Amazon and BP Expanding Their Year-Old Deal for Renewable Energy and AWS Cloud Services
For the last year, Amazon Web Services and BP have been working together as partners, with AWS providing BP with services to migrate more than 400 applications to the cloud and BP working to help Amazon use more renewable energy for its data centers.
The ongoing project has been so successful that the two companies announced Thursday (Dec. 10) they are expanding their efforts, with BP agreeing to triple the renewable power it provides to AWS in Europe and AWS providing more data center and cloud services to help BP further reduce its own data center energy use and emissions.
The broadened deal is part of what BP says is its strategy of building relationships with major corporate partners such as Amazon to continue its transformation into becoming an integrated energy company, as well as a company with net zero energy use by 2050 or sooner.
“These new agreements with BP help us toward our goal of powering our operations with 100% renewable energy,” Nat Sahlstrom, director of Amazon Energy, said in a statement. “Our push for more renewable energy is one step toward our goal of reaching net-zero carbon by 2040 as part of Amazon’s commitment to The Climate Pledge.”
William Lin, BP’s executive vice president for regions, cities and solutions, said the expanded arrangement helps both companies in their efforts to reduce emissions and help customers reduce their own energy use. “Amazon is helping BP with innovative digital technologies and, using our trading capabilities and scale, we will give Amazon the reliable and flexible renewable energy supplies they need to meet their ambition to decarbonize,” said Lin.
A spokesperson for BP could not be reached for additional comment on Thursday.
Interestingly, in September BP announced a separate strategic partnership with Microsoft that was also aimed at carbon emissions reductions and other energy innovations for both companies. Under that deal, Microsoft is providing Azure cloud services to continue BP’s digital transformation, while BP is supplying Microsoft with renewable energy to help meet the company’s 2025 renewable energy goals.
Cutting Out Utility Companies?
John Webster, an analyst and senior partner with Evaluator Group, told EnterpriseAI that deals like these can also be seen as end-around plays on the electric utilities by Amazon and Microsoft, which in October announced a similar deal with Shell.
“Fossil fuels from the likes of Shell and BP power the generators of Pacific Gas & Electric, for example, that supply electric energy to Amazon AWS and Microsoft Azure data centers, resulting in CO2 emissions,” said Webster. “These kinds of deals give AWS and Azure the electricity they need with a renewable energy source.”
At the same time, “the cloud providers go direct to a renewable energy source and cut-out the utilities,” he said. “There's also a certain amount of bartering going on here - yes? The cloud providers pay for energy in services as opposed to cash.”
This deal could give other companies similar ideas for technology and energy exchanges, said Webster. “This could also serve as a model whereby the fossil fuel energy suppliers get into renewable energy supply through these types of barter deals. Think - who are the big consumers of electricity that they could go after?”
Another IT analyst, Rob Enderle of Enderle Group, told EnterpriseAI that because BP is one of the leading energy companies pivoting to renewable energy, it makes the company one of the few energy companies at scale to trust with a project like this.
"With the Biden administration driving an aggressive green energy strategy, having a partner with the kind of resources BP has is critical for an increasingly global company like Amazon," said Enderle. "The only downside is that, in the U.S., thanks to the [April 20, 2010 Gulf of Mexico Deepwater Horizon] oil spill, BP isn’t as well regarded here as they are in Europe. But the success of this initiative should uplift both BP and Amazon’s brands concerning green energy. This partnership should be strong because both companies are aligned with the benefits of strong execution visible widely ... when being green has global importance."
Details of the Broadened BP-AWS Deal
Under the expanded deal, BP will provide renewable energy for AWS data centers in Europe through a new series of clean power agreements. That means BP will more than triple the renewable power that supplies to Amazon by bringing in an additional 404 megawatts (MW) of wind power in Europe, starting in 2022, according to the companies. About 275MWs of that will come from a new wind project in Sweden and another 129MW will come from two new wind projects in Scotland. These new power supplies are in addition to the original December 2019 agreement that provided Amazon with 170MW of renewable power from BP in Europe.
Under the original deal, Amazon was to help BP with the company’s digital transformation by migrating more than 900 key applications hosted in large BP European-based data centers to the AWS cloud.
That migration is running ahead of schedule, according to the companies, with more than 60% of the affected BP workloads now migrated to AWS, including business-critical applications and trading platforms. By using AWS services and facilities, BP will reduce the energy use for its own digital infrastructure and data centers, the companies said.
As part of that strategy, BP is also pursuing application modernization to cloud-native technologies, as well as collaboration on several AI and machine learning use cases. Among those are the use of Talk2Me – an automated AI support system powered by Amazon Alexa – which is helping to reduce helpdesk calls to BP retail centers by 40%. Also being conducted for BP is a migration to the Amazon Aurora cloud database for BP trading, which is providing increased operational resiliency and performance improvements, the companies said.
Both companies said they see potential to further grow and deepen their relationship in the future.
In February of 2020, BP announced that it wants to become a net zero company by 2050 or sooner, while also helping the world to reach that goal. In August of 2020, the company also announced its new strategy to transform into an integrated energy company focused on delivering solutions for customers, according to BP.
The October services exchange deal between Microsoft and Shell was similar to the BP-AWS deal, which saw the companies deepening their relationship through a new strategic alliance that aims to reduce their global carbon emissions to net-zero by 2050. Shell and Microsoft have worked together for the last three years on AI projects, including on 47 AI-powered proprietary applications deployed across Shell's businesses in 2020 alone.
The stakes are high for both companies in that deal as well. Shell's ambition is to be a net-zero carbon emissions energy business by 2050, while Microsoft has publicly said it wants to be carbon negative by 2050. Under the alliance, Shell will supply renewable energy to Microsoft, while Microsoft will broaden its work with Shell in the field of AI and digital tools that will help Shell suppliers and customers reduce their carbon footprints as well. In addition, Microsoft’s Azure cloud will be engaged to help Shell improve operational safety for employees by improving risk analysis, prediction and prevention, the companies said.
Shell and Microsoft envision their strategic alliance as a model for how other companies can also work together to achieve their own net-zero ambitions.