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Green Energy Sector Weekly Update: Google Gets Into Offshore Wind

This week Google dipped its toes in the largely underdeveloped but extremely promising U.S. offshore and, in doing so, further clarified its ambitious renewable energy strategy.

The Mountain View, Calif., search engine giant announced that it would partner with Swiss private equity fund Good Energies and Japanese industrial group Marubeni Corp. to support initial development works for an offshore — 350 miles (562 kilometers) — grid, that fully developed, could pipe as much as 6 gigawatts of offshore-generated electricity to East Coast markets.

So far Google and its partners are understood to have just invested tens of millions of dollars in the project, but if it pursues the project, Google and the other project backers would have to invest a much bigger chunk (the total project is expected to cost $5 billion) to finance the actual construction.

Google’s latest investment was not made by the company’s not-for-profit arm, Google.org, or its venture unit but at the corporate level, a spokesman tells G.E.R. Actually, so were Google’s previous green investments, including a $39 million wind investment in North Dakota as well as the long-term power purchase agreement it inked for the output of an Iowa wind farm.

So, given these solid investments, it’s fair to ask: Is Google planning to launch a full-fledged green business and emulate what it did for Web search and digital marketing? A spokesman tells us a firm “no,” describing the offshore grid investment and Google’s previous wind power investment as way to diversify its balance sheet while doing good. “We saw an opportunity to generate a financial return, backing an infrastructure that could be a real game-changer,” he explains.

What’s obvious, though, is that Google’s green strategy over the past year has morphed out of the feel-good corporate social responsibility (CSR) arena. The company is a direct investor in large green infrastructure projects. It’s also developing its own in-house green technology, hiring — as G.E.R. reported — leading scientists to oversee this R&D effort. Google might not (officially) be building an energy company. What’s for sure, though, is that it’s now one of the industry’s pivotal green players and one of the few companies these days that actually have the money to fund its steep green ambitions.

According to data released this week, third-quarter venture investment supporting cleantech and renewable energy companies fell to its lowest level in more than a year.

Venture funds invested $625.2 million, a 32 percent drop compared to the same time last year, in cleantech and renewable energy companies, Bloomberg reported.

The numbers are concerning because early-stage and private equity investor have been a lifeline for green startups, investing record amounts over successive rounds in smart grid or biofuel developers. But two years after the global financial implosion, fund managers are still finding it hard to raise cash. Add to that the ongoing regulatory uncertainty over the end of crucial stimulus-funded programs, and that further explains why VCs and PEs are holding back these days.

VC and PE Watch

The California Public Employees Retirement System (CalPERS), one of the world’s largest pension funds, selected Capital Dynamics to manage its $480 million Clean Energy & Technology fund.

Redwood Systems, a developer of LED lighting systems based in Fremont, Calif., secured $15 million as part of a Series B financing.

Accent, a Milan-based developer of chips for the smart grid industry, closed a €5 million Series B led by Tallwood Venture Capital.

Rambling

This week we reported on BP. And no, it wasn’t about the spill in the Gulf of Mexico. We wrote about BP’s Cedar Creek II, a 250-megawatt wind farm in Weld County Colo., which is expected to cost $300 million to build. Cedar Creek is an ironic reminder of how, in this deeply tarnished economy, BP, with its own tarnished environmental record, remains one of the few companies able to single handedly fund large, transformative renewable energy projects.

By. Green Energy Reporter




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