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))
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. 
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.Notes: