Google Throws in the RE<C Towel

Image via CrunchBase

In 2007 Google made a big splash launching its Renewable Energy Cheaper than Coal (RE<C) initiative.  After $850 million in investments to try to drive down the cost of renewable energy below the cost of coal and perform other feats of magic in the clean energy space Google’s Urs Hölzle, Senior Vice President, Operations said November 22nd that it was pulling the plug on its green energy initiatives.

The word was revealed in a blog post along with a long list of other initiatives that Google admitted had not panned out the way they hoped. The Google goal was to produce 1 GW of renewable energy capacity cheaper than coal. But coal won and Google’s technology bets never came close.

Google lived into its green values creating Google Energy, a FERC regulated wholesale energy company for its own on-campus requirements and energy for its data centers committing itself to being a sustainable energy leader. Google estimates that it uses one-tenth of one percent of the world’s electricity and its data centers will use renewable energy roughly 30% of their consumptive use and buy carbon offsets for the balance of its fossil fuel use.

Google put $168 million in Brightsource Energy’s Ivanpah Solar Electric Generating System (ISEGS) and eSolar to support concentrating solar power technology.  But in a confession not often heard in the renewable energy business Google said it hit the technology wall:

We reached a point in our engineering projects where we’re facing new challenges related to our solar receiver design’   — Urs Hölzle, Senior Vice President, Operations.

To its credit, Google was going for the big bang effect in its investment strategy, but its decision reflects the current trend in the solar energy sector where falling prices of solar photovoltaic panels mostly made in China are trumping the big bang theory of concentrating solar power (CSP) which while it may be sexy it is not profitable.

Google also supported Potter Drilling’s geothermal drilling technology and developed the Geothermal Map of the US to showcase the potential for geothermal energy.  But anyone in the energy business could have told the Google geniuses that while geothermal is a great resource if you’ve got it, there are limits to its applicability if you don’t.  So the geothermal map is nice but not a game changer.

When I look at all the initiatives Google is walking away from I’m left with two views.  First, these people at Google must all have attention deficit disorder because they make big bets but don’t stick around to see how they work out.  Or second, these people at Google must be geniuses because they pulled the plug on their RE<C initiative before it pulled down the rest of the company with its commitments to above market costs for its energy use.

The answer turns out to be neither.  Google simply realized what other energy buying business knew all along—it is easier and far cheaper to buy carbon offsets than to spend all this money on above market clean energy technology.  So keep sending that dirty but cheap coal power and Google will just buy carbon offsets to sustain its bragging rights about sustainability.