The problem with building the world's best power inverter in your garage is: Who do you sell it to? It's only worth $250M if you can connect with the buyer who is prepared to spend that much. The real value with something like a $1M prize is that it will lead to interest from people who are prepared to pay $250M. $1M for non-exclusive rights may be cheap for Google, but it is probably still good value for the inventor if it leads to bigger things.
I would assume if you actually did build it in the garage and it worked, the next step would be to get a patent and after that go talk to a venture capitalist.
Strangely enough, probably not much different to the way Google itself came to being.
If such incentives are already in place, Google risks nothing by drawing attention to them. Either way potential inventors go, Google may make this happen sooner.
It's a great recruiting tool. Plus the possibilities of how it will scale for projects like robotics/fiber/wifi etc... who wouldnt want an inside track like that?
This is the opposite of a good deal. Build something that is probably worth $250M and get $1m for it.