Renewable Energy: Maintech, not Cleantech

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Renewable Energy Maintech, not Cleantech
Vinod Khosla Khosla Ventures Feb 2009
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all progress depends on the unreasonable man
George Bernard Shaw
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A crisis is a terrible thing to waste.
Paul Romer
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Problem Misunderstanding Technology
The telephone has too many shortcomings to be
seriously considered a means of communication
-Western Union Internal Memo, 1876
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Excuse Missing Applications
There is no reason for any individuals to have a
computer in their home -Ken Olsen, President,
Chairman and Founder of DEC, 1977
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Problem Understanding of Physics
Heavier-than-air flying machines are
impossible -Lord Kelvin, President, Royal
Society 1895
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Problem Underestimating people
"Everything that can be invented has been
invented." -Charles H. Duell, Commissioner, U.S.
Office of Patents, 1899
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It is the mark of an educated person to look for
precision only as far as the nature of the
subject allows. Aristotle
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oil price forecasts (1985-2005)
Forecast
Actual
Actual
Forecast
Forecast
Forecast
Actual
Actual
Forecast
Forecast
Forecast
Actual
Actual
Actual
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Data/Source World Oil Prices (current /
Barrel)- EIA Office of Integration Analysis and
Forecasting
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gas price forecasts (1985-2005)
Actual
Actual
Forecast
Forecast
Forecast
Actual
Actual
Forecast
Forecast
Forecast
Forecast
Actual
Actual
Actual
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Data/Source Natural Gas Wellhead Prices (current
/1000cf) - EIA Office of Integration Analysis
and Forecasting
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coal price forecasts (1985-2005)
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Actual
Actual
Actual
Actual
Actual
Forecast
Actual
Actual
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Data/Source Coal Prices to Elec. Generating
Plants (current /million btu) - EIA Office of
Integration Analysis and Forecasting
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the US market for mobile subscribers
Source
Actual
Forecasts

• Fortune (1984 gt 1989)
• McKinsey for ATT (1980 gt 2000)
• Herschel Shosteck
• (1994 gt 2004)

• 3.5M
• 109M
• 182M

• 1M
• 0.9M
• 60-90M

The same mistakes are repeated again and again!
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Source American Heritage Magazine -
http//www.americanheritage.com/articles/magazine/
it/2007/3/2007_3_8.shtml
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yesterdays technology, tomorrows forecast

• The actual market

• 1980s phone

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quantitative modeling flaws

• Models with given inputs are precise but
  inaccurate
• low standard deviation, but with high
  standard error
• input the measurable, ignore the immeasurable
  Black Swans
• obscured embedded assumptions
• Food price controversy
• World Bank study 75 of price rise due to
  biofuels
• USDA notes only 3 of total price change

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extrapolation of the past vs. inventing
the future
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relevant scale solutions for

• oil
• coal
• materials
• (efficiency of oil coal use)

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1990 Chindia 13 of CO2 emissions 2005
Chindia 23 of CO2 emissions 2030
Chindia 34 of CO2 emissions EIA
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China and India together account for 79 percent
of the projected increase in world coal
consumption from 2005 to 2030 EIA
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relevant cost relevant scale relevant
adoption
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the chindia test only scalable if competitive
unsubsidized
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the scaling model brute force or exponential,
distributed
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the adoption risk financial, consumer
acceptance, market entry
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• But how do we evaluate solutions?

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key criteria

• Trajectory What is or What Can Be
• Scalability Trajectory
• Cost Trajectory
• Adoption Risk
• Capital Formation
• Optionality
• Carbon Reduction Capacity

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cost and carbon trajectory
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Cost trajectory
Undesirable (hydrogen fuel cell?)
Fossil Carbon Cost
Cost
Fossil Fuel Cost
Subsidy/Support Needed
Time
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cost driving down the cost curve
Source The Carbon Productivity Challenge,
McKinsey Original from UC Berkely Energy
Resource Group, Navigant Consulting
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cost not all technology curves are the same
Cheapest now does not mean cheapest
later! Trajectory Matters!
Coal
Wind
Solar PV
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declining technology cost
Generations of Solar Photovoltaics
Crystalline Silicon
Amorphous Silicon
Thin-Film
Thin-Film Multi-Junction
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but tech cost decline isnt enough
Total Cost
Total cost decline is based on relative
proportion of cost types
Construction Cost
Inputs (Feedstock/Land)
Technology Cost
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Carbon trajectory
Undesirable (natural gas?)
Carbon Emissions Trajectory
Desired Goal (80 below fossil?)
Time
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the adoption risk financial, consumer
acceptance, market entry
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adoption risk - 2,500 nano
Internal combustion engine or Hydrogen /
electric?
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adoption risk U.S. mill closures
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optionality
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optionality biofuels feedstocks pathways
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
Pyrolisis
Biocrude
Methane
Microbial cultures
Ethanol/Butanol
Fermentation
Syngas
Catalytic Conversion
Gasification
Ethanol
Fischer-Tropspch catalysis
BTL Diesel
Waste
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optionality hybrids or biofuels?
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0
Fast (relative) battery tech development
of power from electric sources
of power from liquid fuel
Slow battery tech development
0
100
Time
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capital formation
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capital formation

• Short Innovation Cycles (3-5 years)
• Short investor return cycles
• Mitigate technical market risk cheaply
• Unsubsidized market competition

Private money will flow to ventures that return
investment in 3-5 year cycles!
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carbon reduction capacity
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carbon reduction capacity 10X increase in
carbon productivity!
Carbon Productivity Growth Required 5.6/yr
Less reduction now, but greater capacity to
respond in the future?
Carbon Productivity GDP / Emissions
World GDP Growth
World GDP Growth 3.1/yr
Emission decrease to 20GT CO2e by 2050 -2.4/yr
Source The Carbon Productivity Challenge,
McKinsey Original GDP projection from Global
Insight through 2037
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carbon reduction capacity is key
Growth Offers the Greatest Carbon Reduction
Opportunity!
Growth stock
Replacement of old stock
Improvement of current stock
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goalcost, carbon reduction capacity, carbon
scaling trajectory, capital formation, low
adoption risk, optionality
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• But be vary of irrational ideas.

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irrational ideas toilet paper

• I propose a limitation be put on how many sqares
  sic of toilet paper can be used in any one
  sitting.  Now, I don't want to rob any
  law-abiding American of his or her God-given
  rights, but I think we are an industrious enough
  people that we can make it work with only one
  square per restroom visit,  except, of course, on
  those pesky occasions where 2 to 3 could be
  required.
• - Sheryl Crow

• Source - http//blogs.usatoday.com/ondeadline/2007
  /04/singer_turned_a.html

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irrational ideas green bikinis

• Source - http//www.alternativeconsumer.com/2008/0
  7/29/eco-bikini-from-niksters/

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irrational ideas eat kangaroos, not cows!
SYDNEY (Reuters) - Farming kangaroos instead of
sheep and cattle in Australia could cut by almost
a quarter the greenhouse gases produced by
grazing livestock, which account for 11 percent
of the nation's annual emissions, said a new
study.
Source http//www.reuters.com/article/environmen
tNews/idUSSYD8867720080808
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irrational ideas no flags, no footprint

• But a few days into the Euro 2008 football
  championships fans are being advised not to fly
  their flags - because they could damage the
  environment Austria's automobile club, the
  OAMTC, says attaching two flags to a car leads to
  an increased petrol consumption of "up to half a
  litre a kilometre on motorways and rural
  stretches".
• - The Guardian

• Source - http//www.guardian.co.uk/world/2008/jun/
  10/germany.euro2008

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irrational ideas Shells sustainable tar sands

• UK advertising authority Shell mislead public by
  claiming tar sands as sustainable source!

Source http//www.guardian.co.uk/environment/200
8/aug/13/corporatesocialresponsibility.fossilfuels
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irrational ideas how to green books

• Source - http//www.amazon.com/Lazy-Environmentali
  st-Guide-Stylish-Living/dp/1584796022

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irrational ideas zero-emission buses?

• 3-year Oakland pilot zero-emission hydrogen
  fuel cell buses
• diesel _at_ 1.61/mile vs. hydrogen _at_ 51.66/mile!

solutions must make economic sense!
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Source ABC News - http//abclocal.go.com/kgo/stor
y?sectionnews/localid5984013
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irrational ideas Zero Emission Buildings

• ... the new fashion?

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lets face the facts

• Prius vs. painting 1000 sq-ft of roof white
• Wind PV unscalable solutions without
  storage!
• Classic Biodiesel a technological dead-end!
• CCS Coal FutureGen or Nevergen?
• Hydrogen powered cars a bridge to nonsense?

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no change bigotry vs. environmental
everything vs. pragmentalists
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irrational ideas the Exxon view?

• Discipline, Patience, Vision ? Green!

Source NY Times
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technology expands the Art of the Possible
todays unimaginable or tomorrows
conventional wisdom
the power of ideas driven by entrepreneurial
energy
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Black Swans and forecasting
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black swan solutions ?
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
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what if

• more coal plants meant cleaner air
• more driving meant less carbon
• cement was carbon negative free
• a million year crude production cycle reduced to
  hours?
• engines were twice as efficient cutting world
  oil consumption in half

We are working on these imagining the future!
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Calera

• Cement that sequesters CO2, instead of emitting
  it!

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Kior biocrude replaces crude
Crude oil
Refinery
Millions of Years
Biocrude
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Kior Millions of years ? Minutes!
Biomass
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Catalytic Cracking (BCC in minutes)
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Thermal Cracking (Pyrolysis- seconds)
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Oxygen (wt )
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20
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Geo Thermal Conversion
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(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)
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Transonic

• Gasoline engines at high compression ratios
• New injector technology is multi-fuel capable
• Precision ignition timing
• 50-100 mileage improvement
• Near term goal 100mpg diesel Prius

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Soraa/Kaai/Lumenz lasers and lighting
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Living Homes

• prefabricated, environmentally friendly,
  cheaper, LEEDS homes

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what if

• fusion happened at low temperatures
• nuclear plants produced no waste
• batteries were 10-100X better
• plant chlorophyll solar cells produced
  electricity or fuels
• algae could excrete its oil production

Others have proposed these!
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not your niche markets anymore!
The New Green
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)

• Generation - 250B - US
• Solar Thermal
• EGS
• Clean Coal
• New Nukes

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

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our renewable portfolio
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Khosla Ventures Renewable Portfolio
Sequestration Tools EPC
Distributed Solar Utility Scale Solar
Engineered Geothermal Wind Storage Synthetic
Natural Gas
Waste Water Water Desalination
Solar
Wind
Tools
Geothermal
Water
PVC Plasticizers Polyurethane Polyethylene Glass
Cement
Natural Gas
Coal
Plastics
Materials
Electrical Efficiency
Lighting Batteries Motors
Efficiency
Building Materials
Oil
Mechanical Efficiency
Corn/ Sugar Fuels
Future Fuels
Cellulosic
Homes Engines Appliances Pumps
Sugar Feedstocks Starch Feedstocks
Butanol Cellul. Diesel Cellul. Gasoline Cellul.
Jet Fuel
Cellulosic Ethanol
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Khosla Ventures Renewable Portfolio
Stion Ausra Infinia PVT
Nanostellar Codon
NanoH2O
AltaRock Great Point Energy
Solar
Wind
Tools
Geothermal
Water
Natural Gas
Draths Segetis Soladigm Calera
Seeo Kaai Soraa Lumenz Topanga GIV Gridshift
Coal
Plastics
Materials
Electrical Efficiency
Sakti3 Firefly Ramu
Efficiency
Building Materials
Oil
Mechanical Efficiency
Corn/ Sugar Fuels
Future Fuels
Cellulosic
PAX Streamline EcoMotors Transonic Tula Hybradrive
Cilion
Mascoma Range Coskata Lanza
Amyris LS9 Gevo KiOR
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Together, our products will improve the way all
people live
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Calera Corporation
Built on carbon negative cement
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Living Homes
And prefabricated, environmentally friendly,
cheaper, LEEDS homes
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Soladigm
Using electrochromatic windows
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Amyris
LS9
Gevo
Kior
Mascoma
Range Fuels
Coskata
LanzaTech
Fueled from renewable sources
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Ramu
EcoMotors
Transonic
Firefly
Seeo
Sakti3
Nanostellar
Tula Technologies
Hybradrive
With reduced fuel consumption and CO2 emissions
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Topanga
Lit by high intensity, low power discharge
lighting
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Ausra
Altarock
Infinia
Stion
PVT Solar
Using renewable electricity
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Great Point Energy
Cooking with natural gas from clean coal biomass
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Lumenz
Group IV
Soraa
Reading with LED lighting
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Kaai
Watching HD laser TV
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NanoH2O
Drinking desalinated water
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Segetis
Safely using biobased plastics and chemicals
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Draths
Biobased materials for your home
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Pax Streamline
Staying comfortable with more efficient air
conditioning
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Change every aspect of daily living
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to predict the future, invent it!
Forecast 2015 New cheaper than fossil
technologies proven Forecast 2030 How will
oil compete?
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or get to work
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