Google's energy push: Distraction, PR, or good business?
People are wondering why Google's getting into renewable energy. The answer is simple: it believes in innovation.
Many people aren't totally sure what to make of Google's ambitious announcement on Tuesday that it intends to generate one gigawatt of electricity--the equivalent of a few power plants--from renewable-energy sources.
After all, what is a company that makes its money from search and advertising know about the stodgy world of utilities and power generation?
I would argue that Google's commitment to clean energy is a smart move.
Will it make fabulous riches from its investments? We won't know for a while. But in the meantime, its announcement has done exactly what the Googlers wanted--it focused people's attention, however briefly, on the importance of clean energy.
Judging from news articles and blogs, there are plenty of people in the "distraction" camp.
The reaction from ZDNet blogger Larry Dignan (writing for a site owned by News.com parent company CNET Networks) was that Google should not do energy.
"I can't help but think Google is a company with too much cash on its hands and is spreading itself too thin," Dignan wrote.
One financial analyst told the New York Times that he thought the announcement was a "joke," calling the move into energy risky.
Others pointed out there are plenty of other technology companies doing as much if not more to save energy and address climate change
Renewable energy advocates were predictably quite happy with the news.
"It might strike some people as odd that Google would get into the renewable energy field, but I think of Google as a transformative technology company, and that philosophy is very welcome in the renewable energy business today," said Michael Eckhart, president of the American Council On Renewable Energy (ACORE), in a statement.
To put things in perspective, Google.org--its philanthropy, not the corporation--will be investing hundreds of millions in clean energy companies. Google has committed to hire about 20 to 30 people in a new clean energy division in the next year who will do research and development. The money there will be in the tens of millions.
So the dollar amounts are not going to derail Google's core search and advertising business or its investments in Web applications.
Similarly, those investments won't rock the world of clean tech overnight. Venture capitalists are putting about $3 billion a year into the sector, and that's still a fraction of overall research and development from public corporations and government funding.
Where's the upside for Google? It can actually use the technology it develops or helps funds. Co-founder Larry Page said in a conference call with reporters on Tuesday that it's likely that Google will do on-site power production, capture waste heat for electricity, and take other smart energy measures for its facilities.
Of course, if these innovative energy companies that Google.org is seeking out make lots of money, it stands to make some revenue.
What may seem odd is that Google is combining environmental leadership with business. Aren't those at odds?
If you need to clean up a brownfield site, then yes, being good to the environment is a financial drain. But the notion that businesses can profit from the world's woes is being tried and tested every day.
IBM first talked about its "Big Green Innovations" campaign earlier this year which focuses on computing energy efficiency as well as products and services in things like water conservation and solar technology.
Another obvious example is General Electric's Ecomagination, one of its fastest-growing initiatives.
In the end, what Google's trying to do is increase the speed of innovation in clean energy, which most people agree is needed. To do that, Google is investing in a potentially profitable field and using the rock star status (among geeks, anyway) of its founders Larry Page and Sergey Brin to inspire energy entrepreneurs.