As previously reported by Nikkei, Amazon.com will work with Japanese trading company Mitsubishi Corporation to construct solar power facilities situated in Japan and purchase renewable power from them to provide electricity towards its data centers for at least the next ten years, according to the publication.
Amazon will directly negotiate with power generation operators, which is a first for a Japanese company in this industry. With the use of this deal, known as the corporate power purchase agreement (CPPA), Amazon will be able to get steady electricity from private renewable power stations for the foreseeable future, rather than purchasing it from electric utilities.
Some argue that this kind of power procurement is less susceptible to price swings. Although renewable energy is predicted to be more costly than conventional sources, it is going to contribute to the entire renewable energy supply. Consumers and data center users are likely to appreciate the ecologically responsible approach.
Tokyo-based West Holdings, a solar energy business, is developing power plants. It plans to install 450 of in the Tokyo metropolitan region and the Tohoku region over the next five years. In exchange for a share in power sales firms in which Mitsubishi has a holding, Mitsubishi would collect electricity generated at the facility and supply it to data centers of Amazon, logistical facilities, and offices.
Individual property holders will also contribute to the development of solar energy infrastructure. According to the company, West Holdings will be able to charge them for the installation, but they will return their costs in 10 years from electricity sales to the Amazon company. Mitsubishi is going to be in charge of developing the system for collecting electricity, and it will receive a commission on a percentage of electricity sales in exchange for its services.
The overall amount of power produced is going to be 22,000 kilowatts, that is equal to the amount of electricity required to power 5,600 homes. The power plants are scheduled to begin operations in 2023. Seven inked a PPA deal with the NTT-owned energy firm & I Holdings, which is a Japanese diversified retail firm, to acquire renewable energy for the delivery of electricity to forty convenience stores.
Renewable electricity in Japan is primarily supplied to power companies through a feed-in tariff rather than being sold directly to businesses. Approximately 20 PPA contracts are now in place in Japan, as per the Renewable Energy Institute. Amazon project so far is the largest of its sort in Japan at present.
Amazon plans to have 100 percent of the electricity utilized for its corporate activities come from renewable sources by 2025. The retail and technology giant is utilizing corporate power purchase agreements (CPAs) around the globe as a reliable means of procuring enormous volumes of electricity. By decreasing or exempting transmission costs, the Japanese government hopes to promote the widespread adoption of PPA.