Google's Goal: Renewable Energy Cheaper than Coal
Creates renewable energy R&D group and supports breakthrough technologies — Mountain View, Calif. (November 27, 2007) - Google (NASDAQ: GOOG) today announced a new strategic initiative to develop electricity from renewable energy sources …
Context & Ripple Effects
This announcement lands at the end of a year in which Google deliberately widened its footprint beyond search: it launched My Maps custom map sharing, drew more than 30 companies into the Open Handset Alliance for open mobile development, and prepared a consumer file-storage service that analysts noted would intensify its competition with Microsoft. An accompanying analysis argued the pattern makes sense through the lens of complementary goods — Google benefits whenever the inputs to Web-based computing get cheaper.
The renewable-energy initiative applies that same logic to electricity itself. Rather than a philanthropic gesture, the new R&D group targets a core input cost for a company whose storage strategy depends on running massive data centers, making power prices a direct competitive lever against Microsoft and other Web-platform rivals.
First-order effects
- Google redirects capital and engineers into a dedicated renewable-energy R&D group whose stated goal is electricity cheaper than coal — a cost target aimed squarely at the power bill behind its own data-center buildout.
- Coal-fired generation faces a new class of competitor: not a utility or an oil major, but a software company with the balance sheet to fund breakthrough energy research internally.
Second-order effects
- Microsoft and other operators of competing Web-storage platforms must now weigh whether matching Google means matching its energy economics, extending a rivalry already sharpened by Google's planned consumer storage service into physical infrastructure costs.
- Energy technology startups and researchers gain a marquee corporate patron outside the traditional utility and automotive funding channels, reshaping where renewable R&D talent and dollars flow.
Third-order effects
- If the complementary-goods framing holds, cheap renewable power functions like cheap bandwidth or cheap handsets did for Google earlier in 2007 — an input subsidy that accelerates the shift of computing onto the Web and pulls the company deeper into energy markets.
- The move points toward corporate buyers, rather than utilities alone, becoming primary funders of energy innovation — a structural reordering of who finances and steers the power sector's technology agenda.
The trend: Large internet companies are beginning to treat energy as a strategic input, investing directly in renewable generation because cheaper clean power compounds the value of everything they sell.