Google is a giant consumer of energy, but it also sees into the future. That’s why it’s pursuing investments in renewable energy and is now approaching the $1 billion investment mark.
Late last week, Google announced its acquisition of a $75 million equity stake in a wind farm in Iowa, bringing its total investment in renewable energy to over $990 million.
For a technology giant whose global data centers consume as much energy as some 230,000 residences, investing in renewable energy is not only smart—it’s a necessity.
Let’s take a look at where Google has put its renewable energy money:
• $94 million in California Recurrent Energy solar projects
• $75 million to a solar Clean Power Finance fund
• $280 million to a SolarCity fund
• $178 million in a BrightSource solar project in the Mojave Desert
• A 37.5% equity stake in Atlantic Wind Connection (amount undisclosed)
• $157 million in the Los Angeles Alta Wind Energy Center
• $100 million in Oregon’s Shepherd’s Flat wind far
• $38.8 million in North Dakota wind farms
• $5 million in a solar equity stake in Germany
• $75 million in an Iowa wind far
Google is also dabbling in some other interesting renewable energy areas. Right now it is testing a new biofuels processing system.
This experiment, in conjunction with Cool Planet Energy Systems, is attempting to produce high-octane gasoline through a thermal process that uses non-food biomass (wood chips, agricultural waste, energy crops). The feedstock is converted to hydrocarbons and then is put through a catalytic conversion process.
This is all done at “microrefineries”, which are 100 times smaller than typical refineries, and the byproducts are used to enhance soil. The point is to reduce the cost of feedstock transportation and maximize overall capital efficiency.
The resultant high-octane gasoline could be used in existing vehicles with traditional distribution systems. It would also achieve this with a 150% smaller carbon footprint. Google Ventures (along with General Electric, BP, ConocoPhillips, NRG and Exelon) is one of Cool Planet’s financial backers.
Consuming as much energy as it does, Google is keen not only to secure its own energy needs, but also to foster an image of itself as a forward-thinking, socially and environmentally responsible company.
Is it working?
Economically, the company insists that its renewable energy investments are logical, and it is continually concerned about long-term price volatility since its greatest expense is the power consumed by its data center operators.
According to the company, since 2007, Google has been “carbon neutral”.
In terms of image, the jury seems to be out, still.
A recent report issued by the EIRIS global responsible investment research firm gives Google a weak rating (along with Apple) in terms of sustainability criteria, saying that they lag behind other tech companies.
Why? According to EIRIS, Google “faces significant risks related to its operations and has failed to publish a sustainability report.” What EIRIS is most concerned about is Google’s acquisition earlier this year of Motorola Mobility Holdings, which it says has “altered its risk profile considerably in terms of its environmental and social impacts.”
But this is more behind the scenes. As far as its public image—and here Google of course has a lot of help because it controls its own public image—the company can be viewed as nothing short of a great friend to renewable energy.
What do Google’s shareholders think? Google has never offered shareholders any dividend payments. While this has disappointed some, plenty think that when technology companies start to pay out dividends it means that they don’t know what to do with their profits—or where to invest them. The wise shareholder would prefer to see Google reinvest in due to the dynamic nature of the technology industry.
Since the bulk of Google’s operating expenses are energy-related, investments in renewable energy are likely being viewed optimistically by shareholders. Let’s remember that Google’s stock has been highly successful from the start, and its ability to recover from product or acquisition failures has been impressively quick.
Google and Apple are not the only tech giants making solid footprints in the renewable energy sector. Let’s not forget IBM (NYSE:IBM), which is playing a key role in advanced technological research in the area of smart grids in the US and Europe. And then there’s Microsoft (Nasdaq:MSFT), which most recently has cut a deal with Fuel Cell Energy to use carbon neutral electricity from biogas to power its newest data center research project.
By. Charles Kennedy of Oilprice.com