Energy Generation Breakthroughs and Challenges

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FountainBlue’s August 3 Clean Energy Entrepreneurs’ Forum on the topic of Energy Generation Breakthroughs and Challenges featured:

• Facilitator Awais Khan, Director, Venture Capital Practice, KPMG
• Panelist Jonathan Forrester, Principal, Structured Transactions, PG&E
• Panelist Ripudaman Malhotra, Senior Scientist, SRI International
• Panelist Ryan Murr, Attorney, Goodwin Procter LLP
• Panelist Abe Yokell, Principal, Rockport Capital
• Presenting Entrepreneur: Fareed Sfard, CEO, Ahura Energy Inc.
• Presenting Entrepreneur: Jim DiSanto, CEO, BBE Energy
• Presenting Entrepreneur: Andres Wydler, CEO, Real Green Power

Below are notes from the conversation. The notes above are copyrighted by FountainBlue in 2006-09 and all rights are reserved. You have our permission to forward the notes on to others, to help support further discussion and connections, but please ensure that the notes are INTACT, and that there is proper acknowledgement for our speakers and to FountainBlue.

The Demand for Energy
As global consumption of energy moves from 3 cubic miles of oil a year today to almost 9 cubic miles of oil a year by 2050, due to population growth and growing affluence. People, companies and countries are challenged to meet the overwhelming demand for energy, delivered in a way that works with existing systems and infrastructure and policies. Even with a concerted and collaborative and global effort at conservation, we could reduce the projected demand to 6 CMO/year by 2050.

Even then we would have the challenge of generating more energy. Generating 1 CMO/year requires a battery of about 2500 one-GW nuclear power plants of energy. To meet this need, we would have to install one new nuclear plant, or one thousand wind turbines, or one quarter million roof to PV systems (2 kW each), each every week for fifty years, assuming the systems installed in the first year are still working. See the attached SRI report detailing our growing global energy demands.

Technology Advancements
Advancements in technologies for energy generation are being developed to meet the energy needs, however, finding cost-effective alternatives to fossil fuels remain a challenge. In solar generation for example, there are mechanical, optical, nano and other materials and system innovations, as well as business model and financing reforms, which would make it more attractive for people to adopt these technologies. Indeed, with hardware and software technology advancements AND the rising cost of power, we may in some regions approach grid parity, the point at which photovoltaic electricity is equal to or cheaper than grid power provided by local utilities, particularly in areas where there is plenty of sunshine and high energy rates.

Political and Social Factors Weigh In
Unfortunately, the political and social pressures are precluding energy generation options for different reasons related to safety, ecology, etc. There is continued and growing pressure from consumers to reduce the carbon footprint and produce energy at reasonable costs. With the overwhelming and increasing demand for energy, it is important to consider each energy generation option, from fossil fuel to nuclear to hydro, geo-thermal and other methods. It is important to work together and embrace the up-sides of these options, while working to mitigate the downsides through technology and policy and business model advancement. It is equally important to simultaneously remain unbiased during the decision-making process and focus on the bottom line results rather than on personal and political agendas at the personal, company and country levels.

Financing as a Hurdle
In addition, financing options for energy generation solutions can be quite expensive, and funding sources are limited, especially as venture firms continue to avoid capital intensive projects with projected returns beyond the 3-5 year mark. The vast majority of energy generation worldwide has been planned and paid for by government with some corporate support. Venture capital has played a very small role in energy and cleantech to date. So start-ups are challenged to come up with funds to de-risk their technology solutions sufficient to be worthy of additional investment. Options for financing include government grants and corporate partnerships.

The panel offered their insights on the opportunities ahead.
• Leverage opportunities provided by utilities like PG&E who are providing power purchase agreements which would encourage cost-effective production of energy ready to feed into the grid, particularly when there is the greatest demand – in the summers and during the afternoon hours. For more information, visit http://www.pge.com/includes/docs/pdfs/b2b/wholesaleelectricsuppliersolicitation/Feedin_Tariffs_FAQs.pdf
• Consider the various modules for the solution you are providing, and how technology innovation in any one component can increase the productivity of the overall system. For example, innovation in an inverter for solar panels, which accounts for roughly 7-10% of the overall cost of the panel, can maximize the output of the panels themselves, and also be cost-effectively manufactured.
• Consider the entrepreneurial opportunities around the storage of energy, including chemical (battery), compressed air, pumped hydro and other options.
• Although all sources of energy generation should be considered, some options will take a much larger investment to produce results. For example, tidal and wave energy might be a ready, natural and available energy source, but capturing it efficiently has historically been cost-prohibitive due to extremely harsh marine environment.

Leadership is Key
As we continue to face the growing global energy demands, the verdict is out on whether today’s leaders can maintain a bottom line perspective on our energy options, while showing political will power to deliver results which would benefit all. During this crisis, we need to focus on objectives. If it’s merely making life better for billions, we will need more energy. With climate change, we will need to solve new problems including effective desalination, building dykes and sensible zoning, amongst other challenges. In conclusion, we should all be informed and feel empowered to influence who leads and how they lead us through this problem-that-must-be-solved.

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