Learn > Google's Solar Example

In October 2006, Google announced via its official blog that it planned to build the largest solar-power installation on any corporate campus in America—perhaps even the world.

In all, they would install over 9,000 separate solar panels, amounting to a total of 1.6 megawatts of power. The company stated that its project would offset approximately 30 percent of peak electricity consumption at key buildings at its Mountain View campus. The initiative was a natural fit with Google’s corporate culture: its founders had invested in solar power companies like Nanosolar for years, and it had taken smaller green steps previously. The straightforward announcement marked one of the most high profile steps towards solar power in American history.

Financing

The move toward solar energy made financial sense for Google. Citing an EPA report, the company acknowledged that it would make back its investment due to electricity savings. Reports confirm that Google will do so in approximately 7.5 years. From that point onward, it will enjoy net savings. Google’s cash-on-hand is just under $12 billion, and its solar investment cost in the region of $3 million, making the impact of the decision minimal financially.

Google will also benefit immensely from California’s solar subsidies, which apply even to highly profitable international companies. Google did not explicitly acknowledge this in the initial announcement, but did not escape the notice of some commentators. One particularly articulate objection to this subsidy, posted on Terrapass, used the event to object to two components of California energy policy: (1) using taxpayer money to subsidize enormous corporations, and (2) the government emphasis upon photovoltaic panels as opposed to solar water heaters.

The central issues are simple: if proceeding from the premise that subsidies for clean energy are a good idea, the problem then becomes how to most efficiently apply those public funds for the maximum utility. From a policy perspective, funding Google’s project—an investment in solar panels by a capital-rich company that would make back its money irrespective of government assistance—might be a misallocation of resources that could go to subsidizing more efficient solar power projects, such as heaters for small businesses or private homes.

Financing    Installation   The Big Picture