Why Google invests in clean energy

Last year, Google invested more than $915 million in clean energy projects–solar, wind and transmission.

That’s a lot of money, even for Google, which had $38 billion in revenues in 2011. The investments don’t appear to be core to the company’s mission of organizing information, and they have attracted criticism, as well as some careless reporting, implying that the Internet giant is exiting the alternative energy business.

Does Google have an energy policy? Does it need one?

To find out,  I recently went to see Rick Needham, Google’s director of green business operations, at the company’s fabled headquarters (well, fabled for a 13-year-old company, anyway) in Mountain View, CA.

I came away not merely persuaded that Google’s energy investments make sense, but thinking that other companies that consume lots of electricity and have a pile of cash on their balance sheets  — Apple, Microsoft and GE come to mind — should consider deploying some of their cash in the clean energy sector.

Clean-energy investing isn’t philanthropy for Google. It’s business. In fact, it’s a classic double-bottom line investment, one that is intended to deliver environmental as well as financial benefits.

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NRG’s David Crane: straight talk about energy

Washington may be stuck in neutral–or worse–when it comes to climate policy, but NRG Energy and its chief executive, David Crane, are aggressively pushing clean energy.

NRG Energy is investing in nuclear power, solar energy (photovoltaic and utility-scale solar thermal) and electric cars. It’s powering the Empire State Building. It’s even helping to finance off-the-grid solar power in Haiti.

“Washington is not filled with people who are going to lead,” Crane says. So it’s up to business to show the way.

I interviewed David Crane at the State of Green Business 2011 forum in Chicago. He’s always a pleasure to talk to because he’s brimming with ideas and tells it like it is. Based in Princeton, N.J., NRG is a $9 billion a year independent power producer that operates coal, nuclear, natural gas, wind and solar plants.

Here are some highlights from our conversation:

On nuclear power: “Nuclear is the ultimate green solution, if what we are solving for is climate change,” Crane said. NRG wants to build a new 2,700 MW nuclear faciity in Bay City, Texas, next to an existing plant. It would supply enough energy to power 2 million Texas homes. The project requires federal loan guarantees and progress through the regulatory system has been slow.

Despite strong support for nuclear from President Obama, Energy Secy Chu and Republicans in Congress, the U.S. is likely to build no more than two new nuclear power plants in this decade, “which is not exactly a nuclear renaissance,” Crane said. [click to continue...]

The hidden costs of solar power

In this sluggish economy, you would think that selling expensive electricity to businesses or homeowners would not be a good business. But the solar-power industry is doing exactly that. Solar power is more expensive that making electricity from natural gas, coal, wind or existing nuclear plants, and yet the business is booming. [See: U.S. solar power: doubling in 2010!]

Hardly a day goes by without good news for the solar industry. For example:

BrightSource Energy, Inc. just announced that power generation company NRG Energy will invest up to $300 million to become the biggest owner of the  Ivanpah Solar Electric Generating System, the largest solar thermal system in the world, just beginning construction in California’s Mojave Desert. Gov. Schwarzenegger and Interior Secy Ken Salazar joined in a groundbreaking today. That’s a mock-up of the Ivanpah plant, above.

And:

SunRun, a California-based home solar company, said this week it received an additional commitment of tax equity from an affiliate of U.S. Bancorp to develop 1,900 residential solar installations. Given that the typicalinstallation costs about $35,000, that’s roughly a $65 million investment. SunRun has now raised more than  $300 million in project financing.

Recently, I visited a solar PV manufacturer,  Solyndra, at its headquarters in Fremont, CA. While Solyndra is worried about competition from low-cost manufacturers in China, it is still selling all of the photovoltaic panels it manufacturers. Recently:

It announced deals to installs its cylindrical solar panels on the roof of a Frito-Lay manufacturing plant and on rooftops in the Los Angeles area that will supply 16.2 MW of power to Southern California Edison.

None of this comes cheap, although calculating the cost of solar power is not simple–it depends on the kind of system in place, its location and the costs of financing, since “fuel” from the sun is free. Solarbuzz, a respected source, says that:

Solar Electricity Prices are today, around 30 cents/kWh, which is 2-5 times average Residential electricity tariffs.

According to the Energy Information Administration, the average residential price for electricity in June was 12 cents/kWh, the  average commercial retail price was 10.70 cents/kWh and the  average industrial retail price was 7.31 cents/kWh.

So why do the economics of solar power work for the industry? The answer, you won’t be surprised to learn, is generous government subsidies. [click to continue...]