Google gets into the energy business

The company is slowly moving into the electric utility sector, buying and selling output in Texas and Oklahoma.

By Kim Peterson Sep 18, 2013 3:33PM
Wind turbines in harvested wheat field, Oregon
Inga Spence/Getty ImagesGoogle (GOOG) is moving into the utilities business, announcing this week that it will buy the entire production of a Texas wind farm.

The company isn't alone in its growing interest in energy. Supermarkets and other companies are slowly moving off the grid by providing their own power production, particularly as the technology improves and it becomes cheaper to do so.

In Google's case, it needs a lot of electricity for its vast data centers located all over the world. So Tuesday, it announced a deal to buy all of the output from Chermac Energy, a small company developing the 240-megawatt Happy Hereford wind farm in Texas.

Regulations ban Google from using the energy directly. Instead, it will sell the electricity from the wind farm into the grid covering its data center in Mayes County, Okla., GigaOm reports.

Google has done this several times before -- although its previous deals haven't been this large -- and is so invested in the idea of renewable energy that it now has its own Google Energy subsidiary to buy and sell energy on the wholesale market. The move allows it to reduce its carbon footprint and promote a cause its founders believe in.

Along the way, Google is "slowly starting to upend the traditional utility business," writes Todd Woody on Quartz. That could be yet another in a string of bad news for the country's traditional energy companies, which are already struggling with a growing interest in residential solar leases due largely to SolarCity (SCTY) and other providers.

Other companies are keen on developing their own power facilities. Grocery giant Kroger (KR), for example, has two big wind turbines in Lancaster County, Pa., The Wall Street Journal reports. In California, Kroger has installed a tank system to turn damaged produce and bread into a biogas that is burned to provide electricity. Overall, Kroger says, it's now saving $160 million a year on electricity -- no small change for a company operating on traditionally razor-thin margins.

Wal-Mart (WMT) has been putting solar panels on its store roofs for years. Now, the company only produces about 4% of the electricity it uses, but tells Google it hopes to up that to 20% by 2020.

The growing interest in renewable energy shows no signs of slowing, thanks partly to Hurricane Sandy, the economic downturn, the plunging price of solar panels and the general shift to be more green. We won't be getting power bills from Google anytime soon, but we'll feel the impact as companies simultaneously take pressure off of the grid and take revenue away from utilities.

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1Comment
Sep 18, 2013 4:22PM
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Now Google is showing Real Innovation, not the BS monopoly money printing via the Global FEDS. Not the farce Banking Derivatives that destroyed the Global Economies.
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