Why Google's So Interested in Wind Energy

Last Updated May 6, 2010 3:07 PM EDT

Google (GOOG) made its first direct investment -- $38.8 million in pocket change, to be exact -- in a North Dakota wind energy project this week. The investment has left a few folks scratching their heads and asking what the heck does wind have to do with search engines?

Google isn't merely throwing money at random experiments in hopes of discovering something new, nor is it planning to directly use the electricity generated at the two wind farms. This is a calculated business move to learn more about wind energy and, more importantly, transmission grids as well as make some money in the process.

The investment make sense considering Google relies heavily on energy to power its dozens of massive data centers scattered around the world. Google's investment in cleaner and low cost energy sources as well as technology to deliver power more efficiently are directly connected to its core business. Why shouldn't Google have a direct hand in promoting the kinds of technology that could save it money down the road?

Google is no stranger to renewable energy. But until now, Google's clean energy investments have come through its philanthropic arm, google.org or more recently through Google Ventures, its year-old venture capital unit. This latest investment comes directly out of Google, and that means the company expects to generate some positive returns on its capital. As Rick Needham, Google's green business operations manager, put it in a recent blog post:

We're aiming to accelerate the deployment of renewable energy -- in a way that makes good business sense, too.
Google's isn't investing in some small time player either. NextEra Energy Resources, a subsidiary of FPL Group (FPL.N) and the company developing the wind project, is the largest installed wind power generator in North America with more 75 wind farms and 7,500 net megawatts in capacity. Plus, NextEra is at the forefront of wind turbine technology and control systems, Needham noted in his post. As a result, NextEra provides one of the lowest-cost sources of renewable energy to the local grid.

But it's not just about harnessing the wind in the most effective way possible. It's also about getting that energy into homes, the crux of wind energy. In short, you can have the most efficient turbines and capture more wind power than anyone else, but that won't matter if you can't effectively direct that energy into the local grid to be used in homes.

Google has already shown a lot of interest in improving the transmission grid and has invested in smart grid technology. Google.org jumped last year into the smart grid scene with PowerMeter, its home-energy management software tool. And Google Ventures has invested in smart meter start-up Silver Spring Networks.

Photo of wind turbine from Stephan Uhlman, CC 2.0 See additional BNET Energy coverage of Google and its clean energy investments: