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China Moves Into U.S. Wind Sector

Chinese wind turbine maker Goldwind…

Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

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Microsoft Bets Big On Wind

Offshore wind

Microsoft Corporation has always been known for their image of environmental protection but this may be their biggest validation to date. The tech company announced on Monday they are in the process converting their datacenter in Cheyenne Wyoming to rely entirely on wind energy. Microsoft will be using three wind farms, two in Kansas owned by Allianz Risk Transfer AG, and the other by Black Hills Corp. in Wyoming. The farms will provide Microsoft with 178 megawatts and 59 megawatts of capacity in wind power respectively.

Microsoft uses datacenters to operate their cloud services. These facilities require an ample amount of electricity to function and the usage levels are only growing as the service becomes more conventional. Microsoft’s goal is to attain a level of 44 percent use of renewables by the end of the year. This is simply another dimension of competition for tech companies promoting cloud services. Amazon web services (AWS) hopes to achieve a level of 40 percent reliance on renewables by the end of the year. Google only taps into clean energy for 35 percent for their datacenters.

Black Hills Corp. is one of the two companies entering the contract with Microsoft. The publically traded company disclosed on October 25th they would be offering a dividend for any of their shareholders prior to November 15th. The stock has been showing a downward trend since the announcement but will likely rebound based on the future success with their new partner. The company’s stock climbed 30 cents following Microsoft’s press release. Microsoft has always been considered a safe long-term investment. With an average earnings growth rate forecasted at 8.13 percent over the next five years, the company is generally a safe investment choice.

Related: Trump’s War On Climate Change

Under Microsoft’s agreement with Black Hills, any surplus power can be stored in backup generators and later distributed to the grid at a discounted rate. In terms of their public image, this will benefit both firms. Corporate promotion of renewable energy is becoming routine for industry leaders. Governments often provide tax cuts to these companies for taking the initiative and aligning their interests with global efforts. Bloomberg forecasts that the top 50 corporations that purchase solar and wind energy will have accounted for 63.4 gigawatts of total production added by 2025.

This can be chalked up as another victory for renewables as we slowly shift away from common power sources like coal and oil. Local Wyoming consumers will prefer this alternative, more eco-friendly source of power as opposed to power from the grid likely produced using power plants. On a larger scale, as we observe the nation moving away from fuel sources such as coal, crude oil, and natural gas, we can expect the price of these products to decline. Investors should write long-term futures in any of these sources as they are replaced. To hedge their bets, individuals should buy green ETFs, made up of environmentally friendly corporations.

By Michael McDonald of Oilprice.com

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  • Bud on November 17 2016 said:
    What do they do when the wind doesnt blow? Seriously, this is not news unless MC provided the seed capital to develop these wind farms. When they start spending 9 figures on developing wind and solar, I will be impressed, and then I will sell their stock short as Amazon is going to roll right over them. Here is a topic worthy of a post graduate degree: Does the stall in cost benefit shown by the German example where such renewables have reached 15% of grid usage translate to the North American grid structure?
  • Lee James on November 19 2016 said:
    When will "Oil Price" become "Energy Price?" Just wondering ....

    U.S. tech corporations, investors and forward-thinking CEOs are the bright spot in U.S. energy. Increasingly, they are transitioning to clean energy even without leveraging public-purpose incentives. They are transitioning privately.

    In the case of this project, the availability of wind for power is hedged with three different locations in two states. Excess power will be banked for power generation later on.

    Must be working -- the list and size of projects continues to grow.
  • Poupon Marx on November 19 2016 said:
    The actual "usage", the amount that a windmill puts out if averaged for a year is 17%, with periods of nil, null, nothing. Eventually, windmill fans will kill al the birds and insect eating bats in North America. And when they have to be replaced, the load of the electricity consumer will be upwards of 500% of what conventional thermal plants produce.

    So how do they get built and operate? S-U-B-S-I-D-I-E-S. All to perpetuate fantasy and for cronies and corrupt scum to make out with millions and billions of taxpayer money.
  • Lee James on November 22 2016 said:
    Lee James, These companies like microsoft are definitely banking on the tax credits received. They can take these huge tax credits and legally transfer them for cash to other companies who may or may not be major polluters.

    Bottom line is taxpayers are buying power for microsoft, subsidizing their operations to an extent. I like wind but i dont like buying it for Microsoft tbrough income tax from our paychecks. That has to stop.

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