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It’s Official: Google Is Now in the Energy Business

Leon Kaye | Thursday July 22nd, 2010 | 3 Comments

It has hardly been a secret that Google has shown a strong interest in renewable energy.  Through its Google.org philanthropic arm, Google formed RE<C, a project focused on developing electricity from renewable energy sources that is cheaper than coal-derived power.  Another project is RechargeIT, which is working on accelerating the mass commercialization of plug-in vehicles (PHEV) by funding innovative technologies and developing strategies to boost demand.

Earlier this year, Google invested US$39 million in a North Dakota wind energy farm, and has also aggressively pushed for more solar power.  It also became a large customer of Bloom Technology.  And now that North Dakota deal with NextEra will go a step further:  Google has entered a 20-year agreement with NextEra, allowing the tech giant to sell that wind power to the grid while obtaining access to Renewable Energy Credits (REC) through a Purchase Power Agreement.

The deal is a tad complex.  Google buys the energy directly from the source.  Since Google cannot exactly use that energy directly, say, for data centers—Google sells that energy back to the regional spot market.  But Google approaches the REC market differently than other purchasers.  In obtaining RECs directly from the power producer, Google claims that such transactions are more beneficial for green power producers like NextEra because such developers gain direct access to capital—an opportunity not afforded if Google were to purchase RECs blindly on the market.

So does this mean we will see Google attempt to broaden its reach beyond tech into energy and utilities?  Or will we start seeing public service announcement-like ads on cable TV that make the company appear to be a “green” ExxonMobil or BP?  The answer is most likely no to both.  Google’s executives for several years have expressed an interest in building up sources of renewable energy while mitigating the environmental effects of their company’s operations.  Data centers and office complexes suck up large amounts of energy, and the company would like to boast that its business is completely carbon-neutral—a goal that has not quite yet been realized.  Deals like that with NextEra give Google a long-term and safe commitment to wind and other cleaner sources of energy.  Meanwhile renewable energy providers have little access to capital but are in desperate need of funding—perhaps a deal with Google is a more attractive option than aligning with venture capitalist firms—the strings attached are not as tightly wound—and the ability to boast that you are a Google “partner” cannot hurt on the PR front, either.


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Categorized: Renewable Energy|

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  • George Goldstein

    i made this point before- as well- goggle as a business requires tremendous energy consumption by them and their customers- buying recs is no big deal whole foods did this strictly for tax benefeits – so although they have money – and power this is not a committment to energy this is a tax break and federal incentives they are buying as you put it commodities – wow what innovators- its about green in dollars that this story is about not green as in envirnonmental as a matter of fact their energy czar cannot be reached to review or discuss opportunities that goggle could particpate in and in california they could fund the solar and wind facilities being built versus buying the offset-

  • http://greengopost.com Leon Kaye

    Thanks for the comment. I guess so Google shouldn't be doing anything at all then. So what's your solution?

  • Sara Behdad

    Thanks for the comment. By the end of tax-free e-commerce, the companies will need some tax credits.

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