June 14, 2010

Google is searching for answers. This time it is using its weight to find energy-related solutions and specifically in the renewable realm. To this end, it has invested nearly $39 million in two wind farms that will generate 170 megawatts of electricity in North Dakota that are owned by NextEra Energy, Inc.

Google is not just a do-gooder. It's a ravenous consumer of electricity and it must find a way to become more efficient and cleaner. By placing its bets on green energy, it is attempting to understand how it works and to help create economies of scale so that it can be cost-effectively generated. The mere fact that the money is coming from its for-profit arm and not its philanthropic division indicates that it is serious.

"We've been looking at investments in renewable energy projects, like the one we just signed, that can accelerate the deployment of the latest clean energy technology while providing attractive returns to Google and more capital for developers to build additional projects," writes Rick Needham, Google's green business operations manager, in his blog.

In Google's case, it operates hundreds of thousands of servers that use tons of electricity. Most of that energy comes from the nearest power plants, which are often coal-fired. As the global leader in internet technologies, the search engine says that it can do better.

Google's quest to go green got its formal start in 2007. That's when the company announced its strategic aim to develop electricity from renewable sources that would ultimately become cheaper than that produced from coal. The enterprise has since spent millions on research and development as well as related investments in green energy. It says that it expects positive returns from those endeavors.

The basic building blocks are already in place. It has gained the experience constructing and designing large-scale data centers. The same lessons apply when it comes to expanding the use of renewable energy, it says, noting that the primary technologies are now available. They just need investment so that they can size up.

Meantime, Google.org, the company's non-profit division, has stakes in eSolar, which specializes in solar thermal power and which has shown the potential to produce utility-scale solar power. It also has an investment in Makani Power, which is building high-altitude wind energy technologies that try to better harness powerful breezes.

"If we meet this goal and large-scale renewable deployments are cheaper than coal, the world will have the option to meet a substantial portion of electricity needs from renewable sources and significantly reduce carbon emissions," says Google Co-founder Larry Page. "We expect this would be a good business for us as well."

Betting Averages

The company has set a goal of becoming carbon neutral. Most recently it joined several other high profile enterprises and environmental organizations in urging global policy makers to formally adopt such constraints. One of the key methods it has espoused is giving consumers the tools they need to see their energy consumption in real or near time. That would reduce energy usage by 15 percent, Google says.

It has therefore developed an online tool called PowerMeter that can be provided through a local utility. The online search engine's desire is to provide critical information to users. For example, it says that if just half of all American citizens cut their energy use by 10 percent, carbon reductions would equate taking 8 million cars off the road.

To do so, Google says that state public utility commissioners must facilitate the development of intelligent utilities. That involves the replacing of 40 million older meters with digitized ones that permit utilities to communicate with their customers. Likewise, it applauds federal lawmakers for allocating $4.5 billion to those new technologies.

At the same time, it is focused on reducing dependence on coal-fired power, which supplies about 40 percent of all electric generation on a global basis. The company, which attributes man-made global warming to coal plants, says that it wants to help spark the green revolution.

"We want to add something that moves these efforts toward even cheaper technologies a bit more quickly," says Dr. Larry Brilliant, executive director of Google.org. "Usual investment criteria may not deliver the super low-cost, clean, renewable energy soon enough to avoid the worst effects of climate change."

To be sure, some critics say that Google is getting into areas that are outside of its core competency. And that's not in the best interest of its shareholders, who expect the company to build a better search engine and not solve all the world's problems. By maximizing profit, the logic is that it is creating jobs and prosperity that can far exceed anything it might try as a side venture.

Google, though, has a mission to uphold -- that of a 21st Century enterprise focused on leveraging information. If arming consumers with the knowledge as to how they are using energy will encourage them to use less or demand cleaner resources, then it would fall within the company fold.

By being good citizens, they are endearing themselves to their own corporate families and to the communities where they serve. In turn, they are validating their corporate images and adding value. Others are also cognizant and notably GE that is using its "eco-imagination" campaign while the world's largest institutional investor, CalPERS, says that its socially-minded investments are enhancing returns.

Google is not betting the farm. It's just making investments in key technologies that most recently include two wind farms. That's capital that the company says will help facilitate the renewable energy movement.

 

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Ken Silverstein EnergyBiz Insider Editor-in-Chief
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