UPDATE 3-Google aims for renewable energy priced below coal

(Adds analyst comments, details, context)

By Eric Auchard

SAN FRANCISCO, Nov 27 (Reuters) - Google Inc (GOOG.O) said on Tuesday it plans to spend hundreds of millions of dollars to help drive down the cost of electricity made from renewable energy below the price of coal.

The project, dubbed Renewable Energy Cheaper Than Coal, is hiring dozens of engineers and targeting investment financing at advanced solar thermal power, wind power, enhanced geothermal systems and other new technologies, Google said.

The Web services and online advertising group will be a big customer for the project, running computers and networks on the electricity and selling back what's left to the power grid.

"Our goal is to produce one gigawatt of renewable energy capacity that is cheaper than coal. We are optimistic this can be done in years, not decades," Larry Page, Google's co-founder and president of products, said in a statement.

A gigawatt can power a city the size of San Francisco. An analyst at broker Raymond James noted the entire U.S. solar cell generation capacity at the end of 2006 was only just over half a gigawatt, while 11.6 gigawatts came from wind power.

Page and Sergey Brin, Google's two 34-year-old co-founders, told reporters their plan made business sense but the company also planned to license any resulting technologies worldwide.

"We see a plausible path to much lower energy costs and we just want to get people working on that now," Page said.

The Web search leader does not disclose the energy consumed in powering its online services, but local energy experts say it ranks as one of Silicon Valley's biggest energy customers.

"As Google grows, we don't want our core business to be part of the problem. We want to be part of the solution," said Larry Brilliant, head of Google.org, the company's philanthropic arm which will direct the energy investments.

Brin said he felt the company would be "hypocritical" not to do something. Google and its founders are big promoters of electric cars and the roof of its headquarters in Mountain View, California, supports a large solar energy installation.

The initiative falls outside the company's management rule whereby most effort is focused on its core Web search, ad and software businesses. Page said while it does fall under Google's "Director of Other," it would cut operating costs.

Around Google headquarters, the Renewable Energy Cheaper project is known by the mathematical shorthand of "RE<C". "I know it's a little bit geeky," Page told reporters. Details can be found here

THROWING WEIGHT AROUND

Google, now the sixth-largest U.S. company by market value, is taking advantage of its size, a growing mountain of cash, and global brand recognition in launching the campaign.