Is Google the Future of Clean Energy?

“Google is more likely to become an energy company of the future than a lot of utilities” Shuli Goodman, executive director at LF Energy, said during an interview earlier this year when she shared her latest prediction for what’s to come in the energy industry. “Google is more likely to become an energy company of the future than a lot of utilities” Shuli Goodman, executive director at LF Energy, said during an interview earlier this year when she shared her latest prediction for what’s to come in the energy industry. If this prediction sounds like it’s coming out of left field, let me assure you it’s not. Google has been slowly upending the traditional utility business for the past 10 years.  We are at a turning point in history, both in our consumption and production of energy. In the energy world, the relationship between the vendors, suppliers, OEMs, utilities, regulators, and stakeholders is a log jam, Goodman said. “With a log jam, you cannot delicately pick at it,” she explained. “The way that you move a log jam is with dynamite. Not only are we not moving anywhere near quickly enough, any ambitions we may have toward electric mobility, demand response, electrification, decarbonization of the grid, all of those things require a kind of agility and an ability to move at the speed of technology.”  And for the most part, utilities are laggards, she said. No matter how much utilities want to transition to renewable energy and “go green,” the current power grid and control systems could soon be obsolete. Clean energy sources are subject to variable conditions that cause fluctuations in power supply and demand that current power grid and control systems simply can’t handle.  “The truth is that utilities do not yet have the infrastructure to manage the data that would enable price-based grid coordination,” Goodman said. To manage this variability and torrent of edge data, Goodman said the grid must be digitized for virtual functions, automation, software integration, and disaggregation of hardware and software to help manage, coordinate, and choreograph flexible services at scale and modulate energy flows. In other words, electricity and energy must no longer reside under centralized control, but instead rely on interconnected devices to actively participate in energy systems. Expanding the grid into a distributed model for energy production and distribution will require a complete paradigm shift to enable the electrification of everything to scale.The energy value chain is becoming an IT-based industry and it’s only a matter of time before hyperscale businesses make a move on this cash cow.  Amazon, Microsoft, and Google have all made either net-zero or negative carbon commitments, and they are “becoming de facto energy companies,” Goodman said.  “What I mean by that is they are hiring the best talent that would have otherwise gone to a utility in order to run their own operations with regards to decarbonization,” she added. From an adjacency standpoint, they are becoming huge energy companies. Just think about network traffic on the internet: it’s very complex and you have very sophisticated algorithms to manage it.”  Hyperscale businesses – and Google in particular – already have the infrastructure, developers, and knowledge in place to both navigate the complexities of the electric utility sector and commercialize energy as a service to consumers. In that way, one might even say they’re perfectly positioned for the energy transition.   “They (Google) may not manage the freeway of lines and poles that the electrons move over, but they’re far better at managing security and arbitrage,” Goodman said. “So I think utilities maybe have a year and at that point, they’re going to be in a diminished role.” Google jumped on the green train in 2007, when it became the first major company to hit carbon-neutral status. And the cloud giant’s entry into the energy business followed soon after in 2011, when Google Energy, a subsidiary of Google, got the green light from the Federal Energy Regulatory Commission (FERC) to buy and sell energy as if it were a utility company.  The FERC order allows Google to erect as many solar panels and install as many fuel cells as it likes and sell off the extra power it generates. Although Google has historically been the largest corporate buyer of renewable energy in the world – a self-prescribed trophy that Amazon recently added to its mantle – the company has yet to come clean on its intentions to light your home. Google dove deeper into the energy industry and consumers’ homes with its $3.2 billion acquisition of smart thermostat maker Nest in 2014. The all-cash purchase is still the second largest in Google’s history behind the $12.5 billion acquisition of Motorola in 2012. While Google hasn’t made any statements about its hand in the energy game, the dollar signs paint a clear picture of the cloud giant’s intent to be a major player in the energy sector for years to come.  And Google X’s recent hire of Audrey Zibelman, the former CEO and managing director of the Australian Energy Market Operator (AEMO), is a strong indication of what’s to come. “Google X  gave us the self-driving vehicles, they are the outer edges of exploration that Google invests in, and I think that’s a harbinger of where we’re going to go because the utilities simply are not moving at the speed of technology,” Goodman explained. “They (utilities) don’t see themselves as technology companies and I believe that if you are utilities and you don’t see yourself as a technology company, you are going to be a dinosaur. Period.”