's energy czar Dan Reicher says IT will help make us greener

Google (GOOG) may be a search engine giant, but it's also a leading player in alternative energy. Founders Larry Page and Sergey Brin are extremely keen on promoting clean-energy initiatives. Through the company's non-profit, they've invested indirectly in a number of interesting startups. Google is also developing some of its own technology, including software tools to analyze energy usage for homes and better mirrors for improved solar thermal energy collection. Dan Reicher, a long-time energy expert, heads up's climate and energy initiatives. I got a chance to sit down with him at REFF West, an alternative energy financing conference in San Francisco. Edited excerpts of our conversation follow:

DailyFinance: What is your favorite thing about what Google is doing in the energy space right now?

It's definitely the interaction between energy technology and information technology that I find most exciting. The ability of Silicon Valley through use of its IT expertise to help us solve some of the world's energy problems is very exciting. It's been interesting for me to move from the East Coast, where I didn't have much of an IT focus, and land at Google where IT is so important.
One thing I am excited about is possibilities for helping people get better information about the energy use in their own homes. How can we make appliances smart and get our washing machine and our refrigerator to talk to each other? How can we improve residential and commercial electricity demand? And it shouldn't only stop there.

How can we use IT to better access and manage key existing energy sources like natural gas? And we shouldn't stop just at electricity. Water is something we also should consider and how IT can help with water consumption. So that what's so exciting. We are working to fit all these pieces together now.

How does what will likely be the largest appliance in the home, the plug-in car, get well integrated into a smart home? We want to avoid that moment on a hot day in July when the grid is in trouble and 5 million people drive home and plug in their cars in at the same moment. As the whirlpools and GEs start putting computer chips in their appliances, how are we going to enable those appliances to talk to the homeowner, talk to the grid and manage the grid effectively?

DailyFinance: What is one of your portfolio companies that you really like working with?

One that I did just go visit and helped them cut the ribbon at their first factory is named eSolar. That's Bill Gross' company. What's interesting to me about them is their idea that you take really cheap mirrors and mount them inexpensively to put together a very efficient concentrated solar power product. They actually describe them as 12,000 bathroom mirrors.

The real genius is that there is something on the order of 100-person years of software lying behind that cheap hardware. The software aligns the mirrors in very fine detail to best capture and track the sun to maximize conversion of solar energy into electricity. It's an interesting example. Here is a solar thermal company that has made progress on the hardware side, but the real improvement has come from the the software that controls the guts of the generation plant.

DailyFinance: Google is a big proponent of geothermal. Could you tell me a bit about that?

There are a couple of things that make it so compelling. There is a vast resource. No matter how you measure it, there is an immense amount of untapped thermal energy underground. Secondly, unlike solar and wind, geothermal is a baseload energy like coal. Baseload means it can be turned on or off at will and is a nearly 100 percent reliable supply source. If we are really going to increasingly supplant traditional fossil energy sources with renewables, we need a mix of intermittent and baseload sources. We need to match solar and wind with baseload technologies.

Daily Finance: Right, I'd heard the rough breakdown utilities feel comfortable with is 80 percent baseload, 20 percent intermittent?

The operators of the grid will debate of the grid will debate that. There certainly are limits, however. The beauty of the plug-in vehicles is that we might have an opportunity to finally crack the code on storing electricity in a cheap and distributed manner. And it might be sitting in the driveways of our homes. But back to geothermal. The great thing about geothermal is it has capacity factor equivalent to coal. That makes it very, very attractive.

Daily Finance: Google is not investing in plain-vanilla geothermal, though?

No, we are looking at advanced technologies in geothermal. There has been so much progress made in going beyond traditional geothermal. There is still opportunity there, but we are looking at other systems in geothermal, such as drilling deep to get to hot rocks, injecting water into the hole to fracture the rock and pumping the now heated water back to the surface to make steam that then turns a turbine and make electricity.

We're also looking at projects where geothermal energy can be produced alongside existing drilling opportunities. It turns out the drilling and energy production industries bring up very large quantities of hot water. So that's another potential source where you don't even have to pay for the drilling costs. We've made investments in a number of geothermal companies. And this year, geothermal is getting $400 million in stimulus money.

That's a lot for a space that previously got less than one-tenth that amount. So we're learning how to do it in new ways and there are an increasing number of projects being developed and financed. Interestingly, Texas is, by certain measures, the Saudi Arabia of oil. So imagine unleashing the oil and gas industry in Texas to start developing this resource.

Daily Finance: What are the challenges in geothermal?

Anything where you drill underground, you release seismic energy. Some people think that might cause seismic events -- earthquakes. The question is, how much energy do you release and compared to what. If you dig a dam or mine for coal, this is not an issue. But several projects have shut down after what people believed were seismic events.

Daily Finance: What are some other areas for potential energy improvements that might be off the radar?

The whole issue of energy efficiency writ large is something we see as having tremendous potential. It's not sexy, but it's one where the economics are extraordinarily compelling. If energy efficiency and energy savings could be better integrated with renewable energy in peoples' homes and businesses, we can make the economics of renewables more attractive.

If someone thinking about putting solar on the roof, the first thing they should do is reduce the electricity load in their house through energy-efficiency measures. That's the most cost-effective expenditure, bar none. Once they've cut that load, something like solar begins to make more economic sense. Then you can scale down the size of the required solar system you put on the roof. So it's packaging energy efficiency and solar energy that would make a great deal of sense.

We're stepping into this with our Google PowerMeter. That's the product we've launched at Google. It gives people real-time information about energy use in their homes. And it's an iGoogle gadget. It sits on your iGoogle homepage and it shows you in real time how much electricity you are using in your home. You can open up your laptop at work. and see what's going on at any given moment.

We think that's a compelling way to get people more engaged in the energy use in their own lives. The situation today in peoples' homes is really so out of date. Imagine if you went to a supermarket and there were no prices on anything. You just put things in your shopping basket and at the end of the month, you got a bill that said "your bill is $664 for groceries. Send your check here." That's what happens in energy use in peoples' homes. We think that if people can see how much it costs and their demand patterns, they can make big changes.
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