Google launched its renewable energy initiative four years ago and started fairly slowly: it invested in a few start-ups and developed an app to monitor home electricity use online. Its announcement was met with surprise and skepticism: why would Google want to stray from its successful search business? But Google has multiple reasons for investing in energy: its goal to be carbon neutral; it’s engineering culture that sees the need for innovation in energy; a positive return on investment. Finally, Google is an information company, and energy information could be a new business.

I was surprised to learn: Google is hiring a team of engineers to work on renewable energy systems. They've had engineers doing this sort of work all along, but this expansion seems to be a sign of its increasing involvement in the sphere — and the possibly of creating its own products.

Notable quote: Google's green energy czar told me they're in it for the long term. If that’s true, it could make a difference on a few fronts.

SolarCity’s business installs and finances solar projects for residential and commercial customers so it’s less expensive for homeowners upfront. It either leases panels to customers, who then use the power they generate, or installs panels on customers’ houses (while retaining ownership) and sells the customer the power generated. That model requires SolarCity to secure a lot of financing, which has largely come from banks. Having a major corporation like Google as an investor breaks some new ground. SolarCity CEO Lyndon Rive is hopeful that Google’s move will send a market signal that encourages more corporations to jump in.

Distributable: To date, Google has mostly invested in large-scale solar and wind farms: utility-scale projects. The company’s investment in SolarCity — its largest clean tech investment so far — is its first major venture into distributed generation. Their stated motives for this deal were a good return on investment and the desire to make renewable energy cheaper by helping to bring down the cost curve.

Looking forward: With the drop in solar panel prices, the outlook for distributed solar has been rosier, despite the economic downturn. But a lot of residential solar companies are anxious about the decline of financial incentives and rebates in California, which has been the backbone of their economic model.

The fact that Google considers financing for residential solar to be a relatively risk-free way to earn a decent return shows how far solar has come in just a few years. Such an investment sends a signal to other potential investors, be they bankers or other corporations with rich balance sheets, that solar is not just a do-gooder investment but a money maker.

Also: Financing expensive solar arrays has been the big hurdle to expanding solar's reach, so the fact that Google has committed nearly $300 million is a big deal.

I’ll be watching: With the Google fund, SolarCity now has raised more than $1 billion to finance solar leases. That's going to put pressure on competitors like SunRun and Sungevity to get more cash into the game.