A greener grid: Will energy be the next big thing for Google?
From Times staff writer Edward Silver:
In some ways, the electric grid is like the telephone system before it smartened up. Eventually the network underwent a digital makeover and provided a home for the Internet.
Google Inc., that workshop of Internet imagination, has a growing interest in that other web -- the one that delivers power to computers and animates most of the mechanics of modern life.
Indeed, any guess about Google’s future would have to consider its intention to be a force in energy. How it ultimately will make its mark, though, is still undefined: producer, technology supplier, financier or cheerleader?
As the owner of armadas of servers, Google is a ravenous consumer of electricity. It feels apologetic about its coal habit and is clearly mindful of the close-knit energy and climate crises. After all, its corporate motto is "Don’t be evil."
Last year, Google launched a program dubbed Renewable Energy Cheaper Than Coal, or RE<C. It aims to foster the means to make renewables cost-competitive with the most abundant but dirtiest electric feedstock.
The Web search wizard’s funding arm, Google.org, has invested in prominent solar upstarts Nanosolar, BrightSource and ESolar. All are private, and all are based in California. It also owns pieces of Makini Power, a wind technology firm, along with geothermal specialists Potter Drilling and AltaRock Energy.
Another Google.org program, RechargeIT, supports plug-in hybrid development and projects that could enable electric vehicles to sell juice back to the grid.
Most of these deals were made this year, and the pace is picking up. In September, Google teamed with General Electric Co. to dig deeper into geothermal techniques and help modernize the national power grid, grooming it for nightly hook-ups with EVs. ...
...There’s a nuts-and-bolts logic to the alliance. The conglomerate is a champion in energy infrastructure, mostly in the fossil fuels arena. However, its melange of clean-tech product lines, branded as Ecomagination, could gather $17 billion in revenue this year. For its part, Google has star power, strategic investments, troves of user information and, perhaps, the potential to crack some of the software problems in building a data-saturated, conservation-driven power grid.
Is there a bonus for the bottom line here? Bringing more energy into the system feeds Google’s expanding operations, and using renewables could shrink its exposure to carbon-emissions costs that may be imposed by the next Congress. And with its Web user base a little younger, a little greener than the world at large, being an environmental citizen benefits the brand.
The rewards could be richer, however, if Google were to follow its current path a few steps further and become a full-fledged player in the energy field. It won’t log off from the Web, of course. Yet it needs another outlet.
Like Microsoft Corp. before it, Google must find fresh markets large enough to keep its growth rate up after completing the conquest of its primary terrain. Energy is just about the biggest market out there.
At the unveiling of RE<C, co-founder Larry Page spoke about fueling breakthroughs in renewables and reducing greenhouse gases. Such an agenda could address a global problem, he said, but "we expect this would be a good business for us as well."
The company’s core expertise, of course, is in organizing information (and delivering ads). Google is master of its realm, but energy is a realm apart. Some pros who are paid to see what’s next in energy are skeptical.
"Will Google target the grid as a market? I’m just speculating, but I think they must be," said Harry Weller, a partner at venture capital firm New Enterprise Associates. "It’s another information system, and it’s too big a market to ignore."
But hurdles await its entry, said Weller, an investor in GridPoint, a software maker that’s rolling out pilot projects with Duke Energy Corp. and Xcel Energy Inc. Google has little experience selling technology to other companies, and the grid’s technology puzzles are very different from those Google was built to unlock. Further, Weller added, regulators may look askance at handing household data to a player "well-known to be challenged with privacy concerns."
Merchant banker Neal Dikeman, an advisor to energy giants and editor of the Cleantech Blog, is certain that info tech will be crucial to revamping the electric grid and advancing the entire energy trade. He talks about software to aid the hunt for resources, upgrade meters and boost the grid’s efficiency, but, he said, that race is on and Google doesn’t have a horse in it. If Google enters, it will get "squeezed by the big boys."
To see who’s moving the needle in energy, Dikeman watches Exxon Corp., FPL Group Inc., even IBM Corp., which serves utilities as a systems integrator. "Energy is one field that makes Google look small," he said.
He also watches GE. However hobbled it is by the current financial upheaval, what was once Edison’s start-up has much to offer a newbie partner: Credibility. Know-how. Market reach. Financial heft. And potentially, complementary hardware for Google’s software. If the pair were to join forces in the R&D garage, they might bring good things to not only a vehicle-friendly grid but to metering and appliances, where GE already plays.
Google is nothing if not venturesome. The deals for YouTube and DoubleClick show it’s willing to make big acquisitions as well as small. Though its stock isn’t the potent currency it once was, Google’s balance sheet still boasts piles of cash. Don’t be surprised if the portfolio expands with stakes in smart-grid contenders.
The company might see openings in power storage technology or local generation, said Erik Straser, who leads the clean-tech practice at venture firm Mohr Davidow. Straser uses the Internet metaphor of caching, in which Web pages are stored closer to the user for quicker access.
Paul Kedrosky, a commentator and investor who edits the Infectious Greed blog, believes Google’s chieftains are fascinated by the link between energy and computing. "I fully expect acquisitions or launches, especially in the area of client-side monitoring of energy use. It’s going to happen from Google," he said via e-mail.
And if he were a Google shareholder, would that make him happy?
Uneasy would be closer to the truth. Kedrosky said investors worry as Google execs "scratch their inner energy itch" because they are watching a cost center take form. "In a period of shrinking ad budgets and a declining share price at GOOG," he said, "these sort of forays rapidly become nerve-racking."
But to Straser, the effort is on-mission for Google as a leader in tech, a field so reliant on electrons. Even if he held the stock, he said, he’d back the company’s quest to become a change agent in a different field, one in great need of change.
Google is taking risks, "but it’s exactly the kind of leadership that leads to breakthroughs," he said. "It’s the kind of leadership that has been lacking in energy for a long time."
Top photo: Google's headquarters in Mountain View, Calif. Erin Lubin / Bloomberg News
Bottom photo: Google co-founder Larry Page. Paul Sakuma / Associated Press