Google to seek cheaper, cleaner energy sources

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Internet giant Google is expanding from search and advertising to try developing cheap energy alternatives to coal.
The initiative, Renewable Energy Cheaper Than Coal, will focus initially on solar, geothermal and wind energy.

Google (GOOG) will use its vast resources to buy companies and hire engineers to see this initiative through.

“Our goal is to produce one gigawatt of renewable energy capacity that is cheaper than coal,” Google co-founder Larry Page said Tuesday. “We are optimistic this can be done in years, not decades.”

One gigawatt can power a city the size of San Francisco, with 750,000 residents, Google says.

Google got interested in helping fund new renewable energy sources because it is a huge consumer of electricity for its big data centers. They house hundreds of thousands of computers that run the Google search engine. Additionally, it wants to help solve the global warming crisis, and says cheaper and cleaner energy sources can help do that.

Piper Jaffray (PJC) analyst Gene Munster expects Google to spend $500 million on the project, or 3% of its cash holdings.

Co-founder Sergey Brin says expanding into energy doesn’t take away from Google’s goal of organizing the world’s information. The company works on what it calls the 70/20/10 rule. That is, 70% of its efforts go to the core businesses of search and advertising, 20% to adjacent areas and 10% to anything Google engineers feel like pursuing.

Renewable energy experts welcomed Google’s entry. “Google sells a product you can’t put your hands on that people love to use, which isn’t dissimilar from the electric utility business,” says Mike Eckhart, president of the American Council on Renewable Energy.

Google will “attract very good people,” says Steve Chu, director of the University of California’s Lawrence Berkeley National Laboratory.

Brin was asked on a conference call with reporters how Google could preach for new energy while executives crisscross the globe on its company jets. “To deal with climate change, you have to tackle the big problems,” he said. “To think that people are going to stop traveling is unrealistic.”

Google watchers are “skeptical” about the latest move, says analyst Greg Sterling of Sterling Market Intelligence. “They seem to be getting into so many areas outside of search. There’s a quality to this aspiration that’s a little hard to accept, because it’s so ambitious.”

In the last year, Google announced moves outside of search, including an attempt to develop an open operating system for cellphones based on Google technology, and buying wireless spectrum for a cellphone network.

“If we look ahead to Google in five years, it will be primarily a search company,” Munster says. “Their core business will be unchanged.”

[Read On: USAToday]