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Google Gets into the Wind Game

July 25, 2010

This is fascinating – Google – formerly in the information business, is now in the wind energy business.

Google is officially in the green energy business. The search giant announced on Tuesday that its Google Energy subsidiary signed a 20-year power purchase agreement with NextEra Energy. Google will begin buying 114 megawatts of electricity from an Iowa wind farm on July 30.

Google, of course, cannot directly use the clean green energy generated by the wind farm; that power goes into the local grid. So Google Energy will sell the power on the regional spot market, where utilities and electricity retailers go to buy power when demand spikes and they have a shortfall. Google will use the revenue from spot market sales to buy renewable energy certificates (RECs) which will offset its greenhouse gas emissions.

Many companies buy RECs in an attempt to be carbon neutral, obtaining them from third-party brokers. But by purchasing RECs directly tied to the renewable energy it is also buying, Google is getting a bigger bang for its buck.

“By contracting to purchase so much energy for so long, we’re giving the developer of the wind farm financial certainty to build additional clean energy projects,” Urs Hoelzle, Google’s senior vice president for operations, wrote on a blog post Tuesday.

In general (and IMHO) it’s often a mistake to drift away from the core of what you do.  When you do you can dilute what makes you, you.  But this kind of makes sense – Google is a huge energy user – it’s server farms are huge and given the projected path of oil usage it’s hard to see energy prices doing anything but go up.  So a bit of vertical integration here might pay dividends in the long run – and also help build the green energy sector.  It will be interesting to see how this pans out…

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