Google to make clean energy cheaper than coal

28 Nov 2007 08:20

The search giant aims to either sell electricity from renewable sources or license tech on terms that would promote broad adoption

Search giant Google on Tuesday pledged to spend hundreds of millions of dollars to make renewable energy cheaper than coal.

The effort, dubbed "RE<C" (shorthand for "renewable energy less than coal"), calls for Google to invest in companies developing clean-energy technologies and for Google itself to next year invest tens of millions of dollars in research and development in renewable energy.

Technologies created by Google will probably be used by Google, whose data centres are voracious consumers of electricity. The company envisions either selling electricity from renewable sources or licensing technology on terms that would promote broad adoption, according to company founders Larry Page and Sergey Brin.

Its overarching goal is to produce one gigawatt of electricity from renewable sources — enough to power the city of San Francisco — faster than the current pace of green-technology development.

"The main crux of this is that we believe that you can do it cheaper than coal... and we want to make it happen now," said Page, Google's president of products. "Most people who are doing this now are trying to do it less expensive than people before, but they are not trying for that goal which will have a significant effect on the world."

Investments in other companies will be funded by Google's philanthropic arm, Google.org, which has about $2bn (£970m) worth of Google stock available to it.

In particular, Google will be investing in solar-thermal technology, wind power, and geothermal systems. Its target is to fall below the price of coal power generation, which can be as low as 2.5 cents per kilowatt-hour, said Bill Weihl, Google's green-energy czar.

Google said it's already working with eSolar, a solar-thermal company building systems for utilities to generate electricity from heat. It has invested in Makani Power, which is pursuing electricity generation by harnessing wind at high altitudes.

As part of the effort, Google will be hiring experts in the energy field. It expects to hire 20 to 30 people into its clean-energy division in the next year. More substantial investments will come as energy projects come online, Weihl said.

Although an ambitious plan, Google's impact on the clean-technology market segment in the near term is likely to be more psychological than financial, said Paul Clegg, a senior equity analyst who follows clean technology at Jefferies.

"Tens of millions of dollars is not a small number, obviously, but you're spreading that over things that a lot of other companies are attacking on an individual basis with more money going at it," Clegg said. "I think they'd have to invest a lot more money to get the next Manhattan Project going."

However, Google's initiative is significant in that it could indicate how corporations will start addressing their energy needs and climate change going forward, Clegg said.

A strategic move
The push to mitigate the effects of climate change through clean energy falls squarely into Google.org's missions to improve human health and alleviate poverty, said Larry Brilliant, the executive director of Google.org.

Its foray into the energy business is part of Google's corporate charter to expand into new business areas that are "strategic," according to Brin.

As a large consumer, Google can benefit from cheaper sources of electricity and technologies it successfully develops could generate revenue, Brin said. In addition, those technologies could potentially bring cheaper sources of electricity to areas of the world that don't have it.

"For economic development to be possible in these areas and for new industries to be spurred along, we want to develop cheap alternatives that are widely available," Brin said. "This isn't just about solving a problem. It also creates a gigantic opportunity."

At the moment, the most widely used form of renewable energy in the US is from hydropower, which makes up about seven percent of power generation. Other renewables make up 2.4 percent, while…

…coal-fired power plants generate nearly half of the power in the US, according to the United States Energy Information Administration. Google estimates that about 40 percent of power worldwide comes from burning coal, one of the most polluting fossil fuels.

Some renewable forms of power promise to approach the cost of fossil fuel production, notably solar thermal and wind, which both benefit from government incentives.

In an FAQ document, Google said it will pursue "enhanced" geothermal technology that taps into heat underground to generate usable energy. It said this approach differs from traditional geothermal technology because it can be used nearly anywhere, rather than only in locations with specific geological features.

Avoiding hypocrisy
Google's intention to invest directly in power-generation technologies is unusual for a business outside the energy sector.

Companies with environmental stewardship programs or commitments to reduce greenhouse-gas emissions typically invest in on-site renewable energy or purchase carbon offsets that represent investments in clean-energy projects.

US chain Wal-Mart, for example, has a high-profile programme to make its stores more energy efficient by using the latest technologies, including solar photovoltaics. It has also done reviews with suppliers to reduce waste and packaging in its supply chain and stores.

Google's initiative came about as many of Google's different operations reached a similar conclusion on the need for clean energy, Page said.

The company has hundreds of people dedicated to making its computing infrastructure more energy efficient, and it founded the Climate Savers Computing Initiative to make computer components more energy efficient.

As a corporation, it has undertaken programmes to lower greenhouse-gas emissions from its own operations, including a 1.6-megawatt solar array and a facility to charge plug-in hybrid vehicles. It expects to meet its goal of being carbon-neutral this year, executives said.

In September, it set up a $10m programme to invest in companies developing clean transportation technologies.

Despite these efforts, the company's buildings and data centres continue to consume electricity from coal-fired power plants.

"We feel hypocritical as a company, so we want to make the investments so that alternatives are available down the road," Page said.

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