Google to invest millions into finding limitless sources of energy

Google, the Internet company with a seemingly limitless source of revenue, plans to get into the business of finding limitless sources of energy.

The company, based in Mountain View, Calif., announced Tuesday that it intended to develop and help stimulate the creation of renewable energy technologies that are cheaper than coal-generated power.

Google said it would spend hundreds of millions of dollars, part of that to hire engineers and energy experts to investigate alternative energies like solar, geothermal and wind power. The effort is aimed at reducing Google’s own mounting energy costs to run its vast data centers, while also fighting climate change and helping to reduce the world’s dependence on fossil fuels.

“We see technologies we think can mature into very capable industries that can generate electricity cheaper than coal,” said Larry Page, a Google founder and president of products, “and we don’t see people talking about that as much as we would like.”

The initiative, which Google is calling RErenewable energycheaper than coal,” will be based in Google’s research and development group.

The company also said that Google.org, the philanthropic for-profit subsidiary that Google seeded in 2004 with three million shares of its stock, would invest in energy start-ups.

Google says its goal is to produce one gigawatt of renewable energy — enough to power the city of San Francisco — more cheaply than coal-generated electricity. The company predicted that this can be accomplished in “years, not decades.”

For some Wall Street analysts, the most relevant question is not whether Google can save the world, but whether the company’s idealism may ultimately distract it from its core businesses of organizing the world’s information and selling online ads, nytimes.com reports.

“My first reaction when I read about this was, ‘Is this a joke?’” said Jordan Rohan of RBC Capital Markets. “I’ve written off Google’s competition as a threat to Google’s long-term market share gains. But I haven’t written off Google’s own ability to stretch too far and try to do too much. Ultimately, that is the biggest risk in the Google story.”

Google, now the sixth-largest U.S. company by market value, is taking advantage of its size, a growing mountain of cash, and global brand recognition in launching the campaign.

Officials said Google is targeting renewable energy that could produce a gigawatt of energy at prices, when investments are fully amortized, of 3 cents per kilowatt hour or lower.

"We think we need to get in the range of 1 to 3 cents per kilowatt hour to be cheaper than coal," said Bill Weihl, who carries the title of Green Energy Czar at Google.

The push comes as oil prices near $100 a barrel and coal, which generates 40 percent of the world's electricity, faces regulatory and environmental pressures that may boost prices.

"If they can do it cheaper than coal, then that's the Holy Grail," said Mark Manley, alternative fuels analyst at Natixis Bleichroeder. "If they figure it out, it will take off."

But he and other analysts warned that Google's hundreds of millions of dollars earmarked for the projects are unlikely to make a dent in the multitrillion-dollar energy market.

"This is a tall order to fill," Pavel Molchanov, an energy analyst with Raymond James wrote in a research note to investors. He said solar energy is not cost-competitive with conventional grid electricity in any major market.

If successful in generating power at prices below coal, Google would put the technology to work to slow climate change resulting from increased global coal and oil consumption.

"I don't want to overstate (our goal) too much," Page told Reuters in an interview. "Our goal is to do it in a way that could be applied to a significant amount of the electric generation in the world."

Google plans to spend tens of millions of dollars in 2008 on renewable energy development and other efforts. Its initial focus will be solar thermal and enhanced geothermal systems.

Eventually, the company would spend hundreds of millions of dollars in for-profit "breakthrough renewable energy projects." Hydroelectric and nuclear energy are not part of the project, Reuters reports.