SAN FRANCISCO - Google Inc said on Tuesday the Web services and online advertising group plans to spend hundreds of millions of dollars to help drive the cost of electricity derived from renewable energy below coal prices.

The project, dubbed Renewable Energy Cheaper Than Coal, is hiring dozens of engineers and targeting investment financing at advanced solar thermal power, wind power, enhanced geothermal systems and other new technologies, Google said.

Google plans to be one of the project's first customers, employing the power to run its massive computer data centres while selling back excess energy to the electricity grid.

A gigawatt can power a city the size of San Francisco.

Mr Page and Sergey Brin, Google's two 34-year-old co-founders, told reporters their plan made business sense but Google also planned to license any resulting technologies worldwide.

'We see a plausible path to much lower energy costs and we just want to get people working on that now,' Page said, adding that only if Google's moves have a global impact can it hope to alter the economics that make coal or oil cheaper.

Google does not disclose the energy consumed by the vast data centers that power its Internet services. But local energy experts say the fast-growing company ranks as one of Silicon Valley's biggest energy customers.

'As Google grows, we don't want our core business to be part of the problem. We want to be part of the solution,' said Larry Brilliant, head of Google.org, the company's philanthropic arm which will direct the energy investments.

Around Google headquarters, the Renewable Energy Cheaper Than Coal project is known by the mathematical shorthand of 'RE C'. 'I know it's a little bit geeky,' Mr Page told reporters.

The mouse that roared?
Google is taking advantage of its growing mountain of cash, brand recognition and mushrooming market value in launching the campaign. Now the sixth-largest US company by market capitalisation after its stock leaped in recent months, Google argues the time is ripe for research to cut energy costs.

Officials said Google is targeting renewable energy that could produce a gigawatt of energy at prices, when investments are fully amortised, of 3 US cents per kilowatt hour or lower.

'We think we need to get in the range of 1 to 3 cents per kilowatt hour to be cheaper than coal,' said Bill Weihl, who carries the title of Green Energy Czar at Google.

The push comes as oil prices near US$100 a barrel and coal, which generates 40 per cent of the world's electricity, faces regulatory and environmental pressures that may boost prices.

'If they can do it cheaper than coal, then that's the Holy Grail,' said Mark Manley, alternative fuels analyst at Natixis Bleichroeder. 'If they figure it out, it will take off.' But he cautioned that hundreds of millions of dollars is unlikely to make much of a dent in the multitrillion-dollar energy market. 'It will have somewhat of an impact and shows leadership, although the energy industry is huge,' he said.

Dramatic investments in alternative energy have failed to yield rapid results in the past, he added, citing Pacific Ethanol, in which Bill Gates invested a few years ago. The stock soared as a result, but has since fallen from a year high of US$19.17 to US$4.64 on Tuesday.

If successful generating power at prices below coal, Google would put the technology to work to dramatically slow global climate change resulting from increasing coal and oil use.

'I don't want to overstate (our goal) too much,' Mr Page said. 'Our goal is to do it in a way that could be applied to a significant amount of the electric generation in the world.'

Working with Google.org, the company plans to spend tens of millions of dollars in 2008 on research and development and related efforts in renewable energy. Its initial focus will be solar thermal technology and enhanced geothermal systems.

Eventually, the Mountain View, California-based company said it would spend hundreds of millions of dollars in for-profit 'breakthrough renewable energy projects.' Hydroelectric and nuclear energy are not part of the project.

Mr Page said many researchers, due to lack of capital, make incremental reductions in alternative energy costs rather than focusing on more ambitious breakthrough technologies.

He estimated there were no more than 1,000 researchers worldwide focused on energy cheaper than coal. 'We would really like to get those people in one room and give them resources.' -- REUTERS

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