Following five years of high rises in carbon emissions, new data indicates that Amazon’s server farms in eastern Oregon are using significantly less fossil fuel to power their operations.
A recent state report on the local electric utility that supplies Amazon’s data centers in Morrow and Umatilla counties makes the change clear. Amazon is by far the biggest consumer of the tiny Umatilla Electric Cooperative, a member-owned utility that services the eastern Oregon counties, even though the company’s power usage isn’t publicly revealed.
Although Amazon is cleaning up its electricity, the region’s power mix faces additional challenges as a result of its quick transition to renewable energy. Hydroelectricity, a severely limited resource that was already at its maximum, provides almost all of Amazon’s recently acquired renewable energy.
Therefore, as data centers’ power needs grows, more hydro for Amazon equals less for everyone else. Customers who desire renewable power and other utilities are under pressure as a result, complicating the regional energy scenario.
The energy markets may be alerted to the high demand for clean electricity in the Northwest by major consumers such as Amazon, who are willing to pay more for renewable power.
New wind and solar farms as well as transmission lines to link them to the electrical grid may be built as a result. Despite the increasing need for electricity from regional data centers, that could eventually assist combat climate change and clean up the regional power supply.
However, the massive increase in power consumption from Oregon’s data center industry is causing chaos in the region’s energy market and making the transition to renewable energy more difficult for at least the next few years.
Kevin Schneider, a lab fellow with the Pacific Northwest National Laboratory, stated that just because someone enters the system and starts purchasing more hydro, it doesn’t necessarily follow that more hydro has been produced. In some ways, it’s a zero-sum game. What consequences does that have? It does become somewhat complex.
Half of the utility’s carbon impact
In the past, Umatilla Electric, an electric utility owned by Amazon, provided service to the farms and food processors in the area as well as the residents of Boardman, Hermiston, and Pendleton. Serving a secluded area of northeast Oregon, it was long one of the state’s smallest utilities.
However, in a matter of years, Umatilla Electric has grown to become the third-largest utility in the state, providing enough electricity to power 650,000 homes.
Naturally, the cooperative does not serve quite that many households. In total, it has roughly 11,000 members.
Amazon has constructed a massive network of data centers in Morrow and Umatilla counties over the last few years, which has led to an unusual increase in the area’s electricity use. A significant portion of Umatilla Electric’s energy now flows to Amazon’s data centers, as seen by the sharp rise in power sales since the company’s entrance.
Several big IT businesses, including Amazon, have sizable data centers in Oregon. Other companies include Elon Musk’s X, Microsoft’s LinkedIn, Oracle, Google, Apple, and Meta, the parent company of Facebook. They work from Hermiston to Hillsboro in Oregon.
They are all here to take advantage of some of the most profitable data center tax benefits in the world, which save big tech businesses more than $200 million a year. Every year, Amazon saves around $100 million in Morrow and Umatilla counties. Additionally, the business claims to pay over $50 million in local taxes and levies.
The Bonneville Power Administration’s meager supply of inexpensive, sustainable hydropower was long since depleted by Umatilla Electric. Because natural gas is a major source of carbon emissions, Umatilla Electric started purchasing electricity on the open market as Amazon expanded.
This highlighted Amazon’s carbon footprint and made the little utility one of Oregon’s largest polluters. The Seattle-based business has committed to using only renewable energy.
Amazon spearheaded the effort to thwart a measure that would have subjected server farms to the same clean energy standards as other industries following an article about the data center power problem published in 2022 by The Oregonian/OregonLive.
However, like other large tech firms, Amazon acknowledges the scientific consensus that carbon emissions from human activity are causing climate change. Amazon declared last year that it will purchase over 200,000 megawatt-hours of electricity annually from Avangrid’s Gilliam County wind farm.
That represents a mere 4% of the energy use of Amazon’s data centers located in Oregon. However, Amazon’s electric company had previously lined up a lot more hydropower as it secured its wind energy.
The year after The Oregonian/OregonLive first brought attention to Amazon’s growing carbon footprint in the area, Umatilla Electric’s power mix underwent a significant change in 2023, according to recently published data from the Oregon Department of Environmental Quality.
In 2023, the utility increased its hydropower purchases thrice, purchasing 5.5 million megawatt hours of electricity from several hydro plants in the Northwest, including the Bonneville Power Administration.
Carbon is not emitted by hydroelectric dams. They don’t contribute to climate change because they use water flow to turn enormous turbines to create power. However, they do affect the ecosystem by interfering with fish migration and river flow, and no one in the Northwest is considering large-scale new hydro projects.
In 2023, Northwest hydroelectricity provided the Umatilla Electric Cooperative with three-quarters of its electricity, more than doubling the amount of hydropower it used the year before. (The Oregonian/Dave Killen)LC-Workers
Despite providing 20% more power to Amazon and its other customers, Umatilla Electric’s move to hydro reduced the utility’s carbon footprint by more than half in just one year.
According to a published statement from Amazon, “Our 2023 energy supply agreement with UEC demonstrates our efforts to both innovate and collaborate with local groups to decarbonize our operations.” Together, these initiatives will lessen the effects of climate change and get Amazon one step closer to fulfilling its Climate Pledge goal of having net-zero carbon emissions by 2040.
Clean-power purchases are driven by Amazon.
Umatilla Electric claims that a change in its power purchasing strategy made it possible for the company to transition to renewable energy. According to spokeswoman Jodie Thomas, the utility started purchasing more electricity directly rather than through a power broker, giving it greater control over its energy supply.
According to Thomas, we were successful in locating and sourcing that low-carbon power. The utility’s big industrial clients have really talked to us about their requirements and objectives, and renewable energy is one of them, she said without mentioning Amazon.
Although Umatilla Electric has not revealed the cost of the hydropower, its 2023 annual report reveals that expenses increased significantly. In 2023, the utility’s average electricity price was 7.5 cents per kilowatt-hour, more than double what it had paid just three years prior.
It’s unclear how much of the higher price is due to the Northwest’s overall growing energy costs and how much is a result of paying more for sustainable hydropower. Most likely, a combination of the two.
In any case, most Umatilla Electric customers saw very little change in their rates. Between 2021 and 2023, residential rates increased by less than 10%.
For large industrial customers, Umatilla Electric has charged a different rate since 2022, stating that it will pass along any fees and costs that are properly spent in providing the enormous volumes of power that they require. This shields small businesses, residential ratepayers, and others from having to pay for Amazon’s electrical supply.
According to Thomas, “we definitely insulate each rate schedule from each other.”
Umatilla Electric is not bound by the same rules as Oregon’s investor-owned utilities because it is a member-owned cooperative. It is therefore free to determine who is responsible for what.
However, a bill that would allow the Oregon Public Utility Commission to shield families from the expenses that investor-owned utilities spend while providing service to data centers is being considered by state lawmakers this session. That might make it possible for the state to safeguard PacifiCorp and Portland General Electric customers in the same manner that Umatilla Electric safeguards its residential members.
Demand may encourage investment in renewable energy.
Even so, Umatilla Electric’s power purchases are still having an impact elsewhere even if its residential customers’ prices aren’t going up.
Could it be that their rates have increased since the people next door now have to compete with that? Schneider from Pacific Northwest National Laboratory said that it is possible.
Between 2010 and 2020, Oregon’s electricity consumption barely increased at all as the needs of an expanding and increasingly digital economy were offset by more energy-efficient computers, appliances, and industrial machinery.
However, according to state data, Oregon’s electricity use increased by 17% over the following four years. A large portion of that increase was used to supply data centers, which, according to industry estimates, currently use 11% of the state’s electricity.
By the end of the decade, forecasters predict that the energy consumption of data centers in the Northwest will have doubled, tripled, or quadrupled.
It is evident that the area is experiencing a growing power shortage and, possibly, an ongoing increase in electricity rates when you combine that with the growing demand for electricity from electric vehicles, the move away from natural gas by households and businesses, and state mandates for clean energy in both Oregon and Washington.
“I think people are looking for every avenue they can explore because the pressures are real,” stated Scott Simms, CEO of the Public Power Council, a group located in Portland that represents electric companies throughout the West.
According to state data, emissions from electricity generation have decreased by 17% overall since 2010, despite a more than 25% increase in the region’s power use.
That tendency may or may not continue. According to Simms, in order to fulfill the region’s increasing demand, a lot more renewable energy is required, which calls for additional wind, solar, and transmission lines to link everything.
Simms stated, “I think we’re going to continue to see this pressured environment until we get those things in place.”
Although data centers are mostly to blame for the current power shortage, they may also play a significant role in finding a solution.
According to Mary Wiencke, executive director of the Public Generating Pool, a group of electric companies in the Northwest that predominantly utilize and generate hydropower, there might be a chance to alter the resource stack if consumers are ready to pay more.
Large, industrial clients in the area are prepared to pay more for clean power, as seen by Umatilla Electric’s hydro purchase. As a result, investors may feel more confident about investing in the construction of more generation and transmission in the Northwest.
Hydroelectric dams and Avangrid’s wind farm are the current sources of power purchases to meet Amazon’s electricity consumption in Oregon.
However, Amazon has made it clear that it wants to begin generating its own electricity. The business announced last October that it is looking at the prospect of constructing nuclear reactors in Richland, Washington, which is fewer than 60 miles from its data centers in Oregon. Although nuclear energy produces radioactive waste that persists for millennia, it does not release carbon emissions or contribute to climate change.
Wiencke stated that a comprehensive approach is necessary to address the region’s increasing power shortage, rather than relying just on a bilateral agreement between a single clean energy supplier and a single consumer. According to her, the area requires a centralized framework to deliver renewable energy to those who desire it.
According to Wiencke, big tech firms are most likely in a unique position to pay more for a clean resource. However, we also want to be mindful about generating efficiency and avoiding needless price increases.
Correction: Amazon saves nearly $100 million in local taxes in Morrow and Umatilla counties annually. This article originally understated that figure.
–Mike Rogoway writes on the business and technology in Oregon. His email address is [email protected].
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