Wednesday, June 15, 2011

This week Google inc threw another two hundred and eighty million dollars into its plans to make solar and wind cheaper than coal.
more coverage
Previously, Google has invested over 100 million in the world's largest wind farm, in Oregon, a project using a new technology involving permanent magnets.
Google is building a (5 billion?) transmission line off the east coast, so that offshore wind farms have a place to plug in.
It has contracts to buy 100 million in power generated by a wind farm in Iowa.
It has investments in a German photovoltaic farm, and I've heard something about a geothermal project.
In Southern California its partners are building the world's largest solar thermal tower. Overall, not counting the transmission line, Google had investments of about half a billion before the latest announcement. Last year Google made 7 billion on revenues of over 20 billion. The tax bill on income of 7 billion is nontrivial, so tax credits, along with a 'don't be evil' green strategy, are driving these investments.

In the latest venture, Google will provide financing for rooftop solar for thousands of homes in partnership with Solar City. Mostly these will be in Southern California. Siting is based on several factors coming together - lots of sun, high local energy costs,and state tax credits. Southern California has all these, but 8 other states may see some involvement. The homeowner gets power at a slightly reduced price,and locks in the price so they are safe from future increases. The company building these systems gets capital to put them up. Google gets tax credits and depreciation now,and the expectation of solid returns on its investments over time.
Google also should see positive public relations value to this investment. Thousands of homeowners will be happy to brag about their solar roofs. Google so far is being low key about this,and not going the "chew mail pouch tobacco" route of having the solar panels spell out Google. Actually that's not a bad idea; signage made of solar panels, provided free to homeowners and people with barns. I should write up a business plan.

Another Google energy initiative is some free software it has written so that people with smart-meters can monitor their electricity use in realtime. When and if appliance makers make their devices compatible with the software, significant conservation can be achieved. [citation needed.]

At some point, someone's going to get killed falling off a roof while putting these up,and someone somewhere will be unhappy and experience buyer's remorse. Already there's been a shareholder action to try to get more disclosure of alleged conflicts of interest with one of Google's board members, who is pushing this strategy and may already have a stake in some of the companies Google is partnering with. But overall,
this is a solid move by Google for tax reasons, a worthwhile diversification into bricks and mortar, a public relations coup, and a step towards a possible major Google role as a player in a large-scale profit-making transition to alternative energy.
Sometimes a company starts up in one area and then moves into another. Volvo used to make ball bearings. Ashton Kutcher was a sitcom actor, then the boytoy of a high-income actress, now he's a savvy player in a dozen internet start-ups, after selling his share of Skype to Microsoft for three times what he paid 2 years ago.
Google's strength is in using math to solve real world problems. Having the best search engine was only the beginning.

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