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Google Looks to Renewable Energy as Next Market Opp

November 28, 2007

WindfarmsOnline search giant Google yesterday announced a new strategic initiative, RE <C (Renewable Energy Cheaper Than Coal), to develop electricity from renewable sources of energy.

The company, which, in the words of the New York Times, has a seemingly inexhaustible source of revenue -- and mounting energy costs -- will focus initially "on advanced solar thermal power, wind power technologies, enhanced geothermal systems, and other potential breakthrough technologies." Eventually, the company anticipates investing "hundreds of millions of dollars in breakthrough renewable energy projects which generate positive returns."

It's worth noting that a portion of those dollars will be funneled through the company's philanthropic arm, Google.org, which has generated a lot of hype and not much else since it was launched at the end of 2005. "[Our hope]," said Google.org executive director Dr. Larry Brilliant (no kidding!),

is that by funding research on promising technologies, investing in promising new companies, and doing a lot of R&D ourselves, we may help spark a green electricity revolution that will deliver breakthrough technologies priced lower than coal.

Apparently, they may have to do it without the help of Wall Street. According to the Times, the most relevant question for some analysts on the Street "is not whether Google can save the world, but whether the company's idealism may ultimately distract it from its core businesses of organizing the world's information and selling online ads." Said one analyst at RBC Capital Markets:

My first reaction when I read about this was, 'Is this a joke?' 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.

You almost have to feel sorry for the guy.

Okay, putting aside the perfectly understandable inclination to ignore anything said by anyone who works on Wall Street these days, does the guy have reason to be concerned? Should Google stick to its knitting and use its dominance in online search to end (or render obsolete) Microsoft's desktop monopoly and drive Yahoo! out of business (or into the arms of a deep-pocketed suitor)? Or do Google and Google.org have the resources (human and capital) to succeed in an area, creating viable markets for renewable energy technologies, where so many others have failed?

I don't have the answer to those questions, but I'm reasonably certain that Bill Clinton and his CGI crew will be seeing a lot more of Google co-founders Larry Page and Sergey Brin over the coming months.

-- Mitch Nauffts

Comments

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It's just occurred to me that the world population explosion could be a bigger threat to fossil fuel depletion and climate change than anything else. Globally we add one billion people every 11 years. I'm sure the people at Google know this.

In effect, what the company did was something of a stimulus to drive up efforts in greener energy resources. By investing in companies, people and equipment with innovations, on a wider scale, the effects of all this is hard to neglect. A few hundred solar panels and wind turbines can do so much!

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