Thursday, November 29, 2007

Google's "RE less than C" Initiative

Google has launched a new initiative to make renewable energy cheaper than energy derived from coal. The internet giant will invest "hundreds of millions" into solar thermal, wind and geothermal technologies and businesses, and hire its own engineers and researches for its own R&D team. Wall Street analysts who just don't know any better have quizzically scratched their heads and called into question this is a diversion at the expense of shareholder value. From a New York Times story on the initiative:

“My first reaction when I read about this was, ‘Is this a joke?’” said Jordan Rohan of RBC Capital Markets. “I’ve written off Google’s competition as a threat to Google’s long-term market share gains. But I haven’t written off Google’s own ability to stretch too far and try to do too much. Ultimately, that is the biggest risk in the Google story.”

Robert Peck of Bear Sterns agreed that “the headlines were a little scary at first” and said investors were initially worried that this was another example of Google “trying to bite off more than they can chew.”

Those of us who have followed Google's green ways know better. The company has had a fine tradition of green:

  • Founder's Sergey Brin and Larry Page were early investors in Nanosolar, one of the hottest Silicon Valley solar startups, and in Tesla Motors (which incidentally was named by Greentechmedia as one of the Top 10 clean tech startups of the year)
  • Google has developed cutting-edge energy efficiency technology to power and cool its data centers in the U.S. and around the world and joined other industry leaders to form the Climate Savers Computing Initiative, a consortium that advocates the design and use of more energy-efficient computers and servers.
  • Generating electricity for its Mountain View campus from a 1.6 Megawatt corporate solar panel installation, at the time the largest, and still one of the largest in the U.S.
  • Accelerating development and adoption of plug-in vehicles through the RechargeIT initiative. (See also previous post)
  • Working on policies that encourage renewable energy development and deployment, such as a U.S. Renewable Energy Standard, through, its philanthropic arm.
Bottom line, renewable energy, while admittedly not Google's core business, is a tune that the Company and its founders have been singing consistently for some time. And to those who think the internet and renewable energy have tenuous links at best, try telling that to Tom Friedman or Fat Spaniel (which also incidentally made Greentechmedia's list)

Let's cut the justifications and get down to what this blog is about--Solar. One of Google's flagship partnerships under this initiative is with eSolar, California-based company developing solar thermal technology for utility-scale deployment, which boasts ease of transportation and installment, modularity, scalability, redundancy, and resilience against wind tear.

An eSolar windfarm (source: eSolar)


Matt said...

With respect to the use of the shareholders' money, I am not exactly clear on the distinction between Google.COM's investment ("Google expects to spend tens of millions on research and development and related investments in renewable energy.") and Google.ORG's investment ("Working with RE < C, will make strategic investments and grants that demonstrate a path toward producing energy at an unsubsidized cost below that of coal-fired power plants.")

Further, the NYT article claims that the stock rose 1% on the news. I am not a financial wizard, but with a $217 billion market cap, wouldn't a 1% raise more than offset several hundred millions over several years?

Finally, doesn't Google have a ton of cash lying around? I recall hearing that somewhere. And this is dwarfed by their suggested bid on the wireless spectrum.

It just seems like these quotes are a bit reactionary, which, of course, is your point.

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