Google explains why it became an energy trader

The company said it wants flexibility to support development of clean energy projects

Google has explained how it might use its status as an energy-trading company to increase the use of renewable energy sources in its data centers.

In February, the company's Google Energy subsidiary received approval from the U.S. Federal Energy Regulatory Commission (FERC) to buy and sell power on the wholesale market. The move triggered speculation that Google was hatching plans to enter the energy business.

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Bill Weihl, Google's green energy czar, said Thursday that's not the case. "We don't want to become an energy trader, or God forbid the next Enron," he said, when asked about the plans at the GreenNet conference in San Francisco. "What we want is the flexibility to manage our power contracts, and in particular be able to sign contracts that are useful to developers and that get more renewables on the grid."

He offered an example of how Google might use its FERC status to support such projects.

Google typically buys multiyear power contracts with utility companies, he said, so that it knows what its energy rates will be for the next several years.

"Suppose a developer wants to build a wind farm down the road, we'd love to buy power from that wind farm. But to do so in a way that helps that developer, we would need to sign a power purchase agreement for, say, 10 or 20 years, to allow him to get good financing rates and free up capital for his next project," he said.

If Google is still locked in a contract with its existing utility company, it would be "throwing money away" to sign an overlapping contract with the wind farm.

"What the FERC authority allows us to do is turn around and resell that [wind] power until the day comes when we can use it ourselves," Weihl said. "That's fundamentally the type of thing we want to do."

In other words, Google may indeed buy and sell energy, but as a way to increase its use of renewable energies, rather than as a business in itself.

As one of the world's largest data center operators, Google is always looking for ways to reduce the cost and environmental footprint of its operations. The company has pledged to be carbon neutral, through a combination of greater efficiency, renewable energy use and carbon offsets.

On Thursday, Greenpeace praised Google for its environmental advocacy and for offering a tool, called PowerMeter, that helps consumers reduce their energy consumption. But it also faulted the company for not setting emission reduction targets or disclosing its own emissions. Google finished sixth out of 15 on Greenpeace's Cool IT leadership list.

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