Algae What will it take

1
Algae What will it take?
Vinod Khosla Khosla Ventures October 2008
2
agenda

• The Innovation Handbook
• Key Criteria
• Black Swans

3
not your niche markets anymore!
Main Tech
The Markets You Think Of

• Corn Ethanol
• Biodiesel
• Solar PV
• Wind
• Geothermal

• Cement (100B)
• Water (500B)
• Glass (40B)
• Home Building (!!!)
• BioPlastics (10sB)

• Engines (200B)
• Lighting (80B - US)
• Appliances (10sB)
• Batteries Flow Cells (50B)

• Power Generation (250B US)
• Solar Thermal
• EGS
• Clean Coal
• New Nukes

• Gasoline (500B)
• Diesel (500B)
• Jet Fuel (100B)

4
relevant cost relevant scale relevant
adoption
5
the chindia test only scalable if competitive
unsubsidized
6
1990 Chindia 13 of CO2 emissions 2005
Chindia 23 of CO2 emissions 2030 Chindia
34 of CO2 emissions EIA
7
the scaling model brute force or exponential,
distributed
8
the adoption risk financial, consumer
acceptance, market entry
9
relevant scale solutions for

• oil
• coal
• materials
• efficiency

10
Khosla Ventures rules of investing

• Attack manageable but material problems
• Technology that achieves unsubsidized
  competitiveness
• Technology that scales - if it isnt cheaper it
  doesnt scale
• Manageable startup costs short innovation
  cycles
• Declining cost with scale trajectory matters

11
technology expands the Art of the Possible
to predict the future, invent it!
todays unimaginable is tomorrows
conventional wisdom
12
agenda

• The Innovation Handbook
• Key Criteria
• Black Swans

13
key criteria

• Trajectory What is or What Can Be
• Scalability Trajectory
• Cost Trajectory

14
trajectory scalability
Glycerin
Natural Oils
Transesterification
BioDiesel (FAME or FAEE)
Methanol/Ethanol
Ethanol, Butanol, Renewable Petroleum FermDiesel
Fermentation
ETG via catalysis
Biogasoline
Sugars/ Starch
Dimethylfuran
Catalytic Conversion
Gasoline, Diesel, Hydrocarbons
Catalysis and Aqueous phase Reforming
Algae
Sunlight CO2
Cell Mass
BioDiesel (FAME or FAEE)
Hydrocracking
Ethanol
Cellulose/ Hemicellulose
Acid or Enzyme Hydrolysis
Fermentation
Saccharification
Butanol
Diesel
Mixalco Process
Mixed Higher Alcohol
Biomass
Increasing Technological Difficulty
Pyrolisis
Biooil
Methane
Microbial cultures
Ethanol/Butanol
Fermentation
Feedstock Supply Volume
Syngas
Catalytic Conversion
Gasification
Ethanol
Fischer-Tropspch catalysis
BTL Diesel
Waste
15
trajectory scalability
Gallons oil / acre / year
202
102
48
635
NREL
16
trajectory scalability
Gallons oil / acre / year 440
Year round average 7g/m2/day
Warning Extrapolated from small sample
Ulva
17
trajectory scalability
Gallons oil / acre / year 1600
Year round average 16 g/m2/day
Warning Extrapolated from small sample
Confidential microalgae
18
trajectory scalability
Gallons oil / acre / year 3100
Year round average 30 g/m2/day
Warning Extrapolated from small sample
microalgae
19
trajectory scalability
Theoretical gallons oil / acre / year 6500
240 day average 61 g/m2/day
Warning Extrapolated from small sample
Skeletonema costatum
Kitto et al 1999
20
trajectory scalability
Theoretical MAXIMUM Gallons oil / acre / year
Maybe 2-3x (2,000 gallons oil / acre / year)
with genetically improved algae J Benemann
21
trajectory cellulosic scalability
Miscanthus 17 tons / acre Ethanol 1500-1800
gallons / acre / year Oil 1980-2500 gallons /
acre / year
Source Ceres Inc
22
trajectory cellulosic scalability
Sorghum 25 tons / acre Ethanol 2250-2750 gallons
/ acre / year Oil 3000-3750 gallons / acre /
year
(Prof. Holtzapple- Texas AM)
23
trajectory yields
Miles driven / acre / year 50,000 100,000 150,000

Oil
Oil
Ethanol
Ethanol
Algae Miscanthus Sorgum
Today 5 years Theoretical
24
biocrude replaces crude
Refinery
Crude oil
Biocrude
25
Kior Millions of years ? Minutes!
Biomass
50
45
Catalytic Cracking (BCC in minutes)
40
35
Thermal Cracking (Pyrolysis- seconds)
30
Oxygen(wt)
25
20
15
Geo Thermal Conversion
10
(Million of years)
5
0
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
80,0
90,0
TAN (mgKOH/g)
26
key criteria

• Trajectory What is or What Can Be
• Scalability Trajectory
• Cost Trajectory

27
trajectory fertilizer costs
Desulfurization
Little fertilizer
Vs.
Source Ceres Inc
28
trajectory harvesting costs
How to remove a ton of microscopic particles from
many tons of wet mediadaily?
29
trajectory harvesting costs
Vs.
x 100??
Source Seambiotic centrifuge
30
trajectory containment cost
How to contain thousands of tons of
mediacheaply?
Source Solix
31
trajectory containment costs
Vs.
Source University of MN
32
trajectory containment costs
Vs.
Source AlgaeLink
33
trajectory containment costs
Vs.
Source Valcent
34
trajectory containment costs
Vs.
Source Live fuels
35
trajectory containment costs
Vs.
Source Algenol
36
trajectory containment costs
Vs.
37
trajectory energy costs
How to move, mix, or add light to thousands of
gallons of mediacheaply?
Source Seambiotic
38
trajectory energy costs
Vs.
Pumps Paddles
39
trajectory energy costs
Vs.
Light
Source Helix BioReactor (Origin Oil)
40
trajectory other cost reduction strategies
Co-products like fish or animal
feed Fertilizer from human or industrial
waste
41
trajectory costs
/ Gasoline Equivalent Gallon 0 2 4
6 8
Algae Miscanthus Sorgum
2010 2015 Theoretical
42
agenda

• The Innovation Handbook
• Key Criteria
• Black Swans

43
black swan solutions ?

• Black Swans events are
• Outliers outside realm of traditional
  expectations
• Material make significant, game-changing impact
• Justifiable not predicted, but justified on
  ex-post basis

Technology shocks are classic Black
Swans! Strategy More at bats shots on goal

• rarity, extreme impact, and retrospective
  (though not prospective) predictability

Source Nassim Nicholas Taleb, author of The
Black Swan
44
Black swan algae idea
Fuel excretion? (outside cell wall without lining)
Source http//www.nies.go.jp/biology/mcc/images/1
00images/nies-0836.jpg
45
Black Swan? Algenol
?
Source Algenol
46
Black Swan? Sapphire Energy
Source Sapphire Energy
47
Black swan algae idea
Ocean farming? (no GMO)
Source http//assets.panda.org/img/barents_algal_
bloom_14319.jpg
48
or get to work
vk_at_khoslaventures.com khoslaventures.com/resources
.html
48