In my last piece here on Forbes, I discussed the impact tech companies have on the environment. While most of us aren’t catapulting heaps of plastic into the ocean or dumping motor oil in wildlife sanctuaries, we need to realize the energy we use must come from somewhere. That “somewhere” almost always results in ecological impact, usually in the form of carbon emissions.
Switching out your on-premise servers in favor of a cloud solution will, relatively speaking, reduce the emissions your business produces. So, by continuing to not flagrantly pollute delicate ecosystems and opting for a cloud provider, you’re doing the environment a solid.
The thing is, most of us didn’t (and likely won’t for those who are on the fence) make the switch to the cloud because of the well-being of coral reefs or rainforests. We did it because it’s practical and makes sense. It’s like if you visit a restaurant you frequent for lunch, then happen to learn the business just so happens to be donating its profits to a charity that day — your staple lunch entrée came with a free pat on the back for doing what you were going to do anyway. Moving to a cloud provider is a given for most companies (with the few exceptions for niche service providers) where the environmentally friendly byproduct of doing so is an afterthought, at best.
But what about those who are looking to expand substantially or are making a grand entrance to the market with a large operation? And what about businesses that demand onsite systems for any number of reasons? I feel this is where the Microsoft volume firming agreement (VFA) makes a great difference in reducing both your expenditures on energy and lowering emissions. (Full disclosure: SoHo Dragon is a Microsoft Partner.)
How To Go Green For Business
For most businesses that are looking to implement green power for their facilities, there are a couple of different approaches available.
The first is an onsite installation with equipment you buy or lease. Power is supplied from a renewable energy source that’s installed at your location, most commonly in the form of solar panels you purchase from a vendor or through the contractor that’s installing the units. This is ideal for a location you own (or that’s in the process of being purchased) that also has adequate room and exposure to sunlight. Also, if you’re in the U.S., you’ll be eligible for a tax credit, and if you’re in Europe, you may qualify for EU grants.
A second option is acquiring power from renewable energy sources via a PPA (power purchase agreement.) Many times, sites in urban locations simply don’t offer enough space for a dedicated system that can provide the required power, and in other cases, shared spaces are subject to red tape from other occupants or property owners. In the case of the latter, your only option is typically a “deal” through a PPA that aims to provide clean power at a good price over a long period.
In either scenario, there’s a small problem: The output for green energy systems can vary due to weather and other conditions, meaning there’s anywhere from occasional to frequent needs to purchase power from the grid, which means the prices can fluctuate.
If you’re starting a new business or perhaps expanding to a location where you’re planning on implementing solar power, remember that getting quality power at a good price is quite important.
The Microsoft VFA: What It Does And Why You Should Care
If you hire a contractor to outfit your location with, say, solar panels (or even if you did it yourself), times where extra power is required means you’ll likely just pay the utility company for supplemental power. However, when you’re not in a position to invest in your own equipment, things get more complex when renting green power supplies. This is why PPAs were developed in the first place. However, these contracts are still overly complex and leave too much wiggle room for energy prices.
Mainly, these agreements include clauses that leave a lot of risk for the buyer. Aside from changes in prices, these agreements often need to be transferred in the event of a real estate sale, which makes property sales tricky.
Fortunately, the joint venture between Microsoft, REsurety, Nephilia Climate and Allianz that produced the VFA addresses many of the shortcomings of the PPA, making the green energy substantially more accessible to everyone.
To be brief, the VFA reduces the risk that comes from times that green power supplies suffer due to weather-related conditions. The VFA increases the overall prices (compared to most PPAs), which helps offset the costs for a third-party insurer whose role is to keep pricing consistent. Despite the extra expenditure for insurance that’s built into a VFA, energy costs are still lower than most grid-supplied power and there’s a steady pricing model from power supplies that inherently produce a dynamic output.
This means that big or small businesses in any industry can access a stable, green energy supply without the investment in your own renewable energy supplies or dealing with the uncertainties that come with a PPA. This is ideal for tech companies that insist on having on-premise servers — they’ll save money on energy and reduce their greenhouse gas output versus using power from the grid.
You Can Go Green And Save Money
My thoughts are that if you’re looking to start a new business, expand operations or you’re part of some “anti-public cloud” movement, you’ll going to need energy, regardless. As such, it makes sense to strongly consider green (e.g., solar) energy for your operation. It will save your business money in the long term, whether investing in your own equipment or utilizing a VFA. Plus, it’s an ecologically sound way to power your business. Wildlife everywhere will thank you for doing your part.