It is big news. A phone manufacturer and technology giant which incurs a lot of electronic waste has made a conscious move to inculcate green reforms. But it begs the question, what was really going on in Chief Executive Tim Cook’s head when he announced the ambitious plan of Apple Inc. (AAPL, Financial) to buy about $850 million of power from California-based First Solar Inc. (FSLR, Financial)? Is it to cut the company’s energy bill, or reduce its wastages or be accountable for the environment? Even as its stock market value closed above $700 billion for the first time, it is the leading man’s vision which will sustain the momentum.
Solar energy, though an expensive immediate purchase, saves cost in the long-term process. Investing in it is a sound business deal. Cook said at the Sachs conference. "We expect to have very significant savings." To generate roughly the amount of power needed to run Apple’s corporate headquarters, and its entire California facility footprint, construction on the 2,900-acre California Flats Solar Project is set to begin middle of this year and scheduled to be completed by the end of 2016.
The money factor
According to an advisor of renewable resource procurement, customers will be looking at saving between 15% and 20% off their energy bills with large-scale solar projects over the years. When this is seen with respect to Apple’s 25-year contract to receive power from 130 megawatts of First Solar’s California Flats Solar Project in Monterey County, California at a pre-decided rate, it seems like a pretty good move. "We expect to have a very significant savings because we have a fixed price for the renewable energy, and there's quite a difference between that price and the price of brown energy," Cook said. Soon after the deal was announced, shares of both Apple and First Solar surged with the former’s stock reaching a record valuation of $711 billion, making it the first US Company to cross the $700 billion mark.
Moreover, one cannot forget the lucrative tax credit. Federal tax credit for solar projects is set to drop to 10% from 30% in 2017. Solar companies say that the deadline to claim the full 30% federal tax credit have led to a high demand to complete solar projects. So companies looking to invest in solar power on a large scale will go for it now rather than later.
The climate factor
A bit over a year back, Tim Cook had coldly cut the wings of shareholders who stood against the company’s foray into clean energy. “We know in Apple that climate change is real,” Cook said at the Goldman Sachs technology conference in San Francisco on Tuesday. “The time for talk is passed. The time for action is now.” And Apple seems to be leading the way.
A giant company like Apple not only uses up a load of energy in the form of electricity but also adds to polluting the environment because of its massive amounts of e-waste, in the form of discarded electronic gadgets. Inculcating renewable energy in its work atmosphere can not only cut down on its use of fuel, which is non-renewable, fast depleting and polluting, it is also an attempt to steer the company towards more responsible behaviour.
Such a big-budget move will also push other corporates to think of alternates that are clean and green. This in turn will lead to a hike in demand and companies involved with generation and procurement of renewable energy will receive a much-needed boost. Green awareness coupled with economic profitability may soon lead to a corporate race whereby firms may vie for access to natural, energy-generating resources.
Why solar power?
Now, you must be wondering, why solar power? Of all the renewable source of energy, solar looks to be the most promising. When compared to wind-generated energy which is cheaper at present, the price of procuring solar energy has been declining faster. According to the International Energy Agency, solar could be the world's biggest single source of electricity by 2050. Other companies which have already lined up to buy more clean energy are Amazon (AMZN, Financial), eBay (EBAY, Financial), Microsoft (MSFT, Financial), Wal-Mart (WMT, Financial), Hewlett-Packard (HPQ, Financial), Coca-Cola (KO, Financial) and Google (GOOG, Financial) has already invested $1.5 billion in various wind and solar projects. Last year, the University of California had signed 25-year agreements to buy 80 MW of power from two Frontier Renewables LLC projects in Fresno County.
