I wanted to add a few more thoughts about Google’s new energy initiative, RE<C, or spelled out, Renewables less than Coal, an ambitious attempt to fund alternative energy technologies that offer the possibility of generating electricity at a cost less than that of coal.
The stakes are high. If our worst fears about global warming are right, we’re going to bring our technological progress to a halt unless we get new sources of clean energy. Google’s goal of beating the cost of energy from coal is critical, because coal is the default lowest-cost choice for electricity generation, and the worst from a global warming perspective.
And let’s be clear, the internet industry we know and love is a huge consumer of power. I love Nick Carr’s estimate from last year that a Second Life avatar consumes almost as much energy as a real human. While Nick’s calculations are provocative rather than authoritative, he makes a good point. Our electronic lifestyle has hidden, off-the-books costs. Google is very smart to acknowledge this fact.
But Google’s investments in energy aren’t just driven by worries about global warming. To be sure, Al Gore is a senior advisor to the company, and the management team takes the threat very seriously. But Google also has a very direct business interest in developing new, cheap sources of energy.
One of the first times I met Larry Page, long before Google went public, when he was still driving a bright blue VW bug, he was telling me how for Google, the annual energy cost of each processor they put online was greater than the cost of the processor itself. (This may actually have been lifetime energy cost. It’s a long time and I don’t remember exactly, so I don’t want to put words in his mouth.) Energy is one of the key costs for anyone running a large server farm, and keeping that cost under control is a key element of competitive advantage.
As we’ve written on Radar several times before, companies like Microsoft also feel so strongly about the need to secure their own sources of cheap energy for data centers that they can argue that “in the future, being a developer on someone’s platform will mean being hosted on their infrastructure.”
Of course, I can’t entirely free Larry and Sergey (and Google’s top management in general) from a charge of massive idealism. At that same dinner, Larry (or Sergey — I can’t remember who) was also saying things like “I wonder what we could make happen if we invested a billion dollars in exploring the ocean?” One of the things that’s most remarkable about Larry and Sergey (and Eric) is just how idealistic they are. It’s very rare to find this in the heads of a multi-billion dollar corporation. But it’s clear that Google also has a pressing business interest in new, cheap sources of energy.
I’m also really impressed by the way Google is blending investment by its charitable foundation, google.org, and its commercial business. It’s rare to see company founders spend significant energy on philanthropy while they are still building their business. As he moves towards retirement from Microsoft, Bill Gates is now putting his huge fortune to work for the betterment of the world, in the tradition of generations of previous business leaders turned philanthropists. It’s fascinating to watch how Google is putting its money to work for a better world NOW. Let’s hope more companies start to do the same. Capitalism and a better world shouldn’t be seen as alternatives. We need to find out how going green can mean both a better environment and a better bottom line. I think Google is smart to look for the sweet spot where both outcomes are possible.