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Is there money in being 'green'?

Solar Data Centers, a Web-hosting company, plans to power its servers on electricity generated by solar panels.

Steve May is going to test whether "green" marketing clicks with customers in the faceless Web-hosting business.

May is the founder and CEO of Solar Data Centers, a Raleigh, N.C.-based company that bills itself as one of the first hosting outfits powered entirely by renewable energy.

The company currently purchases its energy from a third party that uses only renewable resources, and by the end of next year it plans to open a small data center powered entirely by electricity generated from its own solar panels.

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What's new:
Steve May says his is the first Web-hosting company to be powered entirely by renewable energy sources.

Bottom line:
His company has only 300 customers so far, small compared with some of the behemoths of the industry, but he's bullish about its prospects. Much like consumers, corporations are increasingly choosing to go with environmentally friendly products and practices, according to experts.

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May--who drives an electric car to work--has made a personal commitment to purchasing renewable energy, but his hosting venture is purely commercial. His gambit is more about marketing than it is about tree hugging, he said.

"It's a completely different spin. It allows us to distinguish ourselves from the oceans of very similar service providers," May said.

May's operation is tiny in comparison to the behemoths of the multibillion-dollar Web-hosting market, including IBM and AT&T. But Solar Data Centers is slowly carving out a niche, serving more than 300 customers, such as the U.S. Department of Energy's Million Solar Roofs program and the Portland Oregon Visitors Association, which have a commitment to use renewable sources of energy.

"I suspect that early customers will be the deep-green, smaller, entrepreneurial companies that are always looking for the next thing they can do," said Jacquelyn Ottman, author of the book "Green Marketing" and founder of J. Ottman Consulting, which works with businesses on environmentally friendly procedures and design.

Solar Data Centers was started about five years ago, when May acquired a small Web-hosting company called Solar Host that used photovoltaic cells to power about 12 servers. That initial venture charged a premium for solar-powered hosting services.

Now, May is aiming to compete on price with conventionally powered Web hosters. He has expanded his business with more servers, which are collocated in another hosting facility, and new services, such as dedicated servers, Web development and online support. Marketing the company as "sun-powered," he purchases electricity from 3 Phases Energy Services, a California power company that generates power only from renewable resources, rather than fossil fuels.

May has his sights on setting up an autonomous solar-powered hosting site next year. He's close to choosing a former bank as a site, on which 24 solar panels, sized at 2 feet by 4 feet each and placed on the roof, will generate electricity for the operation. The building's vault will house the company's 40 servers.

May expects that his planned configuration will allow the company to compete effectively on price with other Web hosters. Advances in the technology will help as well. The solar panels still need to improve, but batteries are far easier to maintain than they were a few years ago, he said. Also, some computer vendors supply hardware that operate using the direct current supplied by the solar panels, which simplifies set up.

Special report

Alternative energies are
starting to look better,
especially to investors.

The company will participate in a local energy cooperative, allowing it to purchase and sell energy with other members. That energy-exchange system, plus a battery backup system, gives the company a cushion in case the solar panels do not generate enough energy, which May says is unlikely.

This sun-powered data center will certainly not be the first to use photovoltaic cells to run computers. A village in India has launched a project to power PCs with solar panels, as has a school in the United Kingdom, according to local press reports, and many homes worldwide supplement their electricity with solar panels.

Solar Data Centers serves mostly smaller, environmentally aware companies. But May thinks there's a sizable market in the commercial realm. Companies such as Johnson & Johnson and Ford Motor have made sustainable business practices company priorities, May noted.

At the same time, even companies that make a point of maintaining environmentally friendly policies typically don't buy electricity generated from sustainable sources. Still, much like consumers, corporations are increasingly choosing to go with eco-friendly practices, according to experts. And there are more options to purchase "green" energy than there once were.

"It pushes the envelope on the next thing that companies can do beyond energy efficiency, recycling, etc.," Ottman said.

Any potential customers will need some guarantees that May's service is reliable and cost-effective, noted Dan Lieberman, program manager for utility markets for Green-e. Green-e is a renewable electricity certification program administered by the Center for Resource Solutions, a think tank that advocates the use of renewable energy sources.

"Businesses wouldn't do it if they didn't see a financial value," Lieberman said. "They want to do the right thing, but they're not going to do it if it means having a negative impact."

Ultimately, May's bet is that people with a similar mindset will plug into his company's data center. "The market potential for companies that walk the talk of sustainable business practices is phenomenal," he said. "It's just a choice that you make."