Google will spend hundreds of millions of dollars to jumpstart alternative energy technology, cofounder Larry Page announced Tuesday. Google will focus efforts on solar thermal power, wind power, and enhanced geothermal systems, the company said in a statement.
Google plans to spend tens of millions of dollars in 2008, as the project hires engineers and energy experts. Capital expenditures on renewable energy projects will reach hundreds of millions of dollars, the company said.
What does Google know about renewable energy? Page said the company has learned quite a bit about through "designing and building large-scale, energy-intensive" data centers. "We want to apply the same creativity and innovation to the challenge of generating renewable electricity at globally significant scale, and produce it cheaper than from coal."
Solar Thermal Promising
Clearly the first line of attack will be solar thermal technology, which Page said "provides a very plausible path to providing renewable energy cheaper than coal." In addition, Page said, Google is "aware of several promising technologies, and believes there are many more out there" with the potential to deliver cost-effective green energy.
"With talented technologists, great partners, and significant investments, we hope to rapidly push forward," Page said. "Our goal is to produce one gigawatt of renewable energy capacity that is cheaper than coal." Google said a gigawatt can power a city the size of San Francisco. "We are optimistic this can be done in years, not decades."
Google's investment would represent a sizable percentage of total investment in alternative energy. Wednesday, the National Venture Capital Association announced that total VC investment in the first three quarters of 2007 reached $2.6 billion, on track to double 2006's full-year investments of $1.8 billion. Clearly Google is considering its investments to be good business as well as good deeds.
"If we meet this goal," said Page, "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. We expect this would be a good business for us as well."
During a conference call, cofounder Sergey Brin said the task is not only to make energy cleaner and less expensive, but also to make electricity available in areas that have no reliable energy sources. "Cheap renewable energy is not only critical for the environment but also vital for economic development in many places where there is limited affordable energy of any kind," Brin said.
While some observers question whether Google should be straying so far afield from search and online advertising, Brin said that energy is critical to Google's operations with its vast data centers. "We don't need to own this. We just need the problem to be solved," Brin said, adding that Google can serve as a major customer for the new technologies. "Given our investment in data centers, we'll be in a position to invest significantly in our own plants," he said.
Philanthropy Meets R&D
The investments will come from both Google's philanthropic arm, Google.org, and corporate R&D expenditures. "Usual investment criteria may not deliver the super low-cost, clean, renewable energy soon enough to avoid the worst effects of climate change," said Dr. Larry Brilliant, Google.org executive director.
"By funding research on promising technologies, investing in promising new companies, and doing a lot of R&D ourselves, we may help spark a green electricity revolution that will deliver breakthrough technologies priced lower than coal," Brilliant added.
Google.org is already investing in two small companies with promising technologies: eSolar of Pasadena, California, which is specializing in solar thermal technology, and Makani Power of Alameda, California, which is developing high-energy extraction technologies.
Public Relations Play?
Google's energy initiative can be viewed as a savvy public relations move, Rob Enderle, principal analyst with the Enderle Group, said in an e-mail.
"From an image standpoint, this has the potential of assuring we view Google positively through their next growth phases," he said. "Overall, I think this will help them avoid the kinds of problems that other big companies like Standard Oil, AT&T, IBM, and Microsoft have gained with size and power and that will improve their future ability to execute and avoid government interference."
But as Google moves into the energy industry, it might find itself butting heads with Big Oil, Enderle said. "The trick will be to make sure this doesn't become too distracting for the executive team and to avoid going to war with Big Oil," he said. "Those folks are nasty players who have their own unique, and rather creative, rulebook."