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Summary:

Will Google be selling you electricity? There are reports that the search engine giant has created a subsidiary called “Google Energy,” which is looking to buy and sell electricity on federally regulated wholesale markets, and the company has asked for permission to do so.

Could Google one day sell you electricity? This week E&E News and CNET are reporting that the search engine giant has created a subsidiary called “Google Energy,” which is looking to buy and sell electricity on federally regulated wholesale markets. Google has asked the Federal Energy Regulatory Commission (FERC) — the group that oversees the U.S. electrical network — for permission to do so.

Google’s Niki Fenwick told us (and is quoted in the other media reports) that Google has no plans to become an energy seller but that the creation of Google Energy is an attempt to proactively address hurdles it could face in its plans to go carbon neutral. Given the legal permission to act as a utility — basically buying and selling clean energy (it owns a large rooftop solar project at its headquarters) — Google could help offset its carbon emissions that result from its large power needs.

While creating Google Energy and asking permission to buy and sell electricity is definitely an unusual move for an Internet company, it’s not entirely unheard of for a large company to form a wholesale power firm. Nathaniel Bullard, an analyst at Bloomberg New Energy Finance, pointed out to me that Wal-Mart created Texas Retail Energy, which allows it to procure its own power and get the lowest-cost electricity for their warehouses and retail stores.

When news about Wal-Mart’s energy firm came out in 2007 there was a lot of speculation that Wal-Mart would get into the electricity selling business, and Wal-Mart said it hadn’t fully ruled that out for the long term.

Wal-Mart formed the power firm to find the lowest electricity, while Google says the move is more to address clean energy and carbon emissions. But perhaps the real aim of Google Energy is, like Wal-Mart, to find the lowest cost electricity period. Google uses a massive amount of energy to power its servers and has been looking at a variety of ways to lower their energy bills through energy conservation measures. Just having more control over the supply of energy could help cut the monthly energy bill. Google’s Fenwik tells me that Google wants to buy the most affordable renewable energy that it can.

Google’s Fenwick told CNET that for Google Energy, “We don’t have any concrete plans.” I think that answer is probably not a way to dodge the issue — Google has a lot of aggressive and far-reaching projects that they don’t necessarily think through fully before starting to implement them.

As Google’s energy guru Bill Weihl told the New York Times this week:

[I]f you don’t say five years later, “We never should have done that” about a significant percentage of it , then you’re being way too conservative. So the stuff we’re doing under the Google.org umbrella on alternative energy, some of it doesn’t connect very closely to Google’s core business, some of it does, and that’s O.K.

But then again, companies like Google and Apple deny for years some of their bigger and extreme projects like building mobile phones. So while Google might just be experimenting for now, it’s probably safe to say that nothing is off the table for Google Energy.

  1. Carbon credits?

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  2. Remember how much power Google must consume for its data centers. This story came out a few years ago about Google’s data center in Oregon so big that it needed cooling towers:
    http://www.nytimes.com/2006/06/13/technology/13iht-search.1963474.html

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  3. Is Google the new ENRON?

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    1. The answer should be a strong NO! Google Energy should be something very different than ENRON. ENRON was the result of an incomplete market, that lacked enough functionality, under a flawed architecture. That market was based on the obsolete Investor Owned Utilities Architecture Framework and its incremental extensions, that keep adding huge complexity.

      We should make sure that Google Energy, Wall*Mart Retail Energy and/or any other capable players, are able to participate in a federal (and global) complete and fully functional, simplified electricity market, as explained, for example, through the post “Ray Bell Predicts The Birth of Retail Energy in 2010,” which can be read by hitting the link http://bit.ly/7n2HaV

      Based on the emergent Electricity Without Price Controls Architecture Framework (EWPC-AF), such a market will open the power industry to the real forces of innovation, as described in the article “A Better Decade Require the End of the Prevailing Style of Management,” which can similarly be read at http://bit.ly/8xQmIz

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      1. Thank you Katie!

        Related to this post is the tweet is The Global Intelligent Retailer Justification http://bit.ly/68dvCG #EWPC

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  4. By being an energy provider, Google can now participate in energy markets as a provider of demand reduction services (negawatts, as in negative watts by reducing consumption). This is similar to what is provided by an Enernoc or Comverge. By registering themselves, Google doesn’t need to share the proceeds with a middleman/aggregator like Enernoc. For big players, it makes sense to do that.

    What would be really interesting is if Google develops an efficient way to do that and decides to compete with those players or even give it away through the philanthropic arm.

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  5. [...] could happen, as Katie Fehrenbacher writes at earth2tech. She cites a New York Times interview with Bill Weihl, Google’s energy guru (yes, [...]

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  6. @Jim M, Really interesting thought: that Google could compete with EnerNOC and Comverge. Id like to see what that Google service would look like. Google DR?

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    1. Let me suggest 2 possibilities:

      1) For internal use, Google would need to do something focused on their actual data center power usage and how it could be modified to deal with possibilities in energy markets. Given that Google does zillions of real-time auctions every day, it seems reasonable to assume that they could figure out how gain some advantages within the structured auctions of electricity wholesale markets.

      2) For consumer use, ‘Google DR’ could be a small part of energy savings that flow from the PowerMeter widget. They could help consumers use the insight from that to lower their overall energy bills through lots of energy savings and then offer some potential for extra savings for customers whose usage profile could benefit from DR participation.

      Now I’m not with Google and have no knowledge if any of this is accurate, but it’s fun to play with the possibilities.

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  7. Great post katherine. But I don’t give a FERC what the Federal Energy Regulatory Commission says, Google is turning into a monster. A monster!

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  8. Great post. Didn’t know Wal-Mart was engaging in similar practices.

    http://foryouredification.wordpress.com/2010/01/07/google-energy-subsidiary-considers-clean-power/

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  9. [...] their portfolios. Perhaps Google will find a way to solve some of the complications involved in the struggle toward carbon [...]

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  10. Lorenzo McIntyre Thursday, January 7, 2010

    Everyone seems to lose focus on the biggest deal of 2010. Google is desperately trying to acquire Giigle.com to make it a child safe portal while also making a run to corner the childrens consumer market.

    This will have far more of an impact on our economy than Google stepping into energy ever could.

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    1. I’ve been hearing the same thing about giigle.com for weeks. It looks like it’s just a parked page, so I don’t think it has anything to do with “acquiring.” I’ve also heard they’re trying to acquire Toys R Us and use Giigle.com as the distro portal.

      As almost laughable as it is, the implications here are quite astounding. If Google can grow 5% in market share from advertising Chrome on their network, imagine if they started promoting giigle.com.

      They’d blow amazon away.

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    2. This is interesting. Nothing to do with cleantech, which is my day job, but as a full time mother, I’d personally LOVE it if I could finally find a safe way for my kids to search online. “safe” mode is hardly fool proof. More than once I’ve caught my son looking at pictures of scantily clad women on “safe” mode.

      I think it would be great if mothers could have an emailed report showing where their kids searched online each week. I vote yes on giigle.com

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