Google, Alphabet Inc (GOOGL), Announces New Renewable Energy Project: Analyst Bullish on Innovation

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Last week, internet giant Google, part of Alphabet Inc (NASDAQ:GOOGL), announced on its official blog that it is purchasing 842 megawatts of renewable energy to power its data centers, nearly doubling its current levels and investing in lowering long-term costs. This deal brings the company one step closer to reaching its goal of 100% renewable energy in operations by 2025.

Google states the deal is the “largest… most diverse, purchase of renewable energy ever made by a non-utility company.” The several deals consist of solar and wind energy purchases in the U.S., Chile, and Sweden and range from 10-20 year periods. The company expects to finish the six different wind and solar projects within the next two years. According to the company, the deals help minimize environmental emission and “make good business sense by ensuring good prices.” Google timed the announcement to coincide with the COP21 UN conference on climate change, where several world leaders met in Paris to discuss ways to reduce carbon emissions.

The plans for the latest renewable energy purchases are outlined in three stages. First, Google will design more efficient data centers to decrease energy consumption by 50%. Second, the company reiterated its goal to use 100% renewable energy in its operations, highlighting 2010’s purchase agreement with a wind farm in Iowa as well as other large-scale projects in the past five years.  Third, the company emphasized its efforts to buy large amounts of renewable energy from its utility suppliers, with the most recent announcement marking “the first solar project enrolled under that program.”

Google has also invested $2.5 billion to finance renewable energy projects unrelated to its operations in several countries such as Germany, the U.S., and Kenya. The company states, “These investments have been in some of the largest and most transformative renewable energy projects in the world with a goal to help drive renewable energy development not only as a customer but as an investor, and bring down costs for everyone.” In addition to its past renewable energy contributions, the company is currently working on Project Sunroof, which helps homeowners evaluate and install solar panels on their roofs. The company is also supporting Makani Power, a company developing energy kites that generate 50% more energy through wind turbine technology.

Due to announcements like these, as well as general innovation, analysts are mostly bullish on Alphabet, which is comprised of Google and Google’s subsidiaries such as YouTube and Nest Labs. This past fall, analyst Ronald Josey of JMP securities maintained a Market Outperform rating and raised his price target on Google ahead of the Alphabet transition, commenting on the company’s innovation. He stated,  “Overall, we believe Google is one of the most innovative companies globally, is very well positioned across almost every growth driver on the Internet, and with the new Alphabet structure, we believe is better positioned to invest and grow going forward.”

According to TipRanks’ statistics, Ronald Josey has a 56% success rate recommending stocks and an average return of 1.5% per recommendation. Out of the 35 analysts who have rated GOOGL in the last 3 months, 34 gave a Buy rating while 1 remains on the sidelines. The average 12-month price target for the stock is $841.09, marking an 9.35% upside from where shares last closed.Google Consensus

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