I was struck by the stock analysts' reaction in a New York Times story to Google's announcement that it would invest up to hundreds of millions of dollars to develop renewable energy that is "cheaper than coal." The analysts were bewildered: Would this detract Google from its main mission? Is it a risk to investors?
My reaction: Who else do they think is going to make investments that leap over to the next non-fossil fuel technology? Chevron? Exxon? As a new study by Rice University's Baker Institute shows, these companies are boosting their stock short-term by putting more than twice as much into stock buybacks as in energy development of all kinds. These are the companies that tout little-bitty biofuel investments, but refuse to even sell branded biofuels at their own stations.
Google built its business taking chances. And it is starting the new venture with a couple of doozies.
Makani Inc. is a big-idea startup seeking to harness high-altitude wind power, a literally high-flying technology that could end up like Icarus, or could power much of the Earth. eSolar Inc, on the other hand, is powering old-fashioned power turbines with reflected solar heat--think backyard solar oven, times a million. (Google's announcement, linked above, has links to skimpy one-page pdfs about each venture.)
The one thing these companies have in common is that if they succeed, "cheap and green" won't be a fantasy. But neither of them is an obvious investment choice, like solar electric panels or conventional wind farms.
Makani (which came into being last year with $10 million in Google startup money) is particularly interesting. The company offers little information about itself, and its executives aren't talking. But there was an interesting online column on Makani and high-altitude wind power last year by PBS technology reporter Bob Cringeley. Here's the heart of it:
To my knowledge this idea of using a tethered kite to generate power was first put forth back in 2003 by Pete Lynn, a mechanical engineer and second-generation kite designer from New Zealand [who is now at Makani]. He described his work back then in an extensive post on Google Groups as well as on his own web page. (That page is no longer directly available online, but in this week's links we've managed to recover that page thanks to the Internet Archive's WayBack Machine.)
Lynn's explanations in 2003 and 2004 were very clear and the implications of his work even clearer: this was probably the best way yet to extract energy from the wind -- far better than more traditional windmills.
The problem with wind power is that much of the time there isn't enough of it available to even justify energizing the alternators attached to the large windmills used in wind farms. Unless the wind speed is over, say, 10 miles per hour, it isn't worth running the windmills at all. And above some speed on the order of 40 mph, it again isn't worth the effort, this time because of fear that high winds will damage the windmills -- windmills sometimes costing hundreds of thousands of dollars each.
But power-generating tension kites are different, as Lynn so ably explained: "the numbers strongly infer that such a wind turbine system can produce power for around a fifth to a tenth the cost of current generation systems, depending on site costs. This is roughly US 0.5 cents a kilowatt hour, with the likelihood that this will reduce further with mass production."
I'd love to see comments from people qualified to assess the prospects of this high-flier concept.
Google's obviously taking a big chance, on par with investing in Thomas Edison before he had a glowing filament. But Google can afford it, has a big vision and is focused on exactly what needs doing: cheaper than coal. They've got the field to themselves, which is a shame.
I didn't buy Google stock when it was issued, fearing it could turn into another Silicon Valley low-flyer even though "Google" was already a verb. (Those pesky stock analysts again.) I hope I'll get another crack at it, with eSolar or Makani.