Microsoft had hinted at it for some time, but last week it took the step of locating an experimental data center next to a wastewater treatment plant. It chose to put the pilot project next to a rich source of biogas, a natural gas substitute produced by the digestion of organic matter, that would in turn power the data center via fuel cells. The project is the first time a data center is sourcing biogas directly for a fuel cell.

It’s an experimental project that will last 18 months and comes on the heels of two other major data center fuel cell announcements from eBay and Apple, both of which are installing fairly sizable fuel cell installations to power their new data centers. With signs that fuel cells are finding initial traction with data center customers, Microsoft’s move to access biogas directly raises the less discussed question: how clean are fuel cells, anyways?

About that feedstock

Microsoft has received public criticism for its use of backup diesel generators both at its data centers in Silicon Valley and in central Washington, even though the company went carbon neutral last July. Big IT companies remain unique in that they are responding to pressure to source clean power for their data centers, while other sectors like manufacturing are deaf to calls and are still expounding the joys of cheap fossil fuels.

And so the experimental project is intriguing in that Microsoft is addressing the key issue of how to power fuel cells in a renewable and clean fashion, something that isn’t always obvious.

Natural gas isn’t combusted in the electrochemical fuel cell process, resulting in less pollution. But cells still must break apart methane (CH4), which produces CO2. The only way to make the process renewable is to use biogas, reclaimed methane from locations like wastewater treatment plants.

Otherwise, you’re just using non-renewable mined natural gas, often from sources where hydraulic fracking is used to extract the resource. In the case of Apple and eBay’s fuel cell installations, both companies have to find biogas or purchase biogas offsets because it’s unusual for a natural gas utility to have access to biogas. In eBay’s case, there isn’t even any biogas produced in the entire state of Utah, where it’s locating its new data center.

As Microsoft is seeking to demonstrate, it’s not impossible to source biogas but it does call into question how scalable fuel cells will be as a “clean energy” option if you can’t always get easy access to biogas. And it opens another, more promising possibility regarding whether there might be an opening down the road for specialty natural gas utilities that source biogas for discerning customers. We’re seeing this trend in certain deregulated power markets like Texas where retail utilities can market clean wind or solar power to customers.

The state of California has been particularly sensitive to the question of whether a fuel cell installation is using biogas and if so, whether it’s being procured in the state. The state has adjusted its fuel cell incentives program based upon whether a company purchasing fuel cells is getting biogas locally. NTT America, for example, has five Bloom fuel cells but brings in its biogas from Pennsylvania. Presumably there are additional carbon costs of transporting biogas across the country.

The benefits of fuel cells

Big IT companies are ideal customers for fuel cell makers like Bloom and FuelCell Energy, which is providing the fuel cells for Microsoft. Webscale data centers want clean power and they also see the value of using the grid as backup power. And that’s what fuel cells enable, the ability to generate your own power on site while avoiding the intermittency of solar and wind power.

Companies like Apple, eBay and Microsoft are critically reliant on uptime, and one of the key value propositions of fuel cells is that they can reduce the expenses related to building backup generators and uninterruptible power supplies. The idea is to make the fuel cell the primary power source with the benefit of built in redundancy because fuel cells tend to fail individually, not bringing down the entire power source like during a blackout. Additionally, companies like eBay have told me they believe the gas grid, which delivers the feedstock for fuel cells, is likely more stable than the electrical grid.

Microsoft’s project is small, using just one 300KW fuel cell to power about a 200 square feet container. But it does begin the conversation about where fuel cells will need to source renewable biogas, and whether there are opportunities in terms of locating a data center next to a biogas source. And who knows, if fuel cells really do find the market its investors have been hoping for, there may even be an opportunity for utilities to start marketing biogas to these discerning customers.