Apple's $848M, 25-year solar agreement is the largest of its kind, will provide 130MW of clean energ

Posted:
in General Discussion edited February 2015
Apple's landmark solar power deal, announced by CEO Tim Cook this week, is a long-term sustainable energy solution that should generate enough to power essentially all of the company's California operations, including the upcoming "spaceship" Campus 2, by the end of 2016.

Apple Cupertino Campus 2
Apple's new solar agreement will buy enough electricity for virtually all of its California operations, including Campus 2.


The green energy will be purchased from First Solar, Inc., through an $848 million agreement that will last for at least 25 years, making it the largest of its kind in the industry. First Solar will be providing electricity through its forthcoming 2,900-acre California Flats Solar Project in Monterey County.

When he announced the project on Tuesday, Cook mistakenly said that Apple would be building the facility, but the CEO quickly corrected himself and called it a partnership. In fact, it's First Solar -- not Apple -- that will build the new plant.

In total, the solar plant will output 280 megawatts of electricity, 130 megawatts of which will be bought by Apple. The remaining 150-megawatt capacity will be sold to Pacific Gas & Electric under a separate long-term power purchase agreement.

The Monterey County Board of Supervisors must still approve the project, but it's expected that it will pass, as the facility already received the OK from the Monterey County Planning Commission. If all goes according to plan, construction on the 2,900-acre solar project will begin in mid-2015, and will be completed by the end of 2016.

The California Flats Solar Project will occupy 3 percent of a property owned by the Hearst Corporation in Cholame, Calif. That's about a three-hour drive south from Cupertino, where Apple's headquarters is located.


Apple's Maiden, N.C. solar farm. | Source: Apple


"Apple is leading the way in addressing climate change by showing how large companies can serve their operations with 100 percent clean, renewable energy," said Joe Kishkill, chief commercial officer for First Solar. "Apple's commitment was instrumental in making this project possible and will significantly increase the supply of solar power in California. Over time, the renewable energy from California Flats will provide cost savings over alternative sources of energy as well as substantially lower environmental impact."

Cook said on Tuesday that Apple will buy enough electricity to power nearly 60,000 California homes. That's enough to offset the electricity used by Apple's upcoming Campus 2, as well as all 52 Apple retail stores in the Golden State, and its data center in Newark.

The Apple CEO also made it clear that climate change is a very serious issue for him and his company, which is why they are taking the lead on renewable and sustainable energy. Cook also noted to investors that the agreement makes sound financial sense as well, as the $848 million deal will result in "very significant savings" on the cost of energy.
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Comments

  • Reply 1 of 98
    Thanks for updating the story. The update reflects critical details that make the earlier thread moot.
  • Reply 2 of 98
    So what is the value of the electricity Apple will sell off, because I'm seeing numbers that don't make sense here. I assume we're talking about 280MW per hour, not 280MW over 25 years or per year, right?
  • Reply 3 of 98
    solipsismy wrote: »
    So what is the value of the electricity Apple will sell off, because I'm seeing numbers that don't make sense here.

    I suppose Apple's current electricity costs exceed $32 million per year? That seems high to me, but there are still a lot of unknowns.
  • Reply 4 of 98
    mjtomlinmjtomlin Posts: 2,028member
    Quote:
    Originally Posted by SolipsismY View Post



    So what is the value of the electricity Apple will sell off, because I'm seeing numbers that don't make sense here.



    Apple won't sell any electricity, First Solar will. Apparently Apple is paying $850 million to First Solar and they're being guaranteed 130 Mwh for the next 25 years. The additional power produced at the farm will be sold to PG&E.

  • Reply 5 of 98
    So how do we know this isn't just another GTAT?
  • Reply 6 of 98
    thttht Posts: 3,317member

    I have to see I love this head on push Apple is doing with solar or renewable energy. As far as I'm concerned, every parking lot should have solar arrays or trees, every roof top should have solar arrays or a brown/green roof whatever.

     

    Feel really proud of Tim Cook to say global warming is real.

  • Reply 7 of 98
    mjtomlinmjtomlin Posts: 2,028member
    Quote:

    Originally Posted by PScooter63 View Post



    So how do we know this isn't just another GTAT?



    First Solar built Apple's server farms in Maiden and in Reno, and they're working with them on the Arizona solar farm. They're a fairly reputable and established company... Furthermore the sapphire plant in Arizona was something that had not been done before, solar farms on the other hand have, so there's very little "unknowns" to worry about.

  • Reply 8 of 98
    pscooter63 wrote: »
    So how do we know this isn't just another GTAT?

    Because it's a long term power purchasing agreement. Apple isn't buying the (solar) farm.
  • Reply 9 of 98
    rogifanrogifan Posts: 10,669member
    pscooter63 wrote: »
    So how do we know this isn't just another GTAT?

    Good question. :)
  • Reply 10 of 98
    Republicans should "investigate" this deal. ;)
  • Reply 11 of 98
    rogifan wrote: »
    Good question. :)

    As I said, above, it's not remotely similar. ????
  • Reply 12 of 98
    pscooter63 wrote: »
    So how do we know this isn't just another GTAT?

    Because sog35 hasn't called them crooks and liars. :)
  • Reply 13 of 98
    paxmanpaxman Posts: 4,616member
    Quote:

    Originally Posted by Suddenly Newton View Post



    Republicans should "investigate" this deal. image



    They will. Don't worry about it. (mind you, Obama's name is not indirectly associated yet... Doh, I blew it!)  

  • Reply 14 of 98
    solipsismy wrote: »
    So what is the value of the electricity Apple will sell off, because I'm seeing numbers that don't make sense here. I assume we're talking about 280MW per hour, not 280MW over 25 years or per year, right?
    The output (effect) is measured in (mega)watts, and if you multiply that by time, you get energy. So if you have 280 MW for one hour, that equals 280 megawatthours. So the plant should output 280MW every moment for however long it lasts. Every year, that should be ... 2459240 MWh (365*24*280MWh)
  • Reply 15 of 98
    paxman wrote: »

    They will. Don't worry about it. (mind you, Obama's name is not indirectly associated yet... Doh, I blew it!)  

    This is a private deal between companies. As far as I know, there is no governmental involvement (except for possible solar panel subsidies provided by taxpayers via the State of California).
  • Reply 16 of 98
    mpantonempantone Posts: 1,432member
    Quote:
    Originally Posted by SpamSandwich View Post



    I suppose Apple's current electricity costs exceed $32 million per year? That seems high to me, but there are still a lot of unknowns.



    That doesn't sound particularly high.

     

    If Cook's comments about powering the equivalent of 60,000 homes is correct, that works to 720,000 home-months. Assuming an average monthly electricity bill of $75 per home, that would be $54 million in total electricity costs.

  • Reply 17 of 98
    mpantone wrote: »

    That doesn't sound particularly high.

    If Cook's comments about powering the equivalent of 60,000 homes is correct, that works to 720,000 home-months. Assuming an average monthly electricity bill of $75 per home, that would be $54 million in total electricity costs.

    Apple isn't buying power for homes, they're buying to power their facilities...although Apple getting into the power business and taking on Southern California Edison certainly would be appealing to me.

    Also, is $75/mo. about average for an electricity bill? That's incredible.
  • Reply 18 of 98
    paxmanpaxman Posts: 4,616member
    Quote:

    Originally Posted by THT View Post

     

    As far as I'm concerned, every parking lot should have solar arrays or trees, every roof top should have solar arrays or a brown/green roof whatever.


    There are a lot of flat surfaces that do little but absorb or reflect heat. It would make sense for all these areas to be generating electricity. Though I am sure it is not the reason this is not happening on a wider scale I am am uncertain if energy storage solutions can deal with  such an uneven power supply at present. 

  • Reply 19 of 98
    mpantonempantone Posts: 1,432member
    Quote:
    Originally Posted by SpamSandwich View Post



    Apple isn't buying power for homes, they're buying to power their facilities...although Apple getting into the power business and taking on Southern California Edison certainly would be appealing to me.



    Also, is $75/mo. about average for an electricity bill? That's incredible.

     

    The point is that Cook said that they are buying enough power to supply 60,000 homes. A megawatt to a house is a megawatt to a business. It doesn't matter that Apple isn't trying to power houses.

     

    Nah, it's probably closer to $90 in 2015. I just picked $75 as a low-ball.

     

    Here's one source that says $88: http://www.electricitylocal.com/states/california/

     

    Note that California ranks 48th in residential electricity consumption.

  • Reply 20 of 98
    Quote:

    Originally Posted by SolipsismY View Post



    So what is the value of the electricity Apple will sell off, because I'm seeing numbers that don't make sense here. I assume we're talking about 280MW per hour, not 280MW over 25 years or per year, right?



    The 280 MW is a power rating, not an amount of energy. It's kinda the maximum capability of the plant - during periods of peak production, the plant would be expected to produce around 280MW of power or 280MW x the amount of time at that peak of energy. The plant won't operate at anywhere near peak power on average. It'll probably produce something in the ballpark of 400 or 500 million kWh per year (maybe more, maybe less, but somewhere around that). 280 MW for 24 hours a day for a year would be more like 2.5 billion kWh.

     

    So, best I can tell, Apple is agreeing to pay around $850 million over 25 years for something like 200 million kWh per year (130 MW out of 280 MW of power - or $850 million for something like 5 billion kWh or something like 17 cents per kWh. Those are very back-of-the-envelope calculations, mind you. The real cost per kWh could be meaningfully different (and we have to consider we're talking about costs being paid, for some of it, well into the future), but that gives us a rough ballpark to start from when we're considering whether this deal makes financial sense for Apple. I'm guessing it will, even beyond the carbon footprint concern thingy.

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