The Internet company with a seemingly limitless source of revenue, Google Inc., plans to get into the business of finding limitless sources of energy.
The Mountain View, California-based firm announced on Tuesday that it intended to develop and help stimulate the creation of renewable energy technologies that are cheaper than coal-generated power.
Google said it would spend hundreds of millions of dollars, part of that to hire engineers and energy experts to investigate alternative energies such as solar, geothermal and wind power. The effort is aimed at reducing Google’s own mounting energy costs to run its vast data centres, while fighting climate change and helping to reduce the world’s dependence on fossil fuels.
“We see technologies we think can mature into very capable industries that can generate electricity cheaper than coal,” said Larry Page, a Google founder and president of products, “and we don’t see people talking about that as much as we would like.”
The initiative, which Google is calling RE(LESS)C, using mathematical symbols to denote?“renewable energy cheaper than coal,” will be based in Google’s research and development group. The firm also said Google.org, the philanthropic for-profit subsidiary that Google seeded in 2004 with three million shares of its stock, would invest in energy start-ups. Google says its goal is to produce 1GW of renewable energy—enough to power the city of San Francisco— more cheaply than coal-generated electricity. The firm predicted that this can be accomplished?in?“years, not decades”.
For some Wall Street analysts, the most relevant question is not whether Google can save the world, but whether its idealism may ultimately distract it from its core businesses of organizing the world’s information and selling online ads.
“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 Stearns & Co. 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.” But Google’s stock clo-sed up more than 1% on Tuesday in a higher market, Peck said, when investors “realized this is more of a Google.org initiative and backed off.”
Page said failing to investigate new businesses could hurt Google more than any potential distraction. “If you look at companies that don’t do anything new,” he said, “they are guaranteed never to get bigger. They miss a lot of opportunities and they miss the next big things.” As part of the initiative, Google.org executives said they are working with two firms that have “promising, scalable energy technologies.” One of these, eSolar Inc. uses thousands of small mirrors to concentrate sunlight and generate steam to power electric generators. The other, Makani Power Inc. is developing wind turbines that will run on powerful and more predictable winds at high altitudes.
Sergey Brin, Google’s other founder and president of technology, said the effort was motivated in part by the firm’s frustrating search for clean, cheap energy alternatives. “It’s very hard to find options that aren’t coal-based or other dirty technologies,” he said. “We don’t feel good about being in that situation as a company. We feel hypocritical. We want to make investments happen so there will be alternatives for us to use down the road.” Both founders declined to specify what Google spends on energy.
Idealism is hardly new at Google. In their Letter From the Founders before the firm’s 2004 initial public stock offering, Page and Brin wrote: “Our goal is to develop services that significantly improve the lives of as many people as possible. In pursuing this goal, we may do things that we believe have a positive impact on the world, even if the near-term financial returns are not obvious.”
Google is the latest Fortune 500 firm to embrace green technologies. On Tuesday, Hewlett-Packard (HP) said it would install a 1MW solar electric power system in San Diego, and buy 80GW-hours of wind energy in Ireland next year, which would save it around $800,000 (about Rs3 crore) in energy costs. ©2007/THE NEW YORK TIMES