Google’s Gambit: Investing In The Wind

Politicians, environmentalists, and the private sector have been locked in debate for years over the future of America’s energy infrastructure. Should the largest economy in the world remain powered by oil, or should it switch to nuclear power? How about alternative energy sources, such as wind, water, and geothermal production processes? Or should America continue relying on oil as a primary resource, while simultaneously striving to develop domestic coal and natural gas supplies as well?

Of course, this choice of energy source and production method only represents the first challenge confronting America’s energy policy makers. They face a second challenge as well; namely, how should the energy itself be transmitted from the generation site to the user? Although the general public has always demanded cheap and readily accessible energy, it has no desire to live and work near gigantic towers of newly constructed power cables, fearing everything from property values declines to cancer epidemics.

An innovative solution, though, may have emerged last week from an unlikely source: the online search giant Google. With a single enormous investment decision, the firm may indeed have placed America firmly on the path to energy independence.

Harnessing The Power of The Wind

Most policy makers agree that renewable energy sources provide the most attractive long term potential for meeting America’s energy needs, considering their ubiquitous presence and lack of resultant environmental pollution. Ever since the Dutch first constructed wind mills to power their communal drainage systems and operate their milling factories, every breeze has carried the potential to power industrial societies, at least in the imaginations of romantic environmental visionaries.

Texas energy billionaire T. Boone Pickens has proposed the construction of gigantic wind mills throughout the wind swept Great Plains of the midwestern United States, but his plan has been stymied by the private ownership of prime locations, as well as community opposition to land-based transmission cables. And relatively small wind farms in the Atlantic Ocean, close to picturesque shorelines and islands such as Martha’s Vineyard, have been delayed by environmentalists and wealthy residents who prize their pristine ocean views.

What America needs is a series of wind farms that are as large as the land-based establishments proposed by Pickens, but that are placed far off-shore in the Atlantic Ocean to relieve the concerns of coastline residents. Such remote energy sources, though, would only be technologically feasible with an additional mammoth investment in the underwater sea cables that would be required to transmit the power to the mainland.

Enter Google!

This is where Google stepped into the debate last week, making a $5 billion investment in a proposed off-shore Atlantic Ocean transmission system that would span much of the eastern coastline of the United States, running from New York City to Virginia. Along with a matching $5 billion investment by the clean energy investment firm Good Energies, as well as a smaller stake by the Japanese trading firm Marubeni, the internet giant is placing a huge financial bet on the future direction of the American energy industry.

Why is Google so interested in America’s energy infrastructure? Its motivation should come as no surprise to any internet user; it must operate massive clusters of computer servers to provide its services to a web-surfing public, and those clusters require enormous amounts of energy for operational purposes. Nevertheless, although Google’s investment cannot be construed as a purely altruistic gesture, their decision may result in America’s long term gravitation from an oil-based economy to a wind-fueled one.

President Obama has long advocated that the United States government allocate significant research funds to the development of renewable energy resources. Many experts agree with the President about the wisdom of this strategy, noting (with some trepidation) the competitive investments now being made in China to capture the market for clean and environmentally friendly fuels. At a time when governmental resources are stretched thin, Google has decided to dedicate its significant private sector investment funds to a project that arguably supports the public interest.

Even Short Term Benefits

Interestingly, the project has been ingeniously designed to yield short term benefits as well. For instance, even before the off-shore wind farms are actually built and placed in operation, the transmission system will be able to carry power from the energy-rich southern states to the fuel-hungry northern regions. In other words, the system will be used to better match current supply and demand by utilizing a transmission capacity that is “out of sight and out of mind” to American citizens.

Will it ever be built? Will it successfully wean Americans away from their addiction to fossil fuels? Google itself has just placed a $5 billion bet on these questions, in the hopes that a successful investment will help our nation solve one of our most vexing challenges.