Google is announcing a new strategic initiative to develop electricity that's generated from renewable sources--wind, solar and geothermal systems--and cheaper than coal.
This initiative, called the rather clunky Renewable Energy Cheaper Than Coal, will hire engineers, energy experts and "spend tens of millions on research and development and related investments in renewable energy." Meanwhile, Google says it anticipates "investing hundreds of millions of dollars in breakthrough renewable energy projects which generate positive returns."
One question: Is Google the right company to be taking on this effort?
Google co-founder Larry Page's answer on a conference call: "This doesn't count as search and advertising, but we do want to give our business some latitude to look into new areas especially when they are strategic."
My take: Unless Google is putting ads on windmills it looks like a detour that could make shareholders squirm. We have Google as energy company, wireless company and advertising firm. And of course Google is a future cloud computing provider.
Sure, you could argue that Google finds these renewable energy sources, develops them and then hooks them up to their data centers and saves on electricity. That's a long way to getting ROI though. Double bonus if the solar panels have ads on them.
And this green effort is taking up management time. In a statement, Page, Google president of products, said:
"We have gained expertise in designing and building large-scale, energy-intensive facilities by building efficient 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. There has been tremendous work already on renewable energy. Technologies have been developed that can mature into industries capable of providing electricity cheaper than coal. Solar thermal technology, for example, provides a very plausible path to providing renewable energy cheaper than coal. We are also very interested in further developing other technologies that have potential to be cost-competitive and green. We are aware of several promising technologies, and believe there are many more out there."
On a conference call, Page added that producing a gigawatt of power cheaper than coal would be a "tremendous product." In other words, Google power plants wouldn't be out of the question, but the go-to-market is unclear. However, Page noted that since Google buys so much power "it's a little easier to deploy these things." Any excess power could be sold, said Page.
"Assuming we can develop this I believe we'd want to deploy as many places as possible. We'd deploy and license it worldwide," said Page.
Or Page could get Google Apps nailed down and Gdrive out the door.
I hate to be cynical about this--maybe Google does save the world from its power consumption problems. But I can't help but think Google is a company with too much cash on its hands and is spreading itself too thin. Renewable power is important, but that doesn't mean an Internet advertising company should be the one developing it.
On the bright side, Google does appear to be throwing some dough around to companies that may make a difference such as eSolar and Makani Power. And Google is good for the economy--it's hiring energy wonks (and a bunch of other folks too).
Now I know what Google fans will say: This isn't a distraction because it's a Google.org effort. True, but it's no coincidence that Sergey Brin, president of technology, and Page are quoted. Good thing CEO Eric Schmidt wasn't quoted or it would look like no one has his hand on the wheel.