Google’s green spin might get wind project going

October 12, 2010

Google could put some wind at the back of a fledgling green energy venture. The Internet search giant is touting its involvement in a future Atlantic Ocean power transmission scheme that could encourage as-yet-unbuilt offshore wind farms. The idea is persuasive, but for now it’s still a long shot. Google’s presence could, however, shorten the odds.

The concept of the Atlantic Wind Connection has a sweep to it that is more compelling than piecemeal projects. An offshore backbone running from New Jersey to Virginia could serve future wind farms far enough offshore to be barely visible. It would also bypass an overloaded grid on land — and avoid the property-related roadblocks that sometimes scupper new onshore transmission projects. The price tag could run to at least $5 billion. But it’s too early to think in those terms.

Atlantic Wind faces a raft of challenges, from approvals to politics and the technical difficulty of working in a harsh marine environment. And the billions of needed funding won’t be forthcoming unless there are sellers and buyers of electricity. Although this particular project might be able to make some money simply transmitting electricity from one end to the other, the real payoff would only come with wind farms — meaning there is a giant chicken-and-egg problem.

Moreover, despite its public enthusiasm for green energy and its $30 billion cash pile, Google isn’t about to risk hundreds of millions of dollars building something in the hope wind farms will come. The company’s initial 37.5 percent stake in the project — matched by leading renewable investment firm Good Energies, with Marubeni Corporation <8002.T> taking a smaller stake — is intended only to cover feasibility studies and early approvals, a process costing millions rather than billions.

The idea for investors like Google and Good is to sell down to new, longer-term investors, profiting as the project becomes more likely to happen and therefore more valuable.
That’s where Google’s seemingly premature burnishing of its green credentials could actually become more than spin. Ambitious ideas like the Atlantic Wind Connection often remain on the drawing board. Making them happen requires political, media and financial momentum on top of basic viability. Google’s powerful brand and backing could help get all that going.

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