eBay (NASDAQ:EBAY) recently announced a massive expansion of its data center in South Jordan, Utah. It declared that the new portion of the site will use renewable energy as the primary energy source and use the electric grid only as a back-up source of power. eBay is the first tech giant to have taken such an initiative. ((EBay’s green Utah idea))
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eBay will use 30 Bloom fuel cells—which generate on-site power 24 hours a day, 365 days a year—to replace the large and expensive backup generators and UPS components that have historically utilized less than 1 percent of the year. eBay’s fuel cells will be powered by biogas, a fossil fuel alternative derived from renewable organic waste. [1]
Data centers are typically large installations which guzzle enormous amount of energy and concern has been mounting about this among lawmakers and the civil society, in particular environmentalists. With energy requirements set to multiply in future and conventional grid power becoming increasingly expensive and unreliable, this looks like a far-sighted strategic move. eBay is expected to save enormously on energy costs going forward, more than making up for the initial investment. This should reflect in stable, reduced expenditure and therefore higher earnings.
The initiative has earned kudos for the company from all quarters and has allowed it to score brownie points as well as occupy a high moral ground. It may insulate the company from adverse regulations in future, should they appear on the horizon. These regulations might be in the form of carbon or pollution taxes to compensate for the environmental damage from burning coal to produce power.
We currently have a $48 Trefis price estimate for eBay, which stands nearly 20% above its market price. Marketplaces accounts for the majority of its overall value. eBay competes primarily with Amazon (NASDAQ:AMZN) in the e-commerce space.
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Notes:
FYI
http://www.breitbart.com/Big-Government/2012/06/21/884-May-Be-Bloom-Energys-Fatal-Number-Fuel-Cell-Efficiency-Federal-State-Tax-Credits
"Buried deep in the permit application, in Table 1 on page 161 of a 163-page application, was the number 884. On that page, under penalty of perjury, Bloom officially told the world that its energy servers emit 884 pounds of carbon dioxide per megawatt hour.
Also buried on page 161 of the permit application is a Table 2 notation that says these 235 "clean" servers would emit 22.56 pounds of volatile organic compounds (VOCs) per day. But Delaware, like other states, regulates VOC emissions at far lower levels (Maryland, for instance, regulates boat repair shops that emit more than 15 pounds per day). Moreover, if the same amount of power had been generated by combined cycle gas turbines, only 0.249 pounds of VOCs would be emitted daily. That's 90 times less pollution!
To top it off, because of the Bloom servers' low efficiency and high capital cost, Delaware citizens will pay Bloom over $200 per megawatt hour of power delivered to their electricity transmission grid. But in January 2012, the U.S. Energy Information Agency said the projected "levelized" cost of electricity over the next 30 years from advanced gas-fired combined cycle power stations is $65.50 per MWH.