Google joins $5 billion U.S. offshore wind grid project

BOSTON Tue Oct 12, 2010 1:30pm EDT

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BOSTON (Reuters) - Google Inc has thrown its financial clout behind an ambitious $5 billion proposed electric transmission line intended to spark investment in new wind farms off the heavily populated U.S. East Coast.

The move, which is a gamble as no offshore wind installations have yet been built in the United States, marks the Internet search giant's latest move away from its core business, joining investments in solar energy and a plan to develop a car that will drive itself.

Japan's Marubeni Corp and New York investment firm Good Energies are joining in financing the planned 350-mile underwater electric cable, which will be led by transmission-line developer Trans-Elect. It will help developers of offshore wind projects to surmount a major cost challenge -- connecting their turbines to the grid in a way that allows them to sell to multiple customers.

"This will serve as a clean-energy superhighway, with on-ramps for wind farms and the ability to be intelligently expanded," Rick Needham, Google's green business operations director, told a news conference in Washington. "We can help kick-start an industry that can provide thousands of jobs."

In addition to allowing expected offshore wind turbines to transmit their electricity to the coast, the Atlantic Wind Connection project, would stretch from Virginia to New Jersey and could serve as a backup to the onshore transmission grid.

It could help grid operators avoid or more quickly recover after incidents such as the major blackout that plunged parts of the northeastern United States and Canada into darkness for days in 2003, Trans-Elect chief executive Bob Mitchell said.

The companies' initial investment in the project amounts to tens of millions of dollars, executives said on a conference call. Trans-Elect expects the first segment of the project, which should begin building in 2013, to cost $1.8 billion.

Google described its initial 37.5 percent stake in the project as "early stage," leaving open the possibility other investors or lenders would be brought in to finance the actual construction -- a costlier proposition.

Current U.S. wind farms are capable of generating 35.6 gigawatts of electricity, enough to meet the needs of about 9.7 million homes, according to the American Wind Energy Association. All of that capacity is land-based, with the largest capacity in Texas, Iowa and California.

The densely populated East Coast has fewer turbines, in part because of a lack of open space for them. Offshore installations, advocates argue, offer a way to generate electricity close to major coastal population centers without also producing the greenhouse gases associated with global climate change.

The cable would be able to transmit about 6 gigawatts of electricity, which would meet the needs of some 1.9 million households. The project is only a transmission line, meaning other investors would have to finance and build the offshore wind farms it would serve.

FAR OFFSHORE

The proposed cable would be installed under the seabed, 15 miles to 20 miles offshore. That would make turbines all but invisible from the coast and head off one of the major complaints that have dogged Cape Wind, which first proposed a project in 2001.

Opponents of Cape Wind have raised concerns that the turbines could mar the views from the tourist-dependent Cape Cod region of Massachusetts, as well as interfere with fisheries and injure migrating birds.

Google, an often-quirky company, said in late 2007 that it would begin to invest in companies and fund research into producing affordable renewable energy. It has also invested in onshore wind and solar energy.

Offshore wind on the East Coast could generate about 127 gigawatts of power, enough to meet half of those states' current electric demand, according to a recent study by ocean conservation group Oceana. About a dozen offshore wind farms are proposed for the region.

RISING INTEREST

There are currently no offshore wind farms in the United States, although developers including Cape Wind and Deepwater Wind have proposed installations for the waters off Massachusetts, Rhode Island and New Jersey.

The rising interest has attracted the attention of major industrial companies, including General Electric Co, Siemens AG and Vestas Wind Systems A/S, which make wind turbines.

Google shares were up 1 percent at $544.31 in midday trading.

(Reporting by Scott Malone; additional reporting by Risa Maeda in Tokyo; editing by Edmund Klamann, Maureen Bavdek, Lisa Von Ahn and Andre Grenon)

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Comments (2)
AbdulHakeem1 wrote:
I think that it is a brilliant idea, I just wonder what the return on investment is looking like for Google on the project; and how those returns will be recouped on this project.

Oct 12, 2010 2:57pm EDT  --  Report as abuse
Informative wrote:
Ambitious $5 billion never been done before project – away from its core business

(TRANSLATION)

Risky – Scary – Naive

Oct 12, 2010 5:56pm EDT  --  Report as abuse
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