generation, you can think about that supply side, working with utilities as something like being a better fielder. But then of course you do have something like hitting for power, which is still a very important part of the game, and buying clean energy, which is still a very important part of a twenty four seven carbon free strategy.

So maybe kind of going through each of these five tools one by one, one of the things that you just mentioned and you've mentioned a few times on the podcast today is the procurement of flexible technologies, and that's obviously going to be a very important part of a twenty four seven carbon free strategy. So it's buying geothermal, it's buying nuclear that more closely resembled base load power,

but it's also looking at things like energy storage. Can you tell me a little bit more about what Google's doing here? Yes? Happy too, And you're right. I like your baseball analogy. I was a little nervous. I wouldn't get it at first, to be honest, but it is pointing it right. Yes, it makes sense to me. So I go back to what I was saying before. Right,

So we set this goal. We're one hundred percent renewable on our balance sheet in terms of if you add the left side and the right side of the equation up. It worked. When we dug a little deeper we got to the hourly level, we realized only sixty six percent of the time, really we were running on clean energy. That's unfortunate. All right, how do we actually think about getting to one hundred percent running on clean energy? Will solar and wind do it? Then? Answer is no, solar

and wind is not going to do it. Every single research paper I've seen said solar and wind can get us about seventy eighty percent of the goal of a completely clean grid, and that sort of subject to what we do on transmission, which if we get a chance to talk about, I'd love to talk about. But what is going to happen is that we are in a state where we don't have that last piece of the pie figured out. So if we actually want to get that last piece of the pie figured out, we're going

to need to start investing now. So that means that we have to think bigger than wind and solar, and that's what we've been doing for the past coup beers, and we have a phenomenal team led by my colleague Mode, who is looking across the globe to say, what are the technologies that we need to invest in now, And we tend to look at sort that kilowat to megawat space that have already shown their proof of concept at the kilowat space and we've said, okay, we're going to

now try to scale you beyond that. What are the technologies that we're going to need to fill those firm hours,

like you said, those firm baseload hours. And so we've been investing across the globe in this One of the most recent investments that we made was in Nevada where we invested with a company called Fervo Energy, and this was the first partnership for what we're calling always on clean Energy for geothermal, and so if this is successful, we will see the fruits of those labors to be able to scale geothermal not only for us, but for

other customers. We've also taken this approach in PGM, where we've invested in battery storage with the same idea where we're actually looked to do it as a model not just for us, but for others, and we did what we called a clean Energy manager model there. And so we're looking at this, We're looking at hydrogen, we're looking at next generation advanced nuclear, we're looking at everything that's

on the board. The other thing that we're looking at is how do we just not have to purchase a kilowatt hour in the first place, So demand response, energy efficiency, all of these become tools in your toolkit when you are in a twenty four seven world. To me, it's more creative and you get to sort of be the wind behind the sales of the next technologies that we're

all going to need. And that's been really, really, really exciting, and Mode's team has done an amazing job leading this, and the goal is to get this to a point where we can now get the markets and the policies to be supportive of these next generation technologies and figure out how to best utilize them in a world where within ten years we're going to have zero price signals in a renewable space. So it's an exciting time and that key component of investing in these next generation technologies.

I'll say, like, if we don't use our capital now to do it, they will not be available when we get to these higher penetrations of renewable energy, and we are going to be in a very very, very overbuilt and over expensive system as a result. It's a very

good point. And speaking of that availability, in those markets where those flexibil technologies are not necessarily available, there's obviously the element where you can tap a utility or retailer work with one of those companies to offer you more

reliable electricity as well. And I know Google and other tech companies in the past have signed what we call green tariffs with regulated utilities in the US, but of course there's a slew of other retailers and utilities around the world that offer sleeved programs where they will buy an intermittent source of renewable energy, they'll firm it up with either their portfolio or buying power from the wholesale market, and they'll deliver that and firmed up blocks to Google

as well. So where do utilities fit into this? Retailers how important are they to a twenty four seven carbon free strategy? Oh? Well, utilities and retailers are incredibly important. I mean, we can set the demand, but at the end of the day, we are looking for our partners on the other side to drive the creativity and the innovation and deliver and we need to work together in every situation. So from a utilities perspective, and I think we have to be honest, especially in the United States.

And this is different obviously in Europe, but in the United States, most utilities have been governed by a regulatory process that hasn't changed substantially in the past sixty plus years. And while we were really proud of the inaugural green tariff program and large scale solar programs for corporate buyers,

it is something that exists on the margin. We are initiating these programs really with the idea that we're going to continue to take a portion of whatever is the projected generation mix for that utility, and then we're just going to add solar or at best add solar and wind on and sort of make the math work, as opposed to taking it from a different posture, which is

to say the goal is to commoditize clean energy. The goal is to roll off fossil fuels completely, which means we have to have a very different approach to capacity valuation, to ancillary service valuation, to reactive powerflow valuation, and to energy valuation. And so that means deconstructing the regulatory paradigms that have put power on our system and turn the

lights on in our homes for decades. And so it's that deconstruction which is critical right now, and so Google is playing a part in that and working with our utilities and in multiple parts of the country right now, we are in partnership with utilities to try to get to that next level, that next generation tariff where you're actually fully creating a power stack of clean energy, not a power stack that is fossil fuel that is netted out by an addition of renewable energy, but a full

power stack from capacity energy, ancillary and reserve that is all clean, that's never been done before, and for a utility to be able to do that and take on that role and create tariffs around it will be a game changer for customers because a tariff is something that all customers can buy into, right whether or not you have a procurement team like Google does. A tariff is something that everyone can take on the supply side. It's very similar. Our entire market and our entire system has

been based on a single source PPA structure. So corporate goes out, they sign a large PPA for solar, they sign a large PPA for wind, and then they add them up together. Wonderful. That is really inefficient and also I think derivative of what we actually want to do moving forward. What we need to get to a point with is where a customer, big or small, can go out to the market and say, I want an eighty percent carbon free energy score, I want a ninety percent

carbon free energy score. I want one hundred percent carbon free energy score. I want you to go out to the market, very innovative supplier, and figure out the technologies that need to stack up to deliver that to me. Here's my hourly footprint. You go figure it out. It puts the innovation on the supplier to do that. It a challenge is the market, and I think that's a good posture. We need to be pushing each other and going forward. And we just did this actually with AS

in Virginia, we did this exact same thing. We said, here is our carbon free energy score today. We want you to get it. Here. You go out and figure out the technologies and how they're going to stack, and we're going to work. And it was a back and forth process, but at the end of the day, it was much more efficient as a blueprint for how the

market really should work. So it's about innovation, it's about working together, and it's about having that shared goal which is not just to lay a renewable energy onto an existence system, but to fundamentally change the way we stack power so that we get to a clean system. Yeah, it's a good thing that you have companies like on g an As, like you mentioned as part of this twenty four seven carbon hub or carbon free Hub, right, so they're you know, you're actively workshopping with them on

these types of strategies. Maybe let's move on to the third tool here and again another one that You've brought up a bunch of times today which is policy, and I should say, right, you mentioned before that Google historically was only signing PPAs where PPAs were available, and I do want to give credit to companies like Google and a lot of other tech companies. There's a lot more countries that offer a corporate power purchase agreement model than

there was a couple of years ago. You've seen big developments of course in markets like Taiwan and markets like Japan and South Korea as well, where signing a power purchase agreement or just buying clean energy in general as a corporate buyer is much more accessible than it was a few years ago. But maybe let's open this discussion up a little bit further. Of course, like you mentioned, policy for twenty four seven, carbon free is is a

lot more elaborate and a lot more expansive. So can you tell us about some of the work that Google's been doing there? Yes, I'd love to. This is my wheelhouse, this is where I sit most days. I said this before, but I'll say it again, but one of the inherent commitments in a twenty four seven goal is a commitment to fundamentally change the markets and the policies and the regulations which guide our electricity system. That's because there isn't a market out there today that is built for a

carbon free electricity grit. There isn't one. The truth is that our electricity systems globally are built because of and in service of fossil fuels a namely natural gas. But that's where we have come from and that's where we continue to be, and I think we all need to recognize that the commodity by which our electricity system runs is natural gas. If we want our electricity system to run on clean energy in full force, we have to

commoditize clean energy. The reason why we have commoditized natural gas is because we created policies and regulations and infrastructure to support that commodity. So if we want to run on carbon for energy, we have to create the policies, the regulations, and the infrastructures to commoditize clean energy. And that is a fundamental difference from where we've been and a refocus for everyone. Lee. In April of this year, we released our first policy roadmap for twenty four seven

carbon free energy. And if my colleague Devon is listening, I just want to say thank you again for your blood, sweat and tears on this paper. And this was a paper that we released because we wanted to put this out there. We wanted to put the call to arms out there, which is saying, if you really care about decarbonizing the grid, it's not just about signing PPAs. It's about getting involved in the policies that we need now and we're going to need in the future so that

everyone can realize this goal. And we really lumped these policies into three big buckets. The first one is market reform. All of our price signals right now, you know this better than anyone is run or correlated on the price of natural gas, which is a fuel cost. What are we going to do in a world where we have eighty percent penetrations of renewable energy has zero marginal costs, the market structure is today don't support it. Okay, so

the existing market structures don't support it. But then in multiple areas of the world, and especially in the United States, we don't even have markets where customers can access clean energy.

So we need to reform existing wholesale markets so that they're actually supportive of the commodity of clean energy, and then we need to expand them so that customers can reap the benefits of wholesale markets, which is to drive innovation, drive down costs, and integrate at scale clean energy resources. The second big bucket we have is investment in next

generation technology. We're putting our capital there. I just talked about that with Fervo, but we need policies that support that, and very encouraged recently by what we've seen in Europe with fit for fifty five and what we've seen in the US with the IRA And actually I would argue that the capital game for renewables is there. It's been there for quite some time now. We have a capital game for next generation technologies, so we all need to get on that train, right, We all need to be

investing there. And then the last bucket we really see here is consumer empowerment. And so this gets at the heart of a lot of what we're doing, which is that at the end of the day, we want every corporate, every customer, every buyer to be making the most informed decision on where to deploy their capital that will have

the greatest amount of impact. You cannot do that if you don't know where something is generating, when it's generating, and what it's generating, and you cannot know that unless you know the carbon footprint of your load. So to empower consumers, we need policies that inform them. So we need much more transparency in our regulations. We need to be using things like teaks across the board that give buyers the right price signals so that we actually invest

where we need clean energy, and we need transparency. I've used this joke so many times, but I don't think people realize that one of the most informative pieces of paper on how utilities operate and utilities footprint in the US is still uploaded in a PDF and sent to FIRTH. And if you want to actually download it and get anything out of it, you need to spend lots and lots and lots of money on that type of data.

But that data needs to be open so that we can empower customers so that they are all rowing in the same direction. So those are three big buckets, and building on that, we've been building coalitions globally. We've built a number of coalitions in the US. We've built the Carbon for Energy Compact. We just launched a recent partnership with C forty, which is a major network of cities to see these work on launching pilot programs to see twenty four seven grow. This year we saw Paris in

London and Copenhagen as our inaugural pilot cities. You know, as I said, it's not just about corporates, but it's about everyone who's at the left and right of us, in front, back of us to get this going. Yeah, in many ways, it does seem like policy is kind of the central component of this twenty four seven carbon free strategy, and I think that point about transparency is actually a really good segue into the next kind of

tool in a twenty four seven carbon free strategy. So we've obviously seen a lot of really exciting developments, especially in the EU, happening when it comes to the certification of energy generation. Right, So you have the Guarantees of Origin system in the EU, which is your renewable energy certificate equivalent in Europe. But of course now there's proposals and there's policy in place to expand that to every

type of generation technology. And so I wanted to talk a little bit more just about what do we need on the technology side to enable a twenty four seven carbon free strategy. Part of this is obviously adapting on the demand side. Google has done some really cool work using Internet of Things and other technologies to change data center activities so that they're using more energy intensive processes

at times when renewables are generating. And then of course you have all these companies now that are trade are creating sorry ourly renewable energy certificates. How important is this kind of technology development area in this broader overall strategy. I think it's hugely important, and I'm really glad we're going to talk about it. So let's take it from

both sides. You mentioned teaks our time stamping of geos in the EU, and this is something that's really important for us right now and that you and really should be important for anyone who's driving towards a decarbonized grid, which we have an opportunity right now with the Renewable Energy Directive drafts to really get time stamped geos in there.

And the importance of this is that when you attach an hour and a location and a fuel source to your geos, you start creating the price signals that investors need to put their capital where the grid needs it, and really the goal is to move every one towards focusing on what the grid needs wear to accelerate decarbonization.

That's sort of why these types of registries, a teak registry, a timestamp geo registry, they're really, really, really important because we don't have those market signals right now and rex are insufficient for creating the impact that we need, and

so we need to go farther. And so I think if we get teaks deployed across the board, that will sort of be a game changer and the way we think about capital deployment because then you're sitting from a financial perspective and you actually can see the value of your investment not only for your footprint, but for the overall grid, and that should have a larger value sign

with it. Right if you are decarbonizing in the hours that are really hard to decarbonize in, that creates more value, That creates more long term capital assurance for these next generation technologies, in the same way that a long term ppa for solar and wind created the capital assurance for the developer market to go out and to finance these new projects. And what we need to do is create the revenue certainty for the hours that we're not creating

clean energy for. So how do we do that? We have to create those price signals, So that's why teaks are so important. On the other side you asked about really, which was like the demand side. You know, what are we doing from our load? This is something that is really interesting that I think Google is doing and I think it's interesting for data centers, but I think it's actually more interesting for what it could mean for the

broader industrial economy. So we have a carbon compute system and a clean compute system, which it basically is a system that says we are going to pilot matching our load, matching our demand with the carbon intensity of the grid, and where we can shift load, we are going to shift load so that our footprint is following along with the footprint of the carbon intensity of the grid. Everyone knows that demand response right now is based on the

price of the grid. If you're in Europe right now, you're seeing this day in and day out, and we've seen this in the US, which is that the signal that customers are given is based on the marginal cost of electricity generation. The signal moving forward, if we're going to get to an eighty percent penetration of renewable system where there is no marginal cost because there's no fuel cost is going to have to change. So do we scrap marginal cost altogether? No, I don't think we scrap

marginal costs altogether. We redefine marginal costs. So what is marginal costs in a frankly zero fuel cost system. Marginal cost means carbon intensity. Marginal cost means reserve, it means answllery, it means transmission costs, it means all these other things. But largely, what it's going to mean for buyers that have and the industrial sector that have these huge goals is when can I shift to make my load more clean?

And so the idea of the software that we've been piloting is not only to make data centers follow along with the carbon intensity of the grid, but to get it out there across the entire industrial economy. The interesting thing about data centers is that we don't have very

variable load. We're kind of always on. But I think about general manufacturing that has that ability to shift up, we would be able to get to a point where you have the industrial policy sector merge with demand response in a way that is really focused on creating a CFEE per megawat score for your demand response signal as opposed to a cost of gas per megawat score for

your demand response signal. And I think that builds innovation around energy efficiency in the industrial sector, It builds innovation around building structures about how we build our manufacturing, how we design our parts, how we design transmission and industrial parks in general. So it could really change the way we think about this because you're getting out of just

this price signal to something much more impactful, this carbon signal. Absolutely, and I think what that also does is it takes some of the burden off of some of these other areas that we've talked about today, right around flexible generation and about the collaboration and the work that you do with utilities. All right, So moving on now, I wanted to just really quickly highlight that that fifth tool, right, and of course in baseball, hitting home runs is still

very important. Aaron Judge on the New York Yankees just set the record for home runs this past season, and he just signed a massive new contract yesterday as a matter of fact, to show how much, you know, people still care about hitting home runs, and it's the same in clean energy buying. Right. Of course, signing corporate PPAs is still a very important part of the market, and I want to make sure we gave it a little bit of love on today's podcast. Where does a traditional

corporate PPA fit into Google strategy moving forward? Will you still be signing them? We are still signing them today, but we are signing them much faster and much more simply than we were signing them before. The truth is it's completely inefficient for a company like Google to spend six months going back and forth on the terms of a traditional PPA. We need to be able as an industry to agree on a certain number of terms and move forward and move quickly. And we are piloting and

looking at that right now. So I think traditional PPAs will be there, and it will be there. As we said in the beginning, how the market evolves. If we're not in a very evolved market and the best we can do today is a traditional corporate PPA, we will do that, of course, but we are going to be pushing everywhere we can to at the market to evolve. We would be happy to do a traditional corporate PPA. So I don't want to you know, as you say,

pooh pooh that model. We're using it where it is the best and brightest that it's available, but we're always pushing it to be better. And I think that this is where we as an industry can really work together and knowledge share because we have a lot of collective

experience around this and it's time to evolve. Yeah, I think that's a very good point, and you're totally right if you look at all the companies that are going out and setting net zero targets or making one hundred pledges for all those companies to go out and sign bilateral over the counterpower purchase agreements that can, like you say, take six months or a year to negotiate. It's not sustainable and candidly, there's not enough bodies to go ahead

and do that for every company in the world. And so I think that's a very smart way of looking at it is just continuing to sign corporate PPAs, but evolving how we go out and procure those contracts. So I know we're running out of time here, Caroline, So I wanted to kind of move on to the final one or two questions that I have for you today. How does the investor community interpret a twenty four seven

carbon free strategy. I know you that you mentioned that, of course it benefits the broader grid, and it could change the way that we think about the energy system in general and how companies, of course buy energy as well. But how are investors baking this into their strategies today? Are they starting to consider these things? And maybe it's

is it from that risk angle where they're really focusing today. Yeah, it's a great question, I would say, and I mean I've said this before, which is that the clean energy revolution is not necessarily a capital issue. I think we've all lived in a world where politically, maybe we have said that there isn't enough capital out there. There isn't enough capital appetite to deploy renewable energy to finance next generation technologies at the scale we would need them to be.

It's just too expensive. I think probably anyone who listens to your podcast knows that is true in some areas of our globe. But in the United States and in Europe and increasingly in South America and even parts of Asia, that's not the case. The capital is there. What the capital is there for is, as you've said, is for tried and true contracts that makes sense on their ballot sheet.

So I think Wall Street has been lining up for a long time based on the tax incentives and the tax structures that we've deployed in this country and in others to get a guaranteed return. It's a good one, and let's be thankful for that, right, Let's all take a moment and say we're really glad that happened, and be thankful for the tax incentives and the tax equity that we've been able to monetize over the past decade

to really to make that capital market firm. And so your question is really about, well, how do we evolve this if we know it's not just wind and solar. So one thing I'll say is that it's been really encouraging to see where the EU and the US is thinking about this, and we can see there's a lot amount of public money right now going towards the deployment of next generation technologies. There's a lot of money right now in hydrogen right there's a lot of money right

now in battery storage, long duration storage. And thinking about this where I would take your questions slightly differently, if you'll give me the allowance is that is that there's not a lot of money thinking about the infrastructure that we are going to need to deploy all of this. So I think the capital market knows how to finance a big piece of steel in the ground. It's done

it for a long time. Honestly. If that piece of steel is generating solar electrons or wind electrons or geothermal electrons, the structure is largely there. I'm not saying it's cut and paste. It's not cut and paste. And obviously you're going to need companies like Google and other companies and utilities to be those firm off takers. But the structure

is largely there. What the structure is not there for is investing in monetary rising and securing off take for the infrastructure we need in infrastructure a transmission and substations and long HDVC lines and piping offshore wind from Ireland to the rest of the UK, and wheeling solar in Arizona to New England. And if I was to say anything to the capital market right now, it's that there's

a lot of energy going on. Sorry pun intended, I guess, yeah, there's a lot of energy right now going on about getting clean energy onto the grid. And then there's a lot of energy right now the regulatory bodies, whether it be in the US or in Europe, around grid planning, transmission planning, Q reform, interconnection reform. We have a lot of capital going in into wind and solar in the US.

Even in PJM that just did this watershed docket, we're not going to get anything interconnected before twenty twenty seven that we signed today. That's the quickest something's going to happen. So there's this huge backlog on the grid. And while we have all these planning docks, and we have all these process docks, which are great, I'm very excited for them. We've lent our comments, we've intervened. We want to see transmission planning, we want to see Q reform, we want

to see interconnection reform. We fundamentally need that if we're going to get a single electron on the grid anytime soon in this country. But if we don't figure out how we're financing our infrastructure, and if we don't change cost allocation of our infrastructure in this country and in Europe, all of this capital behind clean energy really doesn't mean

much because it's going to have nowhere to go. We're just going to continue to build these loops of transmission lines in multiple areas of our country countries, as opposed to actually investing in the broad backbone of a transmission system that we're going to need to commoditize clean energy in the way that gas pipelines and rail systems commoditized coal natural gas. If that's not there, and if the capital market doesn't get invested in that another pun, then

a lot of this is just going to stall. So I would sort of take your question and say, if we're really thinking about decarbonizing the grid, we have to think about that infrastructure backbone. And that's where I'd like to see the capital markets get more involved and work with policymakers to figure out what's the best cost allocation here, what's the best investment strategy because this is a public good,

we need it, we fundamentally need it. Or everything we just talked about before is you're sort of going to sit on a shelf. Yeah, of course, No, that's a very interesting spin. And then honestly, when I asked the question, that's not the angle that I was thinking of it from.

And it's a fascinating perspective and maybe just to close things out here, I think a lot of this, of course comes down to spreading the word and you know, of course these messages and talking about the importance of transmission and getting that in front of as you mentioned, investors and policymakers. That makes a world of difference. And of course Google has done a great job and being public and communicating publicly about its twenty four seven carbon

free strategy. And what we hope with this podcast is that we can further spread the word about all the good work you guys are doing. So maybe let's wrap it up there, And just to say, Caroline, thanks so much for joining us today. Fascinating to hear as always what Google's been doing when it comes to clean energy procurement, and I look forward to hearing about many interesting developments in the future around the strategy. Oh well, thank you for having me. This was a wonderful way to spend

my morning. Today's episode of Switched On was edited by Gray Stoke Media. Bloomberg anyf is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed as investment advice. Investment recommendations, or a recommendation as to an investment or other strategy Bloomberg anyf should not be considered as information sufficient upon

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