It is amazing to me that on the day Google announces they're going into the power business, the top story is an xkcd cartoon. Electric power is really fundamental. Change how it's generated, and you change a lot. And Google could make a real difference. They have brains and money and a willingness to do new things. And (equally important) they can be their own beta user.
I grew up in this world; my father designed nuclear reactors. Hidebound doesn't begin to describe the power business. It's not (just) a conspiracy by a few big, classically evil companies. There is a whole culture of inertia. It is very exciting to think of Google doing a cannonball into that particular swimmming pool.
This announcement also shows how startlingly ambitious Google's plans are. Could you imagine Microsoft or Oracle, even at the peak of their founders' energy, doing something like this?
On the one hand: GOOG is trying to build renewable that actually makes economic sense. Good for them. (I assume 'cheaper' means 'cheaper', not "cheaper when you factor in tax credits, gov't incentives, Renewable Portfolio Standards, RGGI, AB32, and so on". If it means the latter, this is a non-story.) Most renewable is a complicated ratepayer swindle.
On the other: 2007 wholesale electric power transactions (outside of Texas) look to be around $270B. So GOOGs investment comes to (very roughly) 0.1% of the market. Describing this as a 'cannonball' seems .... dramatic.
The industry is pretty hidebound, particularly on the T&D side. However, power is sold on relatively transparent spot markets in most of the country's ISOs (e.g. CAISO, PJM), and if generation technologies were sitting out there with significantly lower costs than what's in use today (renewable or no) I find it difficult to see how they could not have yet been deployed by some profit-seeking entrepreneur.
I-banks play heavily in this sector, so it's not as if, were the numbers to make sense, it would be hard to find someone with the capital to fund clever ideas.
I don't object to GOOGs actions: It's their money to spend, they sound like they're trying to come up with something innovative (though see my definition of 'cheap' above) and if they succeed, it will benefit everyone. I just think the odds are that the problem is a bit harder than they think, and that we're seeing a second prominent example of (slightly arrogant) SV s/w guys getting in over their heads. (Tesla is the first.)
Working with RE<C, Google.org will make strategic investments and grants that demonstrate a path toward producing energy at an unsubsidized cost below that of coal-fired power plants.
I don't know if this covers your concerns about ratepayer swindles?
'Unsubsidized' is indeed promising - it seems to preclude direct kickbacks. It leaves open the possibility that Coal could be made deliberately uneconomic (e.g. C02 caps), and that the GOOG energy might be made economic through the sale of ancillary products (Renewable Energy Certificates) for which gov't creates an artificial demand.
At this point, though, I'm just being suspicious. I suppose GOOG deserves the benefit of the doubt, and it costs nothing to give it to them. We'll see what, if anything, they come up with.
The trouble is that it's still vaporware at this stage. I'm very glad that Google, with its brains & money, is going into the power business -- but I'm not going to get excited over a press release saying that someday somehow they might make clean power cheaper than coal. I'm waiting for some real results.
This comment reminds me of the time there were two defence related stories in The Daily Telegraph.
Story #1: in approx 10 years time the Royal Navy will have no aircraft carriers, due to procurement failures, and for the first time since WW2 the UK will be unable to project air power around the globe.
Story #2: British Army soldiers have been issued special underpants for war zones.
They ran in the same week. Which do you think was put at the front of the newspaper with a large billing, and which was slipped in as a note on page 25? You get one guess.
It's this startling ambition that I admire most about Google. They're trying to shake up everything from print/tv/radio advertising to mobile phones to power to ...
Someday, we might all nod sagely and say "they should never have strayed from Search and AdSense" because it is entirely possible that they'll bleed a lot of money and fail on several of these - but it is great that they are audacious enough to try.
I just realized that if you are willing to mess with the system behind the scene, you can drive the community where you want. An easy systematic way to do it would be to make votes of people who vote like yourself (or a trusted group of people) automatically matter more (think kNN). In this way they are likely to push stories you would like but haven't noticed yet.
I am sure this would be perceived as unethical, but I have no idea where the line between such an approach and normal editing/moderation can be drawn.
Of course you can make personalized rating for everyone based on such a recommendation system. But you can also make your taste the default (when someone has not rated enough items) and in this way work to avoid fragmentation in the community.
I wonder what percentage of GOOG's operating costs are power related (heating, cooling, electricity, etc).
I imagine that it's probably their highest expense outside of salaries. Cheaper and cleaner power (generated independently off-grid) could help them solve serious issues w/ remote data centers and their operating margins.
OReilly:
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.
This becomes more and more true as your processors are more spread out all over the world, sometimes in remote locations. I heard google chooses data center locations based on proximity and access to power, which is probably very limiting.
It's refreshing to see the less-than sign in the name of the initiative. Cost of Renewables < Cost of Coal
People whine and whine about responsibility for energy, while everyone chooses the cheapest energy available. This is a feature not a bug, and the same motivating force that makes our lives so astoundingly good by historic standards.
The problem with conventional approaches to alternative energy is the hope that non-solutions can help. They can't. Hybrid cars are not electric cars. A silicon based photovoltaic system will consume more energy (and money) in production than it will save. A popular acronym is EROEI: energy returned on energy invested. Non-solutions have EROEI close to or less than 1.
Potential solutions are those where $/Watt < $/Watt_Coal and EROEI>1. It is rare to see people that understand this. Google does.
Thermal solar systems are the way to go, especially in California.
I wonder what kind of cost they're using, though. Is it marginal cost (on which solar already wins) or return on capital, and does the cost of capital include the cost of research?
The only way I can think of actually trying this is to sell future contracts for, say 1% of Google's alt-power production in 2008, 2009, etc., and to declare the project a success iff the value of 1% of the power, indefinitely, X 100, is less than the amount invested in the project.
Solar doesn't win on marginal cost. What are you talking about? The marginal silicon based photovoltaic system has higher $/W than marginal increases in capacity of coal burning plants.
Why sell futures? Can't they sell energy or at least shares of companies they are investing in?
Marginal cost as in the cost of generating X+1 Watts versus X Watts. With coal, you dig for more coal; with solar, you wait for more sunlight. The systems (coal plants, photovoltaic systems) are capital costs.
Then to answer your question, people look to capital costs for the cost of energy. Considering the rate of expansion of energy demand, it is the only number that matters.
> People whine and whine about responsibility for energy, while everyone chooses the cheapest energy available. This is a feature not a bug
I'm not sure I get what you mean. Is it that self-interest leading people to buy the cheapest energy form, environment be damned, is the way to go? What if we find out that the cheapest energy form is polluting just as much (or more) as coal? We can't escape some form of collective responsibility.
An externality is when a choice has an impact outside those making an exchange that isn't factored into the price. You can't expect people to rationally account for often unknown externalities.
Hope that alternatives that are expensive will win out of shear good will is a losing option because it requires everyone to be aware of the externalities of their choices.
Regulation to deal with externalities can work, but my faith in the competence of government to do well in regulating energy is close to nil, given past performance.
The only solution then is an engineering solution. Make alternatives that people would choose without knowing the externalities.
One side benefit is that you don't need the government and rhetoric about "collective responsibility" that too often approaches totalitarianism when enacted.
This would be a really big deal if they could beat coal energy inside of a decade. That would justify their stock price in an instant. Energy is the only resource that matters. Energy is the best industry to be in out of all of the industries, except maybe banking.
> Webcast and Conference Call Information
Google's renewable energy initiative call begins today at 9:00 AM (PT) / 12:00 PM (ET). A replay of the call will be available beginning at 11:30 PM (ET) today through midnight Tuesday, December 4th, 2007 by calling 888-203-1112 in the United States or 719-457-0820 for calls from outside the United States. The required confirmation code for the replay is 2205214.
Anyone care to put this conference call up as an MP3?
I'm not sure I agree energy is the only resource that matters, but I think it matters the most. The future prosperity (or poverty) of our world hinges on the availability of energy. Even for startups: software and entrepreneurial talents don't matter if you can't get the juice to run your servers.
Getting into the game now is a good investment for Google - eventually fossil fuel will become more scarce and expensive than other sources of energy, and at that point they will stand to make a killing. Even without that, energy is probably one of their largest expenses and it would make sense to generate their own at a lower cost.
I agree on energy being most important, but others that matter are air, water, and food(unless you count food as energy). Also human organs and blood for medicine.
Air probably shouldn't be underestimated. Consider that you can live for weeks without food and days without water, but without air you'll be dead in minutes.
Water -- a desalinization plant allows you to convert energy into water.
Air -- we can bottle as much pure air as we want with energy.
Food -- yes, it takes energy to make food, whether it is grown in the grown or fed food that was grown or completely artificial.
Human organs and blood -- this is a resource separate from energy, but only because of medical ethics. If it wasn't unethical to grow/create people for transplantation/transfusion purposes, we could convert energy to medical resources. This will hopefully become practical overtime, when science allows us to clone organs without making a whole human.
Not to long ago I interviewed with EnerNOC in Boston (http://enernoc.com) for an R&D position. They are working in green energy and have some really interesting things going on. Not to mention a decent amount cash to work with since they went public this year.
Renewable and green energy initiatives are getting big and looks to be a market to make some serious cash in.
I think this is excellent news. Google is sitting on a pile of cash and it will take someone with vision to do this. Governments are so tied in to the oil machine that their hands are effectively tied. Good luck Google!
I grew up in this world; my father designed nuclear reactors. Hidebound doesn't begin to describe the power business. It's not (just) a conspiracy by a few big, classically evil companies. There is a whole culture of inertia. It is very exciting to think of Google doing a cannonball into that particular swimmming pool.
This announcement also shows how startlingly ambitious Google's plans are. Could you imagine Microsoft or Oracle, even at the peak of their founders' energy, doing something like this?