I spend a lot of time reading various tech related publications at work. I just finished this great article about GE and Google, specifically what they want to see happen in the future with energy. It’s full of great ideas that I hope to see become reality. Check it out!
Every year,
Google Inc. invites a group of global A-listers to its own Davos-style conference to think big thoughts. The event, called Zeitgeist, tends to be as pretentious as its name—captains of industry, finance, and government chattering onstage in front of about 400 of Google’s friends and customers about the fate of the internet and the world.
The 2008 version bordered on the surreal. The stock market was tanking, the bond market had flatlined, and the price of gold was surging to its biggest one-day jump in nearly a decade, an indication that investors everywhere thought the global economy was going to hell.
Yet here was Eric Schmidt, Google’s chairman and CEO, on a sparse stage at the company’s Mountain View, California, headquarters, in a green-energy love-in with his counterpart at General Electric Co., Jeff Immelt. The pair bathed in the glow of each other’s affirmation, convinced that the two companies, working together, can save the planet. ( 
View a graphic showing how much energy Google’s own data centers use.)
“I don’t think this is hard,” Immelt said in response to a question from Al Gore, a Google groupie. “I’d say health care is hard. Solving the U.S.’s health-care system is actually quite difficult. Energy actually isn’t hard. The technology exists; it doesn’t have to be invented. It needs to be applied.… We make the gadgets—smart electric meters, things like that. People like Google can make the software, which makes the system. That’s the key to renewable energy.”
Schmidt and Immelt are betting big that green energy will become the steam engine of the Obama age—the driver of a new industrial revolution that can generate untold amounts of jobs and economic growth while rescuing the earth from global warming. For GE, with its massive energy division, including investments in windmills, air conditioners, and power plants, an interest in grabbing part of the renewable-energy business is a no-brainer. As Immelt tells me in an interview, GE doesn’t need Google’s technology so much as it needs its cachet. “Google has a special brand around consumer-user interface, around software and the internet,” he says. “I think that there’s clearly a halo about two great brands when they get together.”
It is Google—with a thinner résumé but an enormous bank account—that is the curiosity. Schmidt’s ambition is to turn Google into the, well, Google of the renewable-energy economy. Just as it imposed order on an unruly Web, Google is hoping to make sense of an always-on electricity grid and help consumers decide when to power up appliances and plug-in cars and when to turn them off. The company is investing tens of millions of dollars—with plans for hundreds of millions more—to reorganize America’s antiquated energy infrastructure in the image of the internet: decentralized, distributed, disembodied. “If you do this right,” says Schmidt, “it sure sounds a lot like the internet: a set of cooperating networks where the traffic and power flow, where people can connect with anything they want. They can be consumers as well as producers. The internet created a tremendous amount of wealth for America, and I think we can do it here too.”
Google’s higher calling comes directly from co-founders Sergey Brin and Larry Page, both ardent environmentalists. But it’s made real by the same moxie that has driven Google to create digital editions of 7 million books, with scant concern for copyright issues, and to amass satellite images of almost all of the earth’s nooks and crannies. “We only hire people who really, genuinely believe that big change is possible and the right thing to do,” says Erik Teetzel, a 34-year-old Google engineer who heads a team of researchers looking for ways to produce cheap renewable energy.
Still, now doesn’t seem like an ideal time for Google to be making such an ambitious move. Oil prices are down, eradicating much of the demand for alternatives to fossil fuels. A global economic downturn means many companies now consider green technology a luxury they can’t afford. Spending on green projects is being delayed while companies wait for the economic storm to pass. Even Google itself has had better days. Its internet-advertising franchise is under more strain than ever, and its stock price, once stratospheric, is down about 50 percent over the past year.
The truth is, Google has never been very successful at diversifying its business; 97 percent of its revenue still comes from online ads. Yet prospecting for new opportunities, at great expense and effort, remains as much a part of company lore as free gourmet meals. “Nine years ago, people said, ‘How can you charge people to do searches on the internet,’ ” says Teetzel. “Larry and Sergey said if you solve the big problem, you can figure out how to make money off it. The same idea applies to energy. If we solve the big problems, we’re going to figure out how to make money.”
Don’t put it past them, says Immelt, who signed an agreement at Zeitgeist to collaborate with Google on technology development and to jointly lobby Washington for green-energy projects. “I’ve never seen a company in my career do as many things well as quickly as Google has done,” he says.
Google’s goal in energy is twofold: First, it wants to make your home energy-smart, so that appliances know when to power up and power down, and heating and cooling systems respond automatically to changes in the price of energy. The company views this as essentially a software problem, akin to making sense of the torrent of information on the Web. But before Google can transform your home, it’s pushing for a revolution in the way energy is produced.
The system of making and distributing electricity in the U.S. is a century old and miserably outmoded. Electricity is sent to factories and homes from large, central power stations, often built far from big cities because of the pollution factor. The old power lines leak like sieves; between 5 and 7 percent of U.S. electricity is lost through the nation’s 200,000 miles of high-voltage wires. But erecting new transmission lines is political drudgery, requiring cooperation across multiple local, state, and federal jurisdictions, any one of which can stall a project for years. In addition, the utilities have delayed expanding and upgrading existing power plants because doing so would require them to install state-of-the-art pollution controls that they contend are too expensive. Consequently, the U.S. grid has stagnated, with the capacity for generating power growing four times faster than the capacity to transmit it. Bill Richardson, the governor of New Mexico and a former energy secretary, calls the grid “third world.”
The decrepit system is a serious impediment to renewable-energy projects on a grand scale. To move wind and solar power to consumers from the breezy Great Plains and the sunbaked deserts of the Southwest, the U.S. needs about 20,000 miles of new transmission lines. It also needs a massive upgrade of the analog grid that directs the energy from place to place, with new computers, sensors, and communication gear to manage the network.
Unlike nuclear reactors and most fossil-fuel-burning plants, windmills and solar cells produce electricity only when the wind blows or the sun shines. An automated grid is crucial for managing the constantly fluctuating power from renewable sources.
The world as envisioned by Google includes a vast computer network that monitors and controls the nation’s electricity grid and sets prices for power based on real-time supply and demand. For example, the system could, on a particularly hot afternoon, send a signal to millions of utility customers warning that power prices are soaring. The information could be fed directly into an energy-management system linked wirelessly to people’s air conditioners and appliances, and their Jacuzzis, garden lights, and electric cars. After being programmed, the system would automatically shut down designated devices if prices hit preset levels, just as program trading automatically buys and sells stocks. For those without automatic systems, it would take just a few keystrokes from a computer at the office to power down selected machines at home and avoid being walloped by the price spike.
The grid itself would work in similar ways. If it faced shortages, it could send out a signal offering to buy back power stored in people’s electric car batteries for a healthy premium above what the same electrons cost just 15 hours earlier. Those interested would click accept on their computer screens. The network would locate their vehicles and automatically activate decharging. Eventually, demand and prices would drop, triggering dishwashers and clothes dryers to switch on. Electric cars would resume charging.
By Schmidt’s reckoning, the smart grid that Google wants to build would fix a massive market failure. Electric utilities, old and “structurally slow,” he says, haven’t invested in new technologies, even “when there’s a significant business opportunity before them.” In most states, they have an incentive simply to produce and sell as much power as possible. As monopolies that get paid for moving big volume, the utilities have no reason to make electricity use smarter. This, Teetzel says, has made power companies “traditionally risk averse.” He adds, “That’s not in our DNA.”
Google’s green-energy czar, Bill Weihl, is a former professor at the Massachusetts Institute of Technology who made his name as a world-class computer scientist in the 1980s and 1990s, then worked for Digital Equipment Corp. and Compaq, where he led research on distributed and parallel computing that produced 19 patents. Now he’s fully immersed in energy. He drives a Prius and has solar panels on his San Francisco rooftop, which he expects will pay off in energy savings after 20 years.
When Weihl came to Google in 2006, he was given a specific assignment by Brin and Page: to green Google’s sprawling data centers and “do it in a way that makes the rest of the world do it too,” Weihl explains.
Energy has preoccupied Google for years. The servers used for Web searches consume vast amounts of expensive energy, and running and cooling those servers has become a significant cost for the company. By altering the voltages and power supplies inside its servers, Google found it could reduce its overall energy consumption by as much as 50 percent below what most other companies use to run their systems.
The servers themselves are designed by the same group that builds and manages Google’s data centers, so energy considerations are integrated into every part of what Weihl calls the “total cost of ownership.” That means Google’s computer architects are supposed to think as much about heating and air-conditioning bills as its building architects do. “In many organizations, the guys in IT and the guys in facilities have never met,” Weihl says.
But even at Google, green energy doesn’t immediately pay. Renewable power, at roughly 8 cents per kilowatt-hour for wind and several cents more for solar, costs up to twice as much as electricity generated from coal. So Google is looking for ways to make renewable energy cheaper. It has invested more than $100 million so far in companies doing similar work, including a $15 million equity bet on Makani Power, which aims to produce utility-scale electricity from high-altitude kites, and $10 million investments in eSolar and BrightSource Energy, a pair of solar-thermal companies that use exquisitely calibrated mirrors to concentrate sunlight on a central water tower that acts as a boiler.
“Right now,” Schmidt said recently, “our primary mission is one of information.” If the company can use its core information business to promote more efficient energy use, he suggested, then “we’re clearly going to do that.”
Google’s green apostle after Schmidt is Dan Reicher, who directs energy and climate-change initiatives for Google .org, the company’s philanthropic arm. When we meet for lunch at Google’s cafeteria in its San Francisco office building—mahimahi burgers and polenta—Reicher, 52, is enthusiastic about his new role. An avid whitewater kayaker and conservationist, he spent a decade in the trenches as an environmental lawyer and prosecutor, and then eight years in senior posts at the Department of Energy under Bill Clinton, ultimately serving as assistant secretary in charge of energy efficiency and renewables. In 2007, Larry Brilliant, director of Google.org, lured him west from a private equity firm that Reicher had co-founded to invest in clean-energy projects. Google, Reicher tells me, has “all the tools under one roof” for an energy breakthrough: engineering, money, vision, and a lot of nerve.
But for Reicher, working with Google is a bit like going back to college. At the yogurt bar, surrounded by Googlers half his age, Reicher in his brown tweed looks like the wizened professor lunching with blue-jeaned students in the dormitory dining hall. When Google launched its initiative to develop low-cost green power—awkwardly named RE<C, for “renewable energy cheaper than coal”—some of the young engineers wanted to set a goal of producing 1.21 gigawatts of green electricity, the precise amount needed to power up Doc Brown’s flux capacitor of the time machine in the geek classic Back to the Future. (They even proposed linking their press release to a clip from the film.) “The adults prevailed,” Reicher says, relieved, and Google set the bar at an even 1 gigawatt, enough electricity to power a city the size of San Francisco.
Reicher says his mandate from Schmidt and the founders is to look for bold ideas. “For big impact, we’ll take some big risks,” he says. That may include investing in energy startups entering the dreaded “valley of death,” where so many go under for lack of funds. Google is also looking at filling some of the void in project financing created by the tanking economy. Reicher says, “You need look no further than the fact that AIG, Wachovia, and Lehman Brothers”—at one time, three of the biggest backers of green-energy projects—“are all gone” from the scene.
Reicher and Google are also hardwired into President Barack Obama’s administration, which has made federal spending on energy efficiency and renewables a pillar of its economic-stimulus package. Reicher helped raise $2 million for the Obama campaign, as a leader of a group named Cleantech & Green Business for Obama. He spent last fall commuting to Washington, D.C., to help chart energy policy for Obama’s transition team and was reportedly on the short list to become Obama’s energy secretary. (The job ultimately went to Steven Chu, a physicist and Nobel Prize winner.)
Schmidt also advised the president on economic issues and served on his transition team. Gore, an unofficial energy adviser for Obama, sits on Google’s advisory board.
For all of them, it’s an article of faith that renewables and the smart grid won’t happen without billions in federal subsidies and incentives. “These stimulus packages will be big enough that our little corner, the one we’re working on, is a relative rounding error,” Schmidt said in a speech on renewable energy. “So that’s where the money comes from.”
In early December, Reicher led a group of five Google engineers and a policy counsel from Washington on a visit to GE’s Global Research Center in Niskayuna, New York, outside Schenectady. The 525-acre campus, with 1,900 employees, is a nerve center of Immelt’s effort to keep GE at the forefront of technologies in which he wants the company to dominate. With a late-autumn ice storm downing power lines throughout upstate New York—and eerily encasing the GE lab in an ice-laced forest—two of the best-known brands of the old and new economies measured each other’s worth. The Google crew left their rooms at the GE guesthouse and dove into a series of morning meetings with their GE counterparts on enhanced geothermal power, plug-in vehicles, and smart-grid technology.
The Googlers were young and inquisitive—some of them still in their twenties—like brainy students on a field trip to the science museum.
The highlight of the day was a visit to GE’s smart-grid lab, a roomful of instruments, screens, and appliances designed to model what it would be like to integrate and automate the U.S. electricity network, top to bottom. A GE engineer, punching keys at a keyboard, alerts the network to a summertime surge in power demand, a “peak event” that triggers a concurrent spike in the price of electricity. The data flashes on an Eco Dashboard in someone’s home, and with the click of an icon, several appliances power down. As patterns emerge, the GE engineer explains, the system will program itself, so customers can select energy plans in advance, just like they pick cell-phone plans. The Google people are riveted.
“Let’s talk about the competition. What are the Japanese and Koreans doing?” a Googler asks.
“We have not seen anybody besides GE looking at energy optimization that reaches all resources” on the grid, responds Juan de Bedout, the head of power-conversion systems at GE’s Global Research Center. “We think this is a unique competitive advantage for us.”
As part of their collaboration, GE and Google will launch an advocacy campaign in the nation’s capital to push for more federal subsidies and incentives for green power. The government, Immelt says, must be a catalyst for change. “I would say this with humility, as I sit here today,” Immelt said. “Look, I’m a lifelong Republican; I believe in free markets. But I think that, to a certain extent, we worship false idols over time. There’s been no such thing, in all the businesses we do, as one in which the government hasn’t played some role. So let’s just be clear about that.”
On renewable power, Schmidt says much the same thing, without the humility. “I’m quite convinced that if you follow my reasoning, and if you take advantage of the technological opportunities, the funding opportunities, and the apparent willingness of the U.S. government to write large checks in a series of crises,” he gushed in October, “we could do this on Monday.”
