More on Google's Energy Initiative
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.
tags: energy, google, philanthropy, web_2.0
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[11.28.07 12:50 AM]
Governments & the public sector initiatives can only go so far. It is refreshing to see private sector entities target such worthy causes. Private sector participation (from micro-lending to RE
Larry and Sergey remind us of the dreams, hopes & aspirations we had when we were just kids. This is before life (read: realism/cynicism) hits us. Regardless of their billions, we should commend them for daring to dream and trying to make a difference. In the "Individual Social Responsibility" or good karma stakes, they definitely rate up there.
[11.28.07 12:57 AM]
Meant to say ..
Private sector participation (from micro-lending to RE<C) always seems to ensure that the economics works out. They also provide the discipline/oversight to achieve specified outcomes.
[11.28.07 06:27 AM]
private investment in alt power gen is great but it won't do as much as you may think without adequate transmission lines, think lack of modern transmission tech and tons of lawyers/nimbys. many locations have more than adequate electric power gen, albeit some is quite polluting but others like hydro are not, but lack transmission line capacity, think bandwidth, to deliver the electricity. also, incidentally, so you know, the lack of transmission lines is the current greatest contributing factor to the increase in electrical rates since it's often decided which power gets delivered by auction style arbitrage markets that make ebay financials look like a kids market for selling pez dispensers. i do admire the idealism of google's founders but if they are looking for a cakewalk the power gen industry is not it.
[11.28.07 11:41 AM]
Hey: What's the problem? - There are 6*10^43 Joules of energy left within the sun:
see: http://spreadsheets.google.com/pub?key=p0Bnc8rX0GoL1V6c67a3gUg
==
By the way: All the new electronics will not reduce the power consumption at all. - Wall covered with interactive screens will not com for free...
[11.29.07 01:28 AM]
Agreed on two things
1. Energy is the next big opportunity to make an investment in to continue to sustain PE multiples of 50 plus
2. Google has the capability of managing and monetizing innovation.
Dis-Agree on the style: launching this under a venture fund similar to INTC Venture fund would have been a better idea. The current announcement confuses wallstreet and when things go bad wall street will start blaming on actions like these for change of management. After All Google is a public company
Check out the post on http://www.gandalf-lab.com/blog/2007/11/google-energy-and-vertical-integration.html
for thoughts on the annoucement
[11.29.07 02:39 PM]
The initiative is great, but the name is TERRIBLE!! You can't Google the name, or even write it in this comment box without messing up the html.
See http://flacku.blogspot.com/2007/11/google-is-smart.html for some additional thoughts on this.
[11.30.07 04:23 AM]
Its great that such a big company like Google is taking this attemp. I hope they will achieve their goal. 1 gigawatt is a lots of energy and would be a big step into the right direction. Maybe other comanies will take this projekt as an example.
[11.30.07 08:23 AM]
Hi Tim,
and thanks for the interesting topic you're putting on the table today.
I'm very interested in environmental issues, and renewable energy is a hot word right now.
Of course, Google is interested in bringing down the price of R.E. (Renewable Energy) because they know that they can't avoid facing environmental issues now or in the near future. They foresee a problem, and they are looking for a solution.
This is an investment.
Apart from that (it keeps shareholders happy and quiet), I also agree on Larry's and Sergey's rare "idealism", and I love it. Maybe that's one of the big reasons why, despite my activities, I'm still job hunting in Google :-)
Now my contribution to this discussion:
if you want to "save the planet", you can focus on:
- producing clean energy
or
- using "dirty" energy in a smarter way
I'm positive that, with the same investment and effort, you can get BETTER environmental advantages if you focus on the latter.
Energy is mostly used to:
- create things;
- transport things;
- light homes, offices, streets, factories;
- power computers and servers around the world, and also televisions, antennas, etc
It's "easy" (relatively easy) to say: producing RE today costs 10$ per KWh; tomorrow I'll be able to produce it for 4$ per KWh.
You can measure it, you can proof it. You win.
It's much harder to say: my policies and initiatives decreased energy consumption because I was able to convince people to produce less, to transport things in a more efficient way, to save energy using lights more efficiently, to idle many computers when people don't need them, etc
But I still think that this is the way to go.
Of course, Google's initiative is AMAZING, and I love it.
I'm probably just "sad" that there are so many "environmental enemies" to face at the same time (the rise of industrial China, the increasing number of cars, etc).
Final, it could be a dream to convince people (electors/voters) to subsidize in a different way... Carbon would be much more expensive :-)
Hmmm... A Google political campaign? Don't know.
[11.30.07 09:43 AM]
I realized I mis-spoke when calling google.org Google's charitable foundation. It is a for-profit subsidiary.
This whole idea of for-profit and good works going hand in hand is one that has occurred to many of the Web 2.0 billionaires. Pierre Omidyar, founder of ebay, committed a lot of money to his foundation, and later decided he could do more good by funding companies that catalyze positive change.
There's also a fabulous non-profit, benetech.org, that builds self-sustaining non-profit businesses (sometimes selling them to for-profit businesses and recycling the proceeds into the parent foundation.)
And even traditional non-profits like the Nature Conservancy have learned to harness the power of capitalist self-interest to achieve their goals.
So Google is helping to further this important approach to solving big problems.
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Nic Bastelt [11.27.07 11:52 PM]
Looks like MS ist trying to reduce their cooling spendings by moving their data centers to a frostier location like Siberia. Thinking out of the box - That's what geeks are good at.