The ever-ambitious Internet mammoth Google has its sights set on the development of renewable energies. The company says it’s tired of its own hypocrisy and wants to invest in the energies so that it will have options in the years to come. It hopes to produce a gigawatt of renewable energy, cheaper than coal, to power its facilities, which are now running on traditional energy.
Some worry that the company is spreading itself too thin. But maybe it can’t afford not to make this investment now.
Posted by Kristin Mehler
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17 Comments
I support Googles efforts.This is the way it SHOULD be done.Free enterprise, not government mandates.
Econ, the issue will soon become whether the stockholders agree with the plan. I suspect that if the efforts to develop renewable energy result in lowered dividends and/or lower stock prices, all the good intentions in the world will not stop the litigation.
With that said, I’m encouraged by the effort.
Good on Google but Google is huge and has vast capital.
Alternative energy is too important to leave to the patience of the good intentions of the “free market”. Smaller biz should be helped or given tax credits for being energy proactive.
It’s cheaper than war.
Its not just small business…
The government needs to get in the game. Allowing Westar to raise rates to pay for Wind is crazy and should not be allowed.
Also, the KCC needs to mandate that we as individuals can create our own power and feed it back into the grid. Currently it is illegal for us as citizens to create excess power and feed it back into the grid. We can sell it back to Westar but only at something like 1 cent per kilowatt hour. They charge a hell of a lot more than that. Oh and you have to have a separate meter to do it.
Its time for Westar and the State of Kansas to join California in its ways of thinking regarding power. No more coal plants, no more Gas plants, more wind, solar and other renewable forms of energy. If Westar doesn’t want to foot the bill, than the governments will and Westar will loose out.
Google is taking 3% of their reserve, $500 million, and putting it to work on renewable energy sources. What’s not to like about that? Now, if big oil would kick in, along with energy companies,auto manufactures, and any other companies who owe the environment, something might be accomplished.
The biggest way the government can help wind is to force the internalization of costs for fossil fuels. Currently many of those costs are externalized.
If Walmart put Solar Panels on every inch of roof space they own, they would be able to cut their electricity usage in half! If they put up wind Generators such as is on Jay Lenos garage, they would be able to all but eliminate their power consumption from the grid.
It is not “crazy” for Westar to worry about compensation for investments Westar makes in alternative energy.
Alternative energy WILL have higher start up costs than the coal or nuclear costs that Westar is used to dealing with, in their other plants.
Do you folks want Westar to invest in “alternatives” or not?
NO, Westar is NOT “just like any other business”.
A public utility must get aproval for rate increases.
Also, utilities pay higher property taxes, as a percent of value, than any other type of property.
Utilities are the highest taxpayers in EVERY taxing district, and in every tax unit, in the State of Kansas.
Will we assess their windmills and solar panals at 30% utility assessment rates?
Other businesses do not get assessed that much.
True, Econ; I consider that a trade off for the “guaranteed rate of return” on investment that regulated rates are supposedly set at. If rate setting is done correctly, then utilities and their shareholders, if publicly held, will not suffer a loss from the regulated business.
While we may all debate whether there should be regulated industries at all, when a regulated industry (primarily a utility) files a rate case, as I recall from the class on regulated industries I took in law school, one factor that is to be considered in setting the rates is a “fair rate of return” arising therefrom.
VTLarge companies do make charitable gifts, all the time.
I agree that litigation might follow, if a company goes so crazy in “alternative energy” that company profits take a beating.
The above comment, of course, was pertaining to Google, as far as any lawsuits against Google if their alternative energy ideas done pay off..
Utilities should not have to worry much about “recouping costs” as this should be allowed by law, when they set their rates or ask for rate increases.
Econ, the root of my concern about this was the fact that, according to the linked article in the header, Google was providing “venture capital” to two alternative energy firms. If these are successful long term, the shareholders will be pleased; if there are bumps in the road, or if the firms invested in go belly up, then here come the suits.
Looks like if they are transparent in their investments, and investors have a reasonable time to react, they wouldn’t have much basis for a lawsuit.
Hey, Google! Come to Kansas. Lots of wind, lots of space, and no coal burning to compete with.
PhantomFar be it from me to put words in VT’s mouth, he speaks very well for himself.
However, I see exactly what he means: Those who owned Google stock, prior to this venture into alternative energy, had no idea that they were investing in a utility company.
They might well have a legal case against Google, if this does not work out.
“Style Drift” is what advisors try to avoid, when trying to do proper “asset allocation” —
I had not given this much thought before, but —
Take a look at Morningstar, the premeir mutual fund expert, IMHO.
They catagorize by large- medium- small capitalizion.
They also catagorize by value-blend-growth.
This give you 9 different investment styles.
Existing Utilities will continue to be “large cap” in most cirumstances. However, when they venture into higher-risk new technology, they will “mix” with growth invesments, somewhat, perhaps. Not as big an issue, with existing utilities, as the law pretty much says utilities can recoup investment costs, with a captive, monopolized customer base, unlike other industries.
The issue comes up in a stronger area when Google, a technology/GROWTH company gets into utilities. At the start up phase, yes, they are still Growth oriented, but — when do they become a “blend” or a “value” stock?
Value Stock: If you sold all assets, paid off all debts, would and divided money among shareholders, would they each have more or less than the current price per share?
Growth Stock: Current inventory and assets aside, FUTURE value projections of the company show that the firm is overvalued/undervalued.
Not a perfect explanation of a subjective art, but — It is interesting to those of us who wonder how the market will look at this, how the regulators will deal with it, and how all of the various rating services will understand it all.
Guess who is heavily invested in Peabody Coal Co.?