Google Invests Massive $168M in BrightSource Solar Project

Mon Apr 11, 2011 4:56pm EDT

The solar investments from Google just keep on comin’, and this time, it’s a biggie. On Monday afternoon, the search giant announced its largest investment in renewable energy to date: $168 million into one of the first utility-scale solar projects being built by startup BrightSource Energy in California’s Mojave Desert.

Even for the clean power fans at Google, the size of the funding is impressive. To date, Google’s investments in solar and wind farms have been considerably smaller, including announcing last week that it would put €3.5 million ($5 million USD) into a solar photovoltaic farm in Brandenburg an der Havel, Germany, which is near Berlin. In May 2010, Google announced it planned to invest $38.8 million into 169.5 megawatts worth of wind projects developed by NextEra Energy Resources in North Dakota. And Google has made a variety of smaller equity investments into greentech startups over the past few years.

The investment in BrightSource announced Monday comes from Google corporate. In contrast, Google actually funded BrightSource with $10 million several years ago via its philanthropic arm, and Google also makes equity investments through Google Ventures.

Google says with the BrightSource deal, its investments in clean power have now hit $250 million. Google launched its “RE<C” program back in 2007, which is geek speak for Google’s renewable energy cheaper than coal project. The goal is to spend “tens of millions of dollars on R&D,” and ultimately produce a “gigawatt of renewable energy capacity,” over several years.

BrightSource’s Ivanpah farm in the Mojave is a high-profile, first-of-its-kind, solar project, which will benefit from Google’s spotlight and support. BrightSource builds solar thermal technology — which uses concentrating lenses to tap into the sun’s heat — and the Ivanpah plant will produce 392 MW of solar power when up and running in 2013. It began construction last October, after finally getting approved by the California Energy Commission last year. About two-thirds of the power from the project will go to Pacific Gas and Electric,  while the rest will go to Southern California Edison.

BrightSource likely needs to raise over a billion dollars to get Ivanpah built. NRG Energy has committed to invest up to $300 million in the project and become the project’s largest stakeholder, and the bulk of the project’s funding should come from a loan guaranteed by the U.S. Department of Energy, which offered a $1.37 billion guarantee more than a year ago, and which the DOE finalized this morning.

You’re probably wondering what on earth Google wants to do with clean power. First off, there are the financial returns. As Rick Needham, Google’s green business operations manager, told me last year, the North Dakota wind farms “were attractive because they offered good returns for our capital, based on the risks of the projects, and allowed us to partner with experienced developers and investors.”

But there’s another reason: data center energy. Google has a subsidiary called Google Energy, which the Federal Energy Regulatory Commission (FERC) approved last year to buy and sell energy on the wholesale markets. Google Energy made its first deal last year to buy clean power from a wind farm in Iowa. Google said it wouldn’t actually be using the clean energy in Iowa to power any of its operations, but planned to instead sell that power back to the grid operator there in exchange for Renewable Energy Certificates (RECs), which are tradeable certificates worth money on certain markets.

However, as Google’s Green Energy Czar Bill Weihl (who will be speaking at Green:Net 2011 on April 21 in San Francisco) made it clear to us, Google Energy is also ultimately about being able to procure energy, specifically clean energy, to power the search engine giant’s data centers. Google can enter into a power purchase agreement contract with, say, a wind or solar developer, agree to buy the clean power before the project is built, and help the developer get a better interest rate for the financing of the plant. Given Google’s data centers largely already have their own power sources, Google could then sell the clean power on the open market until one of its data center power contracts expired.

Google could theoretically do something similar with its solar investment in BrightSource. Google didn’t announce it would buy the solar power via Google Energy, but maybe one day it will. Check out a video clip of Weihl being interviewed about green energy and data centers at Green:Net 2010. Come to Green:Net 2011 to hear more about the intersection of clean power and data centers, to hear about Google and Yahoo’s green data center plans and to listen to NRG Energy CEO David Crane speak about solar and the smart grid.

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Comments (1)
Ectrudert wrote:
Through last November Google’s wide range of green investments hadn’t shown much of a pattern (see I’m not sure these latest investments make things any clearer. Google seems to be making more investments in things that actually generate electricity now, rather than new technologies, but it is still trying a lot of things in this area.

Apr 13, 2011 7:40pm EDT  --  Report as abuse
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