Google is emerging as the ultimate clean power sugar daddy. On Tuesday morning, Google announced it has made its largest investment in clean power to date, creating a $ 280 million fund for rooftop solar panel projects that will be installed by solar company SolarCity. The deal also represents Google’s first investment in residential and distributed solar.
Google has now invested $ 680 million into clean power projects, a size which rivals a large VC or private equity greentech fund or Department of Energy program. While Google’s investments in utility-scale centralized solar projects and transmission lines for clean power could be seen as a way for Google to source cleaner energy for its data centers, home rooftop solar installations are pretty far removed from Google’s data center energy, and Google insists the SolarCity investment is about returns and environmentalism.
Founded in 2006, SolarCity offers sales, installation, financing, operation and maintenance of rooftop solar systems in-house. In contrast to many solar installers, SolarCity offers financing options — covering the upfront cost of the system — which can be critical for consumers and businesses given that solar electric systems are too expensive for an average buyers. SolarCity offers both leases (a fixed monthly fee) and power purchase agreements, which require customers to pay the amount of electricity generated but not the equipment and installation costs.
SolarCity has raised at least a dozen funds similar to the Google one, but it usually raises these funds from banks like Citi and U.S. Bancorp (and has also worked with utility PG&E). Lyndon Rive, SolarCity CEO, said the biggest hurdle to getting its solar projects deployed is raising project financing, and he hopes other corporations will follow Google’s lead.
Google’s $ 280 million fund could help deploy between 7,000 and 9,000 rooftop solar projects depending on the size of the systems, said Rive, in an interview this week. Because there are so few solar rooftop projects in the U.S. right now, the fund could theoretically help deploy one in 10 solar rooftop projects over the next two years, said Google Director of Green Business Operations Rick Needham.
Needham wouldn’t go into details about exactly what kind of return Google gets from such a fund, but Rive referred to investing in solar as a “good and fair,” return and a”safe investment.” When I asked Needham if the SolarCity fund was about the largest investment Google plans to make in clean power, he said “If we find attractive opportunities that meet our criteria, then we’re willing to make more large-scale investments.”
Over the past few months, Google has emerged as a major investor in clean power. As I’ve written before (GigaOM Pro subscription required), giving Google more control over the energy it needs for its data centers could be a smart investment in the long run, in addition to returns from clean power projects in the short term. In addition to the $ 280 million SolarCity fund, Google has invested in:
- The world’s largest wind farm — in Oregon. Google is investing $ 100 million in the world’s largest wind farm, the 845 MW Shepherds Flat project under construction in Oregon.
- North Dakota wind farm. Google is investing $ 38.8 million into 169.5 MW worth of wind projects developed by NextEra Energy Resources in North Dakota.
- East Coast wind farm backbone. Google has invested part of the fund for an East Coast transmission line that is meant to link offshore wind farms, and which recently got an approved rate of return for the project at 12.59 percent.
- Wind power from Iowa wind farm. Google’s first deal for its subsidiary Google Energy — which can buy and sell power on the wholesale electricity markets — plans to buy wind power from 114 MW of wind energy via a wind farm in Iowa owned by NextEra Energy Resources.
- Wind power from Oklahoma wind farm. Google’s second deal via its subsidiary Google Energy is to buy 100 MW of power from a wind farm that’s under construction in Oklahoma by NextEra Energy Resources.
- BrightSource’s solar thermal project. Google plans to invest $ 168 million into a solar thermal project being built by startup BrightSource Energy in California’s Mojave Desert.
- German solar project. Google is investing €3.5 million ($ 5 million USD) into a solar photovoltaic farm in Brandenburg an der Havel, Germany, which is near Berlin.
- Greentech startups (these are small investments). Google (through a combo of Google Ventures and Google.org) has invested in at least nine “greentech” startups, including battery maker ActaCell, electric vehicle maker Aptera, efficient car maker Next Autoworks, geothermal company Alta Rock, neighbor-to-neighbor car sharing company RelayRides, weather insurance company WeatherBill, smart grid company Silver Spring Networks, biofuel maker Cool Planet Biofuels, and efficient power gear conversion tech startup Transphorm.
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