"Google Energy" Subsidiary: What's Google Up To?

36 Comments

Could Google (s GOOG) 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 [company projects], 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 (s AAPL) 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.

36 Comments

John

Google met with and sought advice from Jeremy Rifkin, an economist and author who studies energy issues. He believes in a “third industrial revolution”. Here is a passage from his website:

http://www.foet.org/lectures/lecture-hydrogen-economy.html

“The same design principles and smart technologies that made possible the internet, and vast distributed global communication networks, will be used to reconfigure the world’s power grids so that people can produce renewable energy and share it peer-to-peer, just like they now produce and share information, creating a new, decentralized form of energy use. We need to envision a future in which millions of individual players can collect, produce and store locally generated renewable energy in their homes, offices, factories, and vehicles, and share their power generation with each other across a Europe-wide intelligent intergrid. (Hydrogen is a universal storage medium for intermittent renewable energies; just as digital is a universal storage mechanism for text, audio, video, data and other forms of media).”

Alex

The idea that the smart gris and the Internet carry parallels is sound, but there are also significant differences.

First; Unlike the Internet where an excess of users causes the response to slow down, electricity requires the identical number of electrons to be created as delivered – at any instant in time – failure to do this causes the system to collapse, and the unintended consequences of the grid being overloaded or underloaded in death and chaos.

The grid requires a higher standard of regulation in the interests of all.

Second; the life of technology on the Internet is months to years. The life cycle of equipment for the grid is in generation, to 40 years.

You cannot roll out electrical equipment like you can telecoms.

Third; The internet is relatively nice to have compared to electricity on which humanity depends today

I encourage all thinking Internet parallels to the grid, to remember the not parallels also!

Alex

Oops – a mistake escaped – typo ….

Moderator – can you correct – readers please note.

2nd last paragraph should read “If we want Google to have the knowledge to control energy, I suggest we do “NOT NOT” let them also have the incentive to deliver it!

Alex

I had the dubious opportunity to watch Microsoft destroy IBM OS2 (for those who can remember) and then Netscape to win the browser wars, all because they controlled the operating system. In the last few years we have been informed via anti-trust settlements of the abuse of that power. We probably do not know a half of it really!

The quality products lost, innovation was stifled, now Windows 7 (5 years later) has had to get better – but what a way to learn!

So when will we learn from history?

When will we not repeat the same mistakes?

Quotation by John Emerich Edward Dalberg Acton, first Baron Acton (1834–1902). The historian and moralist, who was otherwise known simply as Lord Acton, expressed this opinion in a letter to Bishop Mandell Creighton in 1887:

“Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.”

If we think that Microsoft had control of us through the operating system that ran our PC, take a step back and think of the control Google has over us in being the channel for the information we receive.

You can go all the way back to the 3rd century and the church to look at the abuses of power by the control of information. They are called the dark ages for a reason.

Technically, we have some safety in the fact that Google can no more tweak a page and the rules of where it will appear in their search rankings, than I can. But, lets be clear, 95% of the traffic we get from people using a search engine to inquire about energy saving, is from Google.

Google has control, of that there is no doubt! All we are discussing is; how they use it, will they use it, and if it will be abused?

Control of information is then potential to control a society.

It does not matter how it came into being and what the motives are. It is an awesome power to have!

This is DANGEROUS indeed!

The issue is not in the founders, from all I read I believe that they have the best of intentions, to sincerely do no evil. I applaud them in this intent.

Further, I have seen examples of their refusal to engage in altering information, even when it might seem they should, in the knowledge of where touching the system could lead them.

But what they have built has the potential for abuse that makes anything we have seen in our history pale into insignificance, should it get out of hand.

If you want proof of the start of abuse. In this case not by Google, but by those who have seen how to game Google’s control of information pay attention to this:

Consider the subject of scam products to help consumers save energy! A subject open4energy and http://www.scamraiders.com are investigating.

Google “magnetic energy generation” – an interesting concept as a renewable energy source. All looks OK – 1 million plus results, plenty ads being served for apparently “useful solutions”

NOW – Google “open4energy magnetic energy generation”

You will see the difference, for it is 95% one big scam, the content is from over 100 web sites established for the single purpose of misleading you and manipulating the Google search result algorythm, millions of dollars are being poured into nothing, and every link of the chain drinking off the foolishness of unwitting consumers.

I sincerely ask any publisher of content on electricity/energy who also serves ads from Google adSense to follow this link – http://adtumbler.com/per/reg/nesc/gps/email/educate – understand the issue we have – and use the free list of domains being offered to block this undesirable material (plus increase your own CTR) – sadly we cannot just publish the list as we know who wants it most!

Google make money on each click, the 1000’s of publishers in their network make money on every click (as do Google on these also) and consumers either waste their time if they are lucky and see into the SCAM, or pay for the plans – perpetuating this insanity.

Despite all we have done to speak to Google, or get the RIGHT information into the “system” of Google information distribution – we continue to struggle.

Google rightly have responded “it cannot “regulate the internet” – so they sit between a rock and a hard place – they own the information distribution and MAY not touch it for where will that end!

The market will self regulate, the system does work, but it is taking far too long. We are all so busy on our own issues, looking up and seeing what it means to serve a scam ad as a publisher is not on the “must do” list.

As an aside, if you are not sure about the quality of search results, add “open4energy” if it is on energy saving and get some safe content into the mix, or “earth2tech” and see what Katie has to say about the topic.

This is an example of abuse of the information control Google has, in fact that search has.

Back to our opinion on Google and electricity supply.

Think of what is to be in the next few years. The smart grid will be in place, energy use information will be wireless received by each home owner and forwarded to the Google software – Google PowerMeter. We will do this to receive the community value of comparing our use with another, trends and so on. It will be free to us, so why will we not use it, and save on our bill, and feel good about ourselves.

Google PowerMeter will be the dominant energy information system.

With the knowledge of who is using what energy across the globe, the control of what information is searched for will be small compared to the knowledge of how the most essential of all human resources, energy, is used.

We can survive without information, or we can add terms like “open4energy or earth2tech or Katie Fehrenbacher” to our requests for information, and protect ourselves – but what will we do when it comes to the supply of electricity.

I can persuade you to search differently, and in time I believe we will all search more prudently, but are you ready to get inside your electrical system and really understand the intricacies of your electrical use.

What happens if Google decides that California needs to reduce energy use in a heat wave so that Google can get a better price for the electricity they generate from a solar farm. who decides what is the best use of what energy and what we pay for it?

I am OK if we decide it is Google, but I suggest we think carefully on this first?

We allowed the banks, motivated by profits and share prices decide what money instruments were appropriate, until the United States economy was brought to an almost collapse. Pick you political side, it was a good thing the government could intervene for a time and stabilize things.

If we want Google to have the knowledge to control energy, I suggest we do let them also have the incentive to deliver it!

There will always be times we ask a fox to watch our chickens, but may I suggest we keep a watchful eye on what Mr Fox is really up to!

José Antonio Vanderhorst-Silverio, Ph.D.

I disagree with the suggestion: “If we want Google to have the knowledge to control energy, I suggest we do let them also have the incentive to deliver it!”

The response is in reverse. First, a Smart Grid delivery only utility should have the primary responsibility to deliver electrity.

Second, Google then should not have the knowledge to control energy, but be secondary to delivery. Google may develop its business model innovations to particpate in the business architecture competition as a Second Generation Retailer with other potetial retailers like INTEL, Microsoft, etc.

Casey Verdant

This is a really interesting move on Google’s part to power its own data centers and make a grab at one of the most profitable sectors of American industry. Let’s hope Google Energy is as green and creative as Google’s other subsidiaries.

If you’re interested in alternative energy and green tech, check out http://www.greencollareconomy.com. It has hundreds of case studies on emerging green technology. It’s also the largest b2b green directory on the web.

Rudy Vee

Well, if they did it with a phone, why not a car? A Google Car you hook up at power stations in parking lots of the grocery store. Data is then downloaded from your car to track your driving habits and ads uploaded to your touchscreen display on your dashboard. Google supplies the car and power, you supply your information. Judgement day, no?

Paul

It’s quite simply about Google going vertical.

If you make steel you want an ownership stake in mines, if you make cell phones you want ownership of chips. Google are going vertical at both ends to improve profitability. Selling cellphones at one end and reducing electrical supplier profits at the other by getting into the wholesale market themselves.

Lorenzo McIntyre

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.

Cindy

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.

J P

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

Plete

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!

Katie Fehrenbacher

@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?

Jim M

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.

Jim M

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.

José Antonio Vanderhorst-Silverio, Ph.D.

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

Comments are closed.