In mid-2008, Google's treasury saw that the technology company had an exposure to power prices in its European data centers. "There was an energy crisis at the time, marked by fast-rising prices, so we went to the data centers and asked, 'Can we help?'" says Brent Callinicos, Google's vice president and treasurer.

Subject to U.S. regulatory oversight, energy prices in Europe are deregulated, exposing Google to potentially wide fluctuations in market prices. To reduce this risk, treasury developed a power purchasing strategy that leverages forward contracts to "fix" the following year's power price. "We are now the power purchasers for the data centers, as opposed to their actually purchasing it," Callinicos says. In Belgium, for example, power for the data center was sourced through a contract with an energy company. This company now permits treasury to fix next year's power price using forward contracts. In other words, the price for power consumed in 2010 is based on forward prices in 2009. "The local power exchange publishes forward prices every day and we have an option to click if we like the price point," Callinicos says. Google's treasury was tasked with determining how to obtain an average annual price by clicking only 10 times a year. "We spread the clicks uniformly over the year, similar to dollar cost averaging in stock investing," Callinicos explains. "Then, we developed a statistics-based financial tool that signals the best time to click based on price trends. A buy decision is then reached." Google's click strategy has also helped treasury to build a strong working relationship with its data centers, while increasing its own understanding of the power markets. "The tool isn't a one-size-fits-all model saying it's time now to buy power now in 12 different countries, since every country in Europe has different sets of rules and types of power generation," Callinicos says, "but we can tweak it to do what we're doing in Belgium elsewhere."