July 12, 2011 • Current Events, Energy Efficiency, Sustainability

Google invests in residential solar projects

by Rich Wilson

For a few years now, clean energy and sustainable business practices have been driving large-scale efforts inside companies of all sizes. Whether the end goal was cheap energy, response to impending government regulation or even a little positive media exposure, evidence of the new green corporate landscape is everywhere. The green movement is gaining a substantial amount of momentum with little evidence of slowing down, due to large-scale implementation of energy efficiency projects. I recently stumbled on an article that discussed how Google has invested $280 million through a partnership with SolarCity, a California-based solar design and installation company. The partnership will help finance solar projects on the residential-customer level through solar lease programs and power-purchasing agreements. The investment in SolarCity is not a new initiative for Google, which has invested more than $680 million to date in a wide range of clean-energy technologies. But what makes this investment particularly interesting is that the clean-energy benefit does not affect Google’s core business the way a more traditional investment such as installing solar panels to help power a company-owned data center would.

“Google has made a series of investments in renewable energy because they make business sense and help deploy a range of solutions that can help move us toward a clean energy future,” said Rick Needham, Director of Green Business Operations at Google. “Now, through this partnership with SolarCity, we’re excited to be making our first investment in distributed residential solar, making it easier and more affordable for consumers across the country, including our own employees, to use renewable energy at their own homes.”

Being the skeptic that I am, I wanted to know the catch. Although it’s admirable for anyone to help make clean energy a more affordable option, I am guessing Google stockholders are not keen on the idea of investing a little more than a quarter of a billion dollars just for a little positive public relations. While the exact return on this investment is not known, there is speculation Google will receive returns in the 10 – 20% range, including the anticipated tax benefit. While not as high as the company’s 29% profit margin, it is substantially better than the current 10-year U.S. Treasury Note yielding a little more than 3%. All in all, not a bad place to stash a few million.

Overall, the biggest issue facing residential customers is not the willingness to utilize green energy but the enormous financial burden. With the recent partnership between Google and SolarCity, energy management through renewable sources will become more attainable for the residential customer. Companies like SolarCity hope  more investors follow Google’s lead by making investments in residential projects, allowing solar energy to become a more affordable option.

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