Home' Technology Review : March April 2007 Contents Q&A
TECHNOLOGY REVIEW /
For many years a partner at the
blue-blooded venture capital
rm of Kleiner Perkins Cau eld
and Byers, Vinod Khosla has been
called the best venture capitalist in
the world by both Forbes and Red
Herring magazines. Certainly, he has
succeeded more grandly and more
reliably, and has failed less spectacu-
larly, than any of his peers. In 2004,
he founded Khosla Ventures, which
advises entrepreneurs and invests in
his latest area of interest: the clean
energy technologies that might
replace the burning of coal and oil.
TR: Whence this newfound preoccu-
pation with clean energy generation?
Khosla: I enjoy looking at hard,
important problems that are still
Funding new energy technologies has
been the work of governments and
big businesses. Do you really think
energy a good investment for VCs?
Not every energy project can
be funded by venture capital-
ists; some have very long time
lines and big budgets. But there
are plenty of opportunities that are
amenable to a venture approach.
Why are you skeptical about efforts
to make coal-based energy genera-
tion cleaner and more efficient?
How fast do you think existing
energy vendors will move to these
clean coal technologies? Alternatives to
coal and oil can get here much faster.
That said, clean coal is one option for
future power generation. We need reli-
able, predictable power; many people
believe that coal can provide that. But
concentrating solar power [CSP] is
also a real option for large-scale, high-
capacity, dispatchable power. Ther mal
underground storage of heat can be
used for utility-grade power genera-
tion, too. If large-scale compressed-
air energy storage [CAES] works,
then wind power will become scal-
able. So I think there will be a horse
race between clean coal with carbon
sequestration, wind with CAES, and
solar ther mal power generation with
storage. I think carbon capture and
sequestration will be di cult, making
clean coal more expensive than CSP.
Today, I would put my money on CSP.
What are the benefits of biofuels?
Biodiesel is a good product, but
it s nonscalable unless it can be made
from biomass instead of seed prod-
uct. Ethanol is a good start, and it
will transition quickly to cellulosic-
based production. But I believe new
fuels like butanol will come along.
I would not be surprised to see bio-
gasoline either, initially made from
cor n and later from biomass.
When will solar cells, or photovoltaics,
be sufficiently efficient to contribute sig-
nificantly to the globe s energy needs?
Don t equate solar with photovol-
taic. I think CSP, leveraging the large
investment in traditional, steam-based
power generation, and using pas-
sive mirrors to concentrate heat, can
get to 35 percent e ciency today at
$500 per kilowatt. For photovoltaics
to compete, we ll need multijunction
thin- lm solar cells produced with
cheap mass-production technologies,
and e ciencies above 30 percent.
Does building wind turbines
using coal power vitiate their
value as an alternative energy?
Many technologies today have long
payback periods before the energy
invested in them is returned. If it
takes so much coal power to pro-
duce the solar cell or wind turbine
that we are not clean-energy positive
for four or ve years, is that really a
problem? But technology is not static,
and all the newer technologies will
improve, and the payback period will
get faster and faster. These kinds of
arguments are generally advanced
by proponents of traditional energy
and economists who are not used to
rapid improvements in technology.
Does nuclear energy have a place
in a clean-energy future? After all,
France generates 75 percent of its
power through nuclear energy.
Nuclear could have a future. That
said, I suspect we are unlikely to go
to mostly nuclear power in the U.S.,
because the political and regulatory
risks are too high and the time line
to build plants is too long. What we
really need is to build a big, high-
voltage DC power grid, and let
nuclear, wind, solar photovoltaics,
solar CSP, electricity from biomass
and waste, and anything else innova-
tors can think of get on the grid. We
need to kick-start the alternatives and
let the competitive ones prosper.
Do you believe in the hydro-
gen economy that President Bush
and others have promoted?
Hydrogen makes no sense to
me. There are forces that like
any technology that is far enough
away that they don t have to make
any real changes. We will want to
reëvaluate hydrogen in 10 years,
but it does not look like a win-
ning option to me today.
Apart from energy, you ve also shown
some interest in investing in new
markets for microloans. Why?
Microloans are the most e ective
tool in addressing poverty. I am not
a big believer in the aid and devel-
opment programs that big govern-
ments favor. But if entrepreneurs
use microloans to make biomass an
important feedstock, for instance,
we will do more to address pov-
erty than all the foreign aid from all
the developed world. And biomass
can be used to produce fuels, elec-
tricity, plastics, and much more.
A veteran venture capitalist s new energy
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