Finding a Moonshot in Electricity
Recently, my colleagues at Greentech Media featured this question and others in evaluating Google’s role in electricity innovation. I opined on this topic back in 2014 on the Energy Gang Podcast with my colleagues Stephen Lacey and Katherine Hamilton. My own view is that on balance Google has tried hard but has really made their greatest accomplishment by supporting the deployment of existing technology -- just like other corporate leaders in the space like Apple, Microsoft, Walmart, Staples, US Bank, Wells Fargo, IKEA, and many others. So why all of the focus on Google to do more? Desperation for a moonshot.
Let’s start with the obvious, the electricity system has changed so little in the past 100 years that two of its famous inventors, Westinghouse and Edison, would largely recognize it today. This not a good thing. We should have had more innovation in the system in the past 100 years. This is because to build out the electric utility system, we created monopoly utility companies and business school 101 teaches us that monopolies hate to deploy innovation (see the original AT&T). For Bjorn Lomberg, Bill Gates, Vinod Khosla, and many others it is because we need a big breakthrough worthy of deploying to scale. The thousands of breakthroughs we already have from the R&D efforts of the 1970s just aren't good enough in their eyes to deploy at scale. In fact, the recent clean energy deployment boom has come from these technologies that have been sitting on the shelf. The boom itself was created by business model innovations like the "Solar-as-a-Service" model I popularized at SunEdison and the mandates imposed by state legislatures that were frustrated with the electric utility’s lack of innovation.
If you want to define this a step further, the real Moonshot in Electricity today is probably whether we can decarbonize our electricity while still keeping it reliable and affordable. But many innovation seekers follow the Google X appraoch which was described in Wired as, "It’s often easier to make something 10 times better than it is to make it 10 percent better." That's just poppycock in the area of electricity or infrastructure. This is where Google and their tech colleagues really failed -- wrong goals leads to crappy outcomes.
Separately, they had a bold initiative called “RE<C”, meaning renewable energy cheaper than carbon heavy sources of electricity, but they placed it in the Google Foundation. They disbanded this group in one of their many restructurings but not before two Google engineers wrote a poorly thought out piece (pattern?) that basically said that renewable energy could never provide reliable and affordable electricity on a systemwide basis. At the same time, Google management was in a race to outdo its tech competitors at Apple and Microsoft on who could buy the most solar and wind energy to announce that it is using 100% renewable energy. Pretty damn confusing.
What’s worse is that today almost everyone considers that the goal of RE<C has been met. A high profile analysis by Mark Jacobson says that we can convert not only our electricity sector but our heating and transportation fuel sectors as well using just renewable energy. Competing visions from Christopher Clack says that 80% is certainly possible and that 100% could be possible if we solve the challenge of seasonal storage. The US Government has weighed in as well and agreed that 80% renewable energy can be accomplished with a scale up of existing technology.
Amazingly, Google never declared victory on RE<C. Instead it descended deeper into obscurity by investing into flying kites, salt storage, fuel from saltwater, improved geothermal drilling equipment, and other projects that look more like something a Billionaire would chase because they are bored, than a list of high potential investments to make the largest impact on carbon dioxide emissions or electricity. As my Greentech Media colleagues described in the podcast, their efforts have largely failed. So if we define the moonshot as “decarbonizing our grid while keep electricity affordable and reliable” I think we can all quickly conclude that Google shouldn’t really be doing much innovation in electricity at all.
Lowest Hanging Fruit in Electricity Decarbonization
Continue Deploying Renewable Energy – Australia has solar on one in seven houses and China just installed 10,570 megawatts of solar in July 2017. The US isn’t even close to reaching those numbers. We have solar on maybe one in 40 houses and we installed about 1,000 megawatts of solar in July of 2017. Google has tried to help here with Project SunRoof, but while it is a cool app that run theoretical analyses not so well, it really doesn’t help develop more residential sales. That would probably require Google putting $50m into helping fix the laws slowing solar down across the country which is just not their style.
NextGen Nuclear – Several billionaires have this solution in their sights, but it doesn’t seem like Google X is one of them. I am frankly not sure why, this is where you hire the smartest people on the planet (which Google likes to hire) and let them loose on using supercomputers to implement 1980s concepts that were too expensive to model way back when.
Big Data to make Electricity more efficient – since the 1970s, the utilization rate of the grid has gone down which makes electricity more expensive and carbon emissions higher. Several high profile folks like Tom Siebel and others have tackled this area. This seems like a natural area for Google to buy a company and set up a salesforce to sell this data to electric utility company. But this is where we learn that Google really just sells advertising and hiring an enterprise salesforce to pursue a multi-year sales effort to electric utilities is not an area they excel in. In fact they own NEST thermostats that could revolutionize the grid by themselves has been in persistent "pilot" mode. It is unclear that Google wants to compete with Oracle/Opower to actually do this as a business.
Energy Efficiency – here is an area where they could excel. With their ownership of NEST and their launch of Google Home this is a value added service that could be easy to do. Just link your utility accounts to Google and use the technology they bought through MyEnergy to actually help people save money. They could use the algorithms they developed in the Google PowerMeter and put together a custom package for customers remotely. They could even mine electric utility rebate programs to game the system and only deploy the measures with the highest rebates and/or fastest paybacks. On a separate note, they have made their data centers extremely energy efficient which is really great. I am not sure if their R&D in this space has been open sourced so that everyone can take advantage but happy to give them credit here.
Switching to Electric Transportation – Google’s contribution here has been self-driving cars. And while I love that feature on my Volvo XC90, I think we can all agree that self-driving cars are more cool than a source of carbon reduction. In fact they could cause people to buy houses even farther away from their work because now they can productively work in the car while the car drives them to their much lower cost home. On the Electric Transportation side I am not sure Google can really take any credit for the current EV revolution. They certainly won’t be investing to make sure Government regulators protect us from self-driving features that increase vehicle miles travelled and carbon emissions.
Electrifying Heating/Cooling – here Google did develop and spin out a company called Dandelion that has a few things going for it: better drilling technology and a big data approach to identifying the people using expensive propane/fuel oil. Pretty interesting but Google didn’t actually fund them post spinout and so it is hard to see how these guys really “make a dent in the universe”, but here’s hoping! Still not really seeing gigaton scale carbon reductions by 2050 in this sector with the approach they are taking now.
So on balance, like many firms Google should be lauded for making financially savvy investments into renewable energy to green their electricity usage and save themselves a very large amount of money. There are many firms doing this, because it makes so much business sense now.
One more thing to emphasize: I think it is disrespectful to all of the innovators since the 1970s to suggest we even need all this additional innovation. I am all for more R&D, it is a universal good. But what we really need today are the hundreds of specialty firms that are doing fantastic work at proliferating solutions to the tune of $200 billion last year alone into the Advanced Energy Economy (just in the USA). Those firms, not Google should get credit for what they do and how far they have come. Almost every company that has become a billion dollar “unicorn” in the electricity innovation space was started since 2000. That’s pretty damn amazing and it is time for folks not to be lazy about expecting Google to come in and do something they have shown no real ability to be good at.
Lastly, to those folks suggesting that Google buy an electric utility company…seriously does anyone but me see that Google is an advertising company that needed greater financial controls which is why Ruth Porat came in as CFO and forced them to reorganize the company into "Alphabet" to prevent the non-Google investments from tarnishing the "Google" name?