Eric Schmidt's Googlefficient Energy Math

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By Peter Troast - January 8th, 2009

During his talk to the Commonwealth Club of California on October 1 (full video at bottom of this post), Google CEO Eric Schmidt described himself as an optimist and a businessperson. If he is to be believed, his interest in energy efficiency has less to do with saving the planet than with making a profit.

Maybe.

In fact, we think he’s doing a (pretty damn impressive) chicken dance because he has figured out that Google can do both at the same time, and he’s making as much noise about it as he can, in hopes other organizations will figure that out, too.

Schmidt’s premise is this: if you invest in energy efficient technology and conservation, you will not just save money.  You will make money as a direct result of the efficiencies.  In his very Google way, Schmidt is talking about real money on both sides of this equation, looking at an investment of 4-4.5 Trillion dollars over the next 22 years.  (A staggering number that he points out is less than the payment for the economic bailout). This would be a daunting figure, if not for the next one.  His projected savings: 5.5 trillion dollars. We are not talking chump change. We are talking sound investment, and excellent ROI.

What strikes us about Schmidt’s discussion of the need for investment and change on a national and global level is that, no matter how large-scale his concept, his focus ultimately returns to the math of buildings. Buildings are, after all, what first launched his thinking about energy efficiency. “What happened in my case,” he said,  “I heard 40% of climate emissions occur from buildings. And I thought, well, I’m in charge of a lot of buildings. Maybe I should do something.”  And he did. Why? Because the math works.

Schmidt’s people told him that if they spent one million dollars on building efficiencies, the payback would be in 9 months.  His response? Do it. (Please. And actually, do it bigger).  Google ultimately came up with a plan to invest $5 million, with a projected payback in 2.5 years.

Near the end of his discussion, Schmidt was asked whether Google intended to provide tools to consumers, to help them understand their energy expenses and opportunities to reduce them. In other words, are you going to grant us our previously blogged about wish for Google Energy Analytics, Eric? He answered this way: "It's obvious to me, if you give information to end users, they behave smartly." And in collaboration with GE, they're working on it.

While we are desperate for Google Energy Analytics, consumers have understood the math of efficiency for some time. We buy CFL lights and invest in better insulation. We understand that the return will come, and that we might have to wait for it.  Schmidt was asked whether the government is prepared to make similar up-front investments. “If they don’t,” Schmidt responded. “The current mess will continue.”

For the first time in… well, about 8 years… we are ready to be optimists about the government’s ability to think a few months ahead, and, for that matter, to do the math, too.


Comments

Love this: “I heard 40% of climate emissions occur from buildings. And I thought, well, I’m in charge of a lot of buildings. Maybe I should do something.” And he did. Why? Because the math works. Schmidt’s people told him that if they spent one million dollars on building efficiencies, the payback would be in 9 months. His response? Do it. (Please. And actually, do it bigger). Google ultimately came up with a plan to invest $5 million, with a projected payback in 2.5 years. Near the end of his discussion, Schmidt was asked whether Google intended to provide tools to consumers, to help them understand their energy expenses and opportunities to reduce them. In other words, are you going to grant us our previously blogged about wish for Google Energy Analytics, Eric? He answered this way: "It's obvious to me, if you give information to end users, they behave smartly." And in collaboration with GE, they're working on it." But, until "analytics" is readily available, consumers won't do the math. What they will do is listen to people making wild, unsubstantiated promises and pick the one that sounds most credible or least expensive. We need to track results and compare them to promises so we can build a confidence ratio. Then the sale won't be based on best pitch, it'll be based upon delivery. Posted by tedkidd on Jan 18, 2012 1:16pm

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