The Federal government recently granted Google the authority to trade power and to buy and sell wholesale power. With this new authority, Google hopes to reduce its electricy bills by trading directly with suppliers. The federal government will specifically allow a newly created subsidiary, Google Energy, to do everything that a traditional utulity does. That includes buying and selling energy, capacity and ancillary services at market-based rates.
Google isn't the first company to do this nor will it be the last. In fact household names like Safeway, Merck Phamaceutical and paper maker Kimberly-Clark have been doing this for a while. More companies are sure to join them as the prices of electtricity and underly fuels that produce it (natural gas, coal, wind, solar) go up.
We may see more of Google in the home energy monitoring arena with the PowerMeter. The utility industry is sorely in need of technological innovation in this area.
Why is Google doing this?
The overriding reason to get into the power markets is to have greater control over procuring an adequate, reliable supply of electricity and to contain costs. Aside from that here are some more reasons:
- Google consumes about 6.3 million MWh of power each year or the equivalent of 6.3 million households.
- Google spends roughly $38 million a year to run about 500,000 servers spread throughout the US. They think they can save money and perhaps make money to by dealing with wholesale power suppliers and trading power.
- Greater profits and cost containment- researchers at MIT, Carnegie Mellon University and Akamai Technologies estimated Google could shave its electricity costs if it got into the energy markets and dealt directly with the power suppliers on a wholesale basis instead of relying on retail rates.
- Google also wants to incorporate more renewables into its electricity portfolio, so dealing with the power suppiers directly will facilitate this.
- Google Energy will be able to hedge its electricity purchases as well, which will provide more control over final costs.
Google is no stranger to the energy field. We often forget that the search engine giant has strong engineering roots and a philosophy and budget that encourages the pursuit of new markets for its software. Also Google's co-founders Larry Page and Sergey BrinCurrently have a great interest in alternative energy and fighting global warming. Google also has investments in non-traditional deep geothermal electric power plants. It also installed solar roof panels to reduce the cost of power at it's corporate headquarters.
Last year Google entered the energy management and smart grid market. This should not suprise anyone since a Smart Grid will be driven more by techcnological hardware and software. Google's niche seems to be demand side management which we're a big fan of. It is specifically interested in advanced metering to help consumers save money and combat global warming by reducing their electricity consumption. Advanced meters are capable of communicating with residential electricity consumers.
Google's PowerMeter product is a home energy monitoring tool that allows users to see detailed energy usage information anywhere they connect to the Internet. We've not seen it and the website does not have a great deal of information in it. While it is nice to know ones energy consumption, we're wondering if the device can talk with the advanced meters installed by utilies. In other words, will we be able to change our power consumption based on prices instantaneously or based on pre-set requirements (e.g. if power reaches a certain price lower the thermostat.
Several utilities are currently testing the PowerMeter packages in conjunction with advanced meters. Personally, I am glad to see Google in this market, because the cost of many advanced meter is high and the power industry could use the expertise that Google brings to the table.
The utilities that are testing the devices are as follows:
- Municipal utilities in Jacksonville, Florida
- San Diego Gas & Electric
- TXU Energy in Texas
- Toronto Hydro
- Wisconsin Public Service
- White River Valley Electric Cooperative in Missouri.