What does Google’s power play mean?

Mon, Jan 11, 2010 at 1:23 pm

    Google last week asked the Federal Energy Regulatory Commission (FERC) for permission to buy and sell electric power like electric utilities do, but nobody seems to know what the Internet giant actually intends to do.

    The filing was made on behalf of a new Google subsidiary, Google Energy LLC. In the application Google writes:

    "In addition to engaging in sales of electricity that are unregulated by the commission, applicant proposes to act as a power marketer, purchasing electricity and reselling it to wholesale customers."

    But Google spokeswoman Niki Fenwick downplayed that idea. She told the Wall Street Journal’s Rebecca Smith and Jessica Vascellaro that if the request is granted Google "could go directly to a renewable energy project and buy power for our operations."  Fenwick told the Journal  "the company has ‘no plans’ to sell its energy management services to others or to become a speculative energy trade."

    Data centers packed with servers and requiring lots of cooling, such as those Google maintains around the world, are notorious power hogs.  So maybe that’s all that this about, getting cheaper power for Google’s own use. A number of other companies that use lots of power, Kohler Co., Alcoa Inc. and Safeway Inc, have approval from FERC like Google is seeking, according to the Journal.

    Considering Google’s recent interest in the so-called smart grid, there may really be much larger goals in mind. As John Paczkowski in his Digital Daily blog on All Things Digital puts it:

    "Google has a long and storied history of insisting it has no plans whatsoever to do something that it ultimately ends up doing. So the company’s claims this week that it doesn’t plan to enter the speculative energy trading business even though it has established a new Google Energy LLC subsidiary that would allow it to do just that, are certainly an eyebrow raiser."

    Tying all this to to Google’s PowerMeter and supplying electricty to smart grid users could be very lucrative for the Internet giant.

    Count me among those, like Paczkowski, who think Google is up to more than getting cheap power for its own server farms. After all it wasn’t that long ago the word from the Googleplex was "we have no plans for an IPO."  As I write, GOOG stock is trading at $601.73.

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