Facebook Data Center

The first building at Facebook’s data center campus in Oregon, built on a high plain above the small town of Prineville. Image by http://www.datacenterknowledge.com/

Facebook is courting support from the Public Service Company of New Mexico and state regulators to build a $250 million data center south of Albuquerque that could launch more green energy and tech jobs in the state over the next 20 years.

But the social media giant, with 1.65 billion users, said before it decides whether to locate in New Mexico or Utah, it needs a guarantee that the facility can be 100 percent powered by renewable energy — either solar or wind.

Facebook confirmed these intentions and its efforts to locate a data center in the Southwest. It did not comment on a specific site, but others have said it is looking at an 850-acre parcel in Los Lunas known as the Huning Ranch Business Park, near Interstate 25 and N.M. 6. City leaders already have voted to provide lucrative tax incentives for a large out-of-state company using the name Great Kudu LLC to build a data center.

The company insisted on anonymity because it was still in land negotiations, but Los Lunas Mayor Charles Griego said Friday a description of the project from PNM sounds a lot like that project. “I have no reason to doubt it’s Facebook, but I haven’t been told,” he said.

PNM filed an application with the Public Regulation Commission on Friday seeking the authority to transmit at least 30 megawatts of solar power to the Facebook data center, and the ability to add as much additional renewable energy as needed over a 25-year agreement with the Internet company, in anticipation of expansion. According to the agreement, Facebook would foot the bill for all costs, including its hookup to the utility grid, the cost of solar panels or wind turbines, and the cost of eventually decommissioning the power site.

The proposal marks a shift in PNM’s position on solar power. Throughout several cases before the PRC, the utility has said solar is costly, places excess financial burden on non-solar customers, and still relies on traditional energy sources, such as nuclear power or coal, as backup.

But the new application and a PNM spokesperson said the deal with Facebook would only benefit other New Mexico power customers.

PNM’s filing with the PRC says the data center could bring more than 200 construction jobs. It would have 30 to 50 full-time employees during the startup period, with the potential for hundreds more as it expands. The filing notes that Facebook approached PNM about the center.

A Facebook spokeswoman said the company has not identified a specific location for a data center but wants to be ready when it needs more capacity. The proposal fits into the company’s own clean energy goals. In July 2015, Facebook pledged to operate on 50 percent renewable power sources by 2018.

“We’re always evaluating potential new sites as we expand our global infrastructure and develop a pipeline for future data center locations. But we’re not committing to anything right now,” she said. “When evaluating potential new sites, it’s important to have all the information we need readily available — including our access to renewable energy. By doing work upfront, we can move fast when we do need more capacity.”

To meet the demands of the massive data storage center, which might be the size of two Wal-Mart Supercenters, PNM is asking the state Public Regulation Commission to approve a Green Energy Rider, which would allow the utility to meet the full renewable energy demands of the company, both for the initial stages of the project and for future growth throughout the 25-year agreement.

The project is expected to meet the demands for a 30 megawatt data center in the Southwest, with the potential to expand beyond 100 megawatts.

PNM hopes to outbid the Rocky Mountain Power Co. in Utah, which is the other site Facebook is considering. Rocky Mountain already has a proposal before the Utah Public Service Commission.

Los Lunas has been at the fore of efforts to recruit new corporate businesses with tax incentives, starting with a Wal-Mart distribution center. Last month, the city approved the sale of up to $30 billion in industrial revenue bonds in six phases for a large data center, Griego said. Any land for the project would be owned by the city until the bonds are retired, and therefore exempt from property taxes.

PNM claims that Phase 1 of the data center would cost more than $250 million. The company also says the data center and power project would help create other economic development opportunities and “support 4,000 to 5,000 jobs over a number of years,” according to documents filed with the PRC.

Like most tech firms, Facebook requires a massive amount of storage. It initially leased space in California but since 2010 has built its own data centers in Oregon, North Carolina, Iowa and Sweden. Another is under construction in Fort Worth, Texas.

While the PNM filing states the center may bring thousands of jobs, the Facebook center in Prineville, Ore., employs fewer than 200 people, according to a September 2015 article in the Oregonian.

“While many large industries rely on tax breaks to reduce operating costs, they usually win those favors in exchange for the promise of high numbers of jobs. Data centers are different,” the story said. “They don’t need many people — 147 work at Facebook’s Prineville site — just power, water and Internet connectivity.

“Since data centers can be anywhere, they have enormous negotiating leverage with small communities and use that leverage to win large tax deals. That’s why Facebook and Apple (both in Prineville), along with Google (The Dalles) and Amazon (Morrow County) are all building rural data centers.”

In order to remain competitive, PNM is asking the New Mexico PRC to approve its request no later than Aug. 31 and waive the right for a public hearing.

But Regina Wheeler, CEO of Santa Fe-based Positive Energy Solar, argues that the public hearing is essential to ensure PNM goes about the deal in a way that is fair to the state’s businesses and ratepayers.

“I would be very excited to hear that PNM has a proposal and has started to really embrace the opportunity of clean renewable, affordable solar as a way to provide energy to New Mexico businesses and homes,” she said. But without a formal hearing process, she said, “I don’t know if this proposal is fair and in the best interest of New Mexicans.”

The public deserves to assess whether the company plans to use assets paid for by ratepayers to leverage its appeal to a private company and potentially create unfair competition with other local businesses, she said.

Wheeler noted that for years, PNM has expressed opposition to solar power purchased independently by homeowners and businesses, saying renewable energy customers add unfair strain to other customers on the grid. She said Facebook should be no different.

Pahl Shipley, a spokesman for PNM Resources, the utility’s parent company, said Facebook would benefit other customers in the state, who will not incur an increase in utility rates or other charges.

“Since the costs of service are spread among all customers, adding a large customer will reduce the amount other customers pay,” Shipley said in an email. “… It will have no impact on PNM customers, other than [this] benefit.”

Shipley said Facebook’s renewable energy facility will still rely on PNM’s traditional power sources.

“Simply put, renewable energy still requires 100 percent backup by fossil fuel or nuclear generation,” he said.

The application to the PRC notes that should Facebook’s energy demand exceed the solar power resources available, PNM will tap into backup power from traditional sources, including nuclear power and fossil fuels.

Traditionally, when the company purchases or shuts down an energy facility, those costs show up in utility bills. The PRC is currently deliberating over how much PNM can charge New Mexicans as a result of its decision to purchase 64 megawatts of nuclear power from the Palo Verde Nuclear Generating Station in Arizona. It is seeking as much as a 15 percent bump in customer bills to cover the cost of the acquisition. Bernalillo County, the state Attorney General’s Office and several other parties oppose such a steep rate increase.

But because Facebook has agreed to pay all costs for renewable energy associated with the proposed data center, including the additional 115 kilovolt burden that the facility will place on PNM’s power grid, the utility seems to have had a change of heart.

The state currently requires that 15 percent of energy generation come from renewable sources, with a goal of carbon neutrality by 2040. The new facility, the PRC application notes, will allow the company to exceed its renewable energy requirements.

PNM has slowly been adding renewable sources to its energy portfolio. It added 40 megawatts of solar power in 2015. And in January, it showcased a gleaming farm of 40,000 solar panels just south of Santa Fe, capable of producing 9.5 megawatts per year. That project alone employed 300 workers at a cost of $20 million.

New Mexico was recently ranked sixth in the nation for collective solar capacity per capita based on 2014 data, according to a report by Environment New Mexico. But solar supporters like Wheeler say the state’s capacity for solar is so vast it could power every home and building, with the potential to outpace coal power.

Still many in the state have raised concerns about the cost of solar power. Extension of a popular solar tax credit set to expire this year was vetoed by Gov. Susana Martinez last year, and measures failed to reach the House or Senate floor during this year’s legislative session. Several Republican state House members raised concerns about net metering, saying the cost of solar would fall unfairly on non-solar customers, who would have to take on the energy costs that solar customers were saving.

Tom Manning, director of Citizens for Fair Rates and the Environment, an advocacy group involved in the current PNM rate case, said PNM’s interest in the Facebook deal should extend to home and smaller business applications for solar power.

“What these agreements show is that through building renewable energy plants, PNM is then able to offer lower rates [to customers],” he said in an email. “Shouldn’t we apply this concept in ways that would benefit us all, not just a few large customers?”

Correction, July 13, 2016

Correction: This story has been amended to reflect the following correction. A previous version of this story incorrectly reported that Facebook will rely only on backup nuclear power from the Palo Verde Generating Station, purchased at “market rate,” if its energy use exceeds the power generated by a renewable energy facility at the site. According to the proposal, the company will rely on backup power from all of PNM’s “traditional” power sources, including a mix of nuclear power and fossil fuels.

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