Oct. 13 (Bloomberg) -- Google Inc., the Web company that a decade ago used engineering prowess to conquer the nascent online advertising market, is now aiming technology and its cash pile at another fledgling industry: offshore wind farming.
The company said yesterday that it’s investing in a $5 billion underwater network that can channel electricity from wind turbines scattered off the Atlantic coast, enough to light up 1.9 million homes from New York to Virginia.
“This project is Google’s signal that we want to have some real impact as we are also making serious financial returns in our energy project investing,” Dan Reicher, who directs Google’s energy and climate projects, said in an interview. “We couldn’t be in a better place at a better moment to be making an investment like this.”
Google is betting that its support will encourage other investors to back wind farming, which the Global Wind Energy Council says will generate more than 22 percent of the world’s electricity in two decades. The investment also may help the U.S. narrow a lead held by China, which is installing more than twice the wind-generating power of the U.S.
By investing in offshore turbines, Google is trying to avoid some of the criticism aimed at on-land wind farm efforts. Homeowners decry them as an eyesore, environmentalists say rotors threaten migrating birds, and many lawmakers have refused to fight in their favor.
“We have tried for years to lobby for policies to kick-start the development of renewable energy but have been met with nothing but stalemate in Congress,” said Melinda Pierce, lead lobbyist for the Sierra Club, a San Francisco-based environmental group. This project offers “the kind of new idea and initiative needed to develop utility-scale offshore wind.”
Offshore Farms Opposed
Even some offshore projects have met opposition. A planned farm off Cape Cod, Massachusetts, has been criticized by homeowners whose ocean views are affected and Native American tribes who say the structures would desecrate sacred rites.
Some lawmakers were loath to invest in green energy projects as the financial crisis and recession dragged on growth and sent the unemployment rate to 10.1 percent last October.
Under the new project, Google will buy a 37.5 percent stake in the development stage of the Atlantic Wind Connection project, said Rick Needham, director of green business operations at Mountain View, California-based Google. The new transmission line would form the “backbone” of an offshore wind industry that could add 6,000 megawatts of capacity to the grid. That’s as much as about five nuclear plants.
The first phase of the project, which the developers aim to complete by early 2016, would run about 150 miles and cost $1.7 billion to $1.8 billion, Needham said. The second phase to complete the 350-mile (563 kilometers) line could be finished by 2020.
The project tackles a key concern over the intermittent nature of wind power, which can force utilities to find other sources of electricity when the propellers aren’t turning, said Brandi Colander, a lawyer at the Natural Resources Defense Council, a New York-based environmental group. Google built a platform that lets multiple wind farms connect to the grid.
The Atlantic Wind Connection rounds out a widening portfolio of sometimes unconventional green-technology investments for Google. Last week, Google said it’s testing vehicles that drive themselves to help improve road safety and aid the environment. In September, Google said it invested $1 million to fund the research and development of a monorail that’s powered by pedaling passengers.
‘Not A Traditional Company’
In July, the company agreed to buy most of the electricity generated by a NextEra Energy Resources LLC wind farm in Iowa, with plans to resell the power to wholesalers. In February, the company won federal regulatory approval to trade in U.S. wholesale electricity markets.
Google, which offers a service that lets residents monitor energy use online, has used its philanthropic arm, Google.org, to invest in startups that include solar-energy provider ESolar Inc. and Makani Power Inc., a maker of airborne wind turbines.
“Google made it very clear that they are not a traditional company and they are not going to operate as one,” said Scott Kessler, an analyst at Standard & Poor’s, who rates the stock a “strong buy” and doesn’t own it. “If you’re going to invest your hard-earned money in Google stock, you need to understand that they are going to try to these things from time to time.”
Google would get a guaranteed return during the construction of the project if it’s approved by Federal regulators, said Daniele Seitz, a utility analyst at Dudack Research Group in New York. Transmission developers are allowed to pass along the costs of construction through power bill increases, Seitz said. Federal rules also let transmission line investors collect a profit on approved projects.
Reicher, an assistant secretary at the U.S. Department of Energy from 1997 through 2001, said Google considered the project for more than a year. Before joining Google in 2007, Reicher worked as president of New Energy Capital Corp., a private-equity firm in Hanover, New Hampshire.
Like other clean-energy investments, the Atlantic Wind Connection has the support of Google’s co-founders Larry Page and Sergey Brin and its Chief Executive Officer Eric Schmidt, Reicher said. The company intends to make a profit on it.
“What attracted me to Google was the willingness to take a look at higher risk investments that offered both the opportunities for some real impact and some real financial returns,” he said.