The new, old kid on the block

Just last week, Google rifled in its back pocket for some spare change, fished out a tidy $168 million, and happily handed it to renewable power company BrightSource Energy.

Just another day in the life of a computing gazillionaire, it seems. But the investment marks a strong trend in Google's purchases, which amount to $250 million so far in renewable energy ventures. Oh wait, this just in, Google invests $100 million in a project to build the world's largest wind farm in Oregon. Make that $350 million then.

Its other investments include $115 million to BrightSource in 2008, $10 million to build infrastructure for an off-shore wind farm in 2010, and another $5 million to a solar plant in Germany.

Google, which cut its teeth in an industry as it was being created, is not one to hold back on the future.

Lezette Engelbrecht

Both of its most recent investments are considerable - BrightSource is building a 392MW solar power plant in California's Mojave desert, the largest solar thermal facility in the world, which aims to produce enough solar energy to light 140 000 homes. The Shepherds Flat wind farm is set to churn out 845MW of energy - enough to power more than 235 000 homes.

Google has put its full weight behind the transition to a cleaner economy, not only in terms of capital funding, but by putting its intellectual talent to work. It has drafted a proposal for clean energy by 2030, and introduced a “Renewable Energy cheaper than Coal” initiative.

Clearly, Google recognises a promising idea when it sees one. The difference is, while many acknowledge the potential of clean energy, few are willing or capable of throwing in a few hundred million to help it on its feet.

To some extent, this is due to hesitance on the part of investors, who are reluctant to commit to a particular technology while national and global markets battle a tangle of incentives, taxes, regulations, policies and targets.

But Google, which cut its teeth in an industry as it was being created, is not one to hold back on the future. It had to learn entire business models as it pioneered services, which bred the cunning and vision for it to know what to put its money on.

It's not an uncalculated move either - the renewable energy market is certainly not a new one, it's just been biding its time, while coal hogged the spotlight with promises of cheap and quick power.

Inevitably, renewables will become the dominant generation source, given oil, gas and coal are headed for obsolescence, and losing support thanks to their heavy pollution levels and emissions footprint.

Governments in developed and developing economies are increasingly making use of alternative sources and old energy players are looking to diversify their offering, faced with the dwindling shelf-life of their primary products.

The conclusion is obvious, and Google knows the value of getting behind promising solutions early on. Its investments are also for actual projects, not simply technology development funding, so Google plans to bank on the lucrative opportunities involved.

Renewable energy companies seem to have a great formula for potential success: a workable idea based on available technology, a huge market (some 1.5 billion people globally are without electricity), and increasingly faster ROI.

The challenge comes in securing funds now for energy that is still more expensive, rand-for-rand, than the fossil fuel-based variety (although not if fossil's negative externalities, and the significant subsidies for their production and use, are factored in). The latter amounts to between $500 billion and $700 billion a year globally.

And that's where the tech giants' deep pockets come in. Many government and public sector financing schemes are tied up in red tape and delayed regulations, stalling the growth of potential renewables players.

But those who were the innovators of their time can see where things are headed - a cleaner economy with energy solutions that will benefit the environment, society and business - and they have the capital to help start-ups clear the initial hurdles. They were once there, after all.

It's many of the same companies that once spotted potential in the market, and knew their idea would work if given a fair chance, that are giving the renewables guys a leg-up.

In the late 90s, tech companies were the young daring upstarts with plenty of ideas and the determination to push the boundaries with new technology. Following the burst of the dot-com bubble, however, many faced a tougher market, and those that survived, including Google, Yahoo, Microsoft and eBay, are now some of the biggest commercial giants in history.

The lessons they learnt during the time have give them keen instincts, so it's telling that nearly all of them have made investments in clean energy. Bill Gates is supporting Vinod Khosla's fund green technologies, an algae fuel company, and nuclear tech firm TerraPower. eBay is trialling BloomEnergy's fuel cell technology, a company whose initial investors include Kleiner Perkins, an early backer of Google and Amazon.com.

Google started out with little guidance in how to run a company initially based on a clever search engine. It had to make, break and rewrite many of its own rules, adapting to new demands and the breakneck pace of tech innovation.

Many renewable energy start-ups - the new generation of pioneers - face a similar struggle, but for different reasons. Their problem isn't that there's no path, it's that it's so riddled with legislation, policies, and unclear fee structures, that hacking one's way through takes everything you've got. Including a lot of money.

There's another reason for Google's backing of clean energy developments, of course. It has its future energy demands in mind, as the digital universe heads into the trillions of gigabytes in the next decade. That's a whole lot of data that needs to be stored somewhere, and given Google facilitates a fair bit of it, it better start building up some reserves.

Oh yes, and then there's that thing called the cloud. That may add a few bytes to the equation.

Being a forward-looking bunch, the folks at Google realised the energy supporting its future appetite had better be the tax-friendly, sustainable kind

Finally, perhaps just a little bit of its support is because it has a soft spot for the underdog. It was there itself once - two guys in a garage with a dream and an algorithm...

And just take a look at it now.