GE and Google form partnership to press clean energy, smart grid initiatives
General Electric (GE) and Google have announced a strategic partnership aimed at promoting national deployment of a clean energy infrastructure. The alliance is loosely focused on overcoming policy barriers and technical hurdles that impede development of more advanced transmission and distribution systems, innovative renewable energy sources, and other clean technologies. The two companies plan to press this agenda by lobbying the federal government and collaborating on research and development (R&D).
Objectives of partnership
The partnership has four distinct objectives, two centered on national energy policy and two on advanced energy technologies. The first policy goal is to push for stronger federal action to expand and upgrade transmission capacity across the country. Underinvestment in transmission and distribution in recent decades has led to an electricity grid that is overburdened and outdated. GE and Google believe that federal coordination and facilitation will be critical to increasing and improving transmission capacity. In particular, they perceive a need for the federal government to take a more active role in addressing planning, siting, and cost allocation issues. New capacity will also be essential to incorporating more renewable energy such as wind and solar power into the grid, as these resources are often located far from population centers and require the construction of new transmission lines.
The alliance also intends to advocate for policies that encourage development of the smart grid. Substantial new investments in transmission capacity offer an exceptional opportunity to incorporate intelligent features into the grid and capitalize on the multiple advantages associated with smart technologies. Apart from lobbying efforts, the companies will also cooperate in developing smart grid software for utilities and residential equipment. A smart grid will enable higher energy efficiency, greater energy savings, and reduced carbon emissions, all of which GE and Google support.
The first technology the companies plan to target is enhanced geothermal systems (EGS). EGS replicates and amplifies natural geothermal conditions by fracturing hot rock deep underground, circulating water through the system, and then using the resulting steam to generate electricity in a conventional turbine. The firms believe that EGS has the potential to provide large-scale base-load renewable power. Their collaboration will focus on reservoir visualization, power conversion, and related technologies and processes that are necessary for widespread EGS deployment.
The companies plan to focus on plug-in vehicle technologies as well. In particular, GE and Google will jointly develop technologies that permit the systematic integration of plug-in vehicles into the power grid. Integrative software, controls, and related services will be specifically targeted. This objective is closely tied to support for smart grid deployment.
The GE-Google alliance has not yet specified precisely what strategies the companies will employ to achieve their goals. A detailed implementation plan is currently being drawn up. However, the partnership has indicated that its general activities will entail the development of policy proposals, coalition building, lobbying, public information campaigns, and cooperation in R&D.
Inconsistent federal / state policy on smart grid
The partnership’s policy initiatives are likely to address a number of disputes that have arisen between state and federal agencies over the creation of an upgraded smart grid. Many of these disputes are the product of overlapping state and federal regulations. A major point of friction concerns new transmission siting. States and utilities have little incentive to approve construction of the sort of long-distance power lines necessary to connect remote renewable generation to urban and suburban sources of demand. The federal government was granted authority to override state transmission siting objections by the Energy Policy Act of 2005 (EPACT 2005), but has resisted making full use of this power. Disagreements also exist about who should pay for clean energy infrastructure improvements. Federal incentives for utilities to modernize grid systems are one potential means of helping resolve the cost allocation problem. Furthermore, regulatory reform is needed to streamline a transmission building approval process that now regularly lasts more than ten years.
The alliance was announced at Google’s Zeitgeist ideas and technology conference, a global forum held annually at the company’s Mountain View headquarters. The GE-Google collaboration is intended to be a loose partnership, reflected in its lack of an official name. Both partners expressed an interest in other corporations and organizations joining their coalition in the pursuit of specific policy goals and technological advancements related to the development of a robust clean energy infrastructure. Neither company disclosed its level of investment in the partnership.
Leaders of both firms expressed enthusiasm at the prospect of a joint clean energy effort. Jeff Immelt, chairman and CEO of GE, declared that “Clean energy is a technology and a public policy; it’s both.” Immelt also stated that “There needs to be more transmission and distribution, and the government needs to intercede to make it happen.” Dan Reicher, director of climate change and energy initiatives for Google.org, the company’s philanthropic arm, said that “A smart grid is something we desperately need in this country and we humbly think we might have something to contribute.”
In a joint statement, GE and Google declared: “Both companies believe that our economic, environmental and security challenges require that we use electricity more efficiently, generate it from cleaner sources, and electrify our transportation fleet. This 21st century electricity system must combine advanced energy technology – a major GE focus – and cutting edge information technology – a major Google focus. We believe that by combining our efforts – along with other relevant businesses and industries – we can advance critical policy change in Washington and develop new technologies and services for consumers.”
A strong partnership
The partnership is premised on a perceived complementarity between the firms’ business interests, research expertise, and corporate philosophies. GE is expected to draw on its vast experience in designing, manufacturing, and marketing energy technology and associated electronics hardware. Google will leverage its position as a leading information technology firm and its large team of highly skilled programmers.
In recent years, both companies have sought to brand themselves as exemplary green corporate citizens, argued that environmental sustainability and corporate profitability can be mutually reinforcing (“green means green” has become a GE mantra), and made significant investments in the clean energy sector. GE’s Immelt has spearheaded the company’s intensified move into environmental products and services, under the rubric of “Ecomagination.” The company has pledged to invest $1.5 billion per year in Ecomagination R&D by 2010. GE operates a major wind turbine division forecast to earn more than $7 billion this year, has substantial investments in the natural gas, clean coal, and nuclear industries, and is rapidly expanding its energy finance business. The company manufactures and sells conventional transmission stations and both conventional and smart meters to utilities, and is actively developing new cogeneration technology with potential geothermal applications. An expanded and upgraded smart grid that facilitates higher demand for superior clean energy technologies would offer lucrative business opportunities for GE.
Google is similarly positioned. Company CEO Eric Schmidt has publicly called for the US to transition completely away from fossil fuel use to renewables within twenty years, and for converting half the US auto fleet to plug-in hybrid cars. Google’s ambitious “RE<C” program seeks to produce renewable energy that is cheaper than electricity produced from coal. Clean energy has been a major focus of Google.org, which has invested tens of millions of dollars in startups specializing in wind, solar, wave, and geothermal energy as well as in developers of plug-in electric cars. In particular, Google.org has invested in AltaRock Energy and Potter Drilling, two EGS firms. The possibility of a “managerial” role for Google in helping operate the smart grid has been raised, but the nature of any potential company involvement in smart grid administration remains unspecified. Google also has a direct interest in cheaper, cleaner, and more reliable energy given the massive amounts of electricity consumed by its data centers.
The ultimate impact of the GE-Google alliance on the smart grid sector is uncertain. In the absence of a detailed implementation plan, it is difficult to discern the partnership’s likely effects in precise terms. In general, however, it is clear that a sustained drive by the companies to transform the electric system into a smart grid will benefit the industry. A push to expand and enhance the country’s transmission capacity will also provide a multitude of opportunities for smart grid firms to sell products and services.
The magnitude of grid improvements will hinge on the design and execution of appropriate policy and regulatory interventions by the two companies. Helping to clarify state and federal jurisdictional issues will enable a more orderly transmission planning and construction process. Promoting a federal carrot-and-stick strategy for accelerating new capacity and smart grid deployment is likely to prove a particularly effective approach for GE and Google to adopt. Specifically, a combination of federal financial incentives to encourage state and especially utility spending on more advanced transmission and distribution systems, paired with a credible federal threat to override state objections to transmission siting proposals, is likely to produce greater investments in an advanced grid system. In addition, pressure to make the transmission approval process faster and more efficient will likely facilitate a more rapid rollout of smart grid technologies.
Integrating plug-in vehicles into the power grid will likely create profitable new markets for manufacturers of smart meters and other smart technologies as well as for service providers specializing in smart technology and grid interfaces. Building, operating, and maintaining systems that allow automobiles to feed power into the grid during peak demand and draw power during non-peak hours will require a new and dynamic class of smart grid firms. And to the extent that the spread of EGS leads to heightened demand for transmission capacity, this element of the partnership is also likely to benefit the sector.
The overall effect of the partnership on the smart grid industry depends, of course, on its success in meeting its objectives, in particular its smart grid plan. Without a specific set of proposals and course of action, it is impossible to assess fully the likelihood that GE and Google will help push the nation’s power grid in a more intelligent, efficient, and reliable direction. A healthy degree of skepticism is warranted. Nevertheless, given the weight and prestige of the two corporations, their financial stake in a clean energy infrastructure built on a smart grid, and broader political and economic developments, federal legislative and regulatory efforts made by GE and Google to promote the smart grid deserve to be closely monitored.
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