Here are some highlights of our conversation (edited for length and clarity):
Fergus Nicholl: Elon Musk…you’ve met the man. How would you introduce him to a global audience?
Alison van Diggelen: He is a genius inventor…the (Thomas) Edison of our day…incredibly sharp minded, a big old geek, but he’s very personable. He has grand visions and wants to make it happen…he has the ability to paint a picture, and motivate a team and build a team. He’s changed the world of electric vehicles and he’s now planning to change the world of power, utilities and battery storage.
Fergus Nicholl: That is an application that would apply in many many countries, beyond India. The idea that you could weather blackouts, brownouts…you’re saying you could bank it, use it when you need it and not necessarily get hit by little domestic crises?
Revathy Ashok: Absolutely. It’s pretty common in India for a normal household to have a one to three hour battery back up.For the last 12 hours it’s been raining heavily…we’ve had no power at all, so all connectivity is lost. I have three hours of battery backup which is all gone…
Alison van Diggelen: The main idea is, if you’ve got solar panels on your roof, or windpower, your house can become a power station with the addition of these batteries. No matter what natural disaster, earthquake etc. is happening, you will have a reliable source of power. You won’t need the utility anymore. You can just disconnect from the grid, go “off-grid.” So that’s the huge potential and that’s why people are really excited about tonight’s announcement.
Fergus Nicholl: The Gigafactory (in Nevada)…tell us more about it…a net zero energy factory…it’s quite an extraordinary project.
Alison van Diggelen: Yes, a net zero energy project means it will be solar powered itself and will produce as much energy as it uses to make these batteries. It’s definitely quite revolutionary and has Elon Musk’s fingers all over it.
Fergus Nicholl: In this picture, the entire roof is vast solar panels, kind of like a solar farm laid perfectly flat. I guess Nevada is probably the best place to be for that?
Alison van Diggelen: Indeed, several states were actually fighting over it. California was hoping to get it too, but Nevada won out because they gave some very juicy incentives…The Gigafactory will produce more batteries, once it’s fully operational, than the world’s supply of batteries in 2013. That’s what they’re predicting. It’s a mind blowing amount of batteries and Tesla board member, Steve Jurvetson told me they’re planning to build more Gigafactories around the world, once this one is operational. As well as being Net Zero, they’re going to be creating a lot of employment, so there will be a lot of communities wanting them in their back yard too.
Fergus Nicholl: They’ll be lining up in different countries…
Note: We didn’t have time to discuss the competition that Tesla will face in the battery storage space. There are already major players like Samsung, LG Chem and Mitsubishi working on energy storage solutions and a slice of what Deutsche Bank estimates is a $4.5Bn market. The question is, will Tesla’s strong brand and reputation for quality emulate what Apple achieved in the cellphone market, and leapfrog over the existing competition? In his usual hyperbolic (Steve Jobs) fashion, Elon Musk said last night that “existing battery solutions suck.” But the success of his high risk venture in the energy storage market will depend on swift execution and competitive pricing that makes the Tesla Powerwall a viable solution for a wide spectrum of potential buyers, from wealthy consumers and businesses in California to rural communities in India, Africa and beyond.
It’s no secret that cleantech has taken a bashing in the last few years, yet Andrew Chung, a partner at Khosla Ventures is still bullish about the sector’s prospects and convinced that it makes sense long-term, both domestically and globally. During our recent hour-long conversation, he admits that “keeping the cleantech fire burning” is the first thing he thinks about when he wakes in the morning.
“The number one thing is to ensure the cleantech industry continues to survive and thrive,” says Chung. He cites several companies in his portfolio that recently raised large rounds at strong valuations.
Keeping the fire burning? It’s curious imagery for someone focused on clean energy; and technologies that lower our carbon footprint. I imagine him cheerfully stoking a bonfire, plumes of black smoke filling the air.
“Would you like to qualify that?” I ask.
He chuckles, “Yes…we would capture the carbon created by the fire and transform it into something else.”
It’s a fitting segue into one of his favorite investments: LanzaTech, a company that happens to do just that. It takes carbon capture one step further, capturing waste gases like carbon monoxide from heavily polluting steel plants and converting them into “valuable fuel and chemicals.”
He calls it one of his Black Swans – highly improbable investments, that are not incremental improvements on business as usual, but giant technological leaps.
So compelling that the company recently announced a joint venture with Baosteel, a major steelmaker in China, which is investing in a new commercial facility due to come online in 2015. LanzaTech’s zero capital contribution to the deal means it can continue to scale up and pursue other partnerships in Japan, Europe, India and Russia.
I was curious to learn who helped with the initial discussions to broker the deal? None other than former British Prime Minister, Tony Blair. Those paying close attention to Khosla Ventures will remember he joined the team as a strategic advisor in 2010.
So what makes it such a compelling deal? Chung calls it a confluence of events. The blanket of smoke over Shanghai being a palpable one, leading to pressure from the Chinese government on major polluters like steel makers to clean up their act. There’s also the global ambition of many Chinese businesses who view such partnerships as strategic moves.
Societal tensions add to the pressure to solve China’s huge environmental problem. Even Jack Ma, China’s Andrew Carnegie is focusing his new philanthropic trust on health and the environment.
You’ll notice that the United States is conspicuously absent from LanzaTech’s partnership list. That fact is also at the top of Chung’s mind. Several of the potentially transformative technology companies he backs are finding it easier to get global partners than American ones.
“How do we communicate this message to D.C.?” says Chung. “If technology is not supported here, it will leave our shores.”
Chung feels the regulatory environment means that American companies are more complacent and have less appetite to take risks. He cites the U.S. car industry where employees get bonuses whether or not they achieve product improvements.
“It needs a regulatory push to compel them to take greater risk,” says Chung. “We don’t have the dire need like in China where (almost) 1 million people are dying of pollution every year.”
KINDRED SPIRITS OF ELON MUSK
Talking of risk taking, Chung sees himself and his boss Vinod Khosla as kindred spirits of Elon Musk, who staked all his PayPal wealth on transforming the electric car sector with Tesla Motors.
“It’s a major cleantech success story,” says Chung. “Elon deserves a lot of credit…he stepped on the gas when others were giving up.”
What makes them kindred spirits? It’s more than just their strong belief in technology explains Chung. He quotes Irish playwright and cofounder of the London School of Economics, George Bernard Shaw:
“All progress depends on the unreasonable man.”
“So are you and Vinod Khosla unreasonable?” I ask.
Chung laughs. “We are contrarians!” he says. “We’re willing to do what it takes.”
He points to Khosla’s investment in Ecomotors, an internal combustion engine targetting energy efficiency gains of up to 50%. The company also has backing from Bill Gates and entered into two joint venture partnerships to build plants in China, deals involving hundreds of millions of dollars. He anticipates 200,000 engines for cars and diesel generators will roll off the production lines by the end of 2016.
“We’re addressing the transport problem from both angles,” says Chung. “We are focused on the electric revolution…battery technology investments. EcoMotors is a hedge to reflect the 99% (of the transport sector) that’s not yet electricity…electric vehicle infrastructure is still a challenge.”
SINGING FOR THE WORLD
We finally touch on what Chung calls his “secret identity,” his singing career. A finalist in Hong Kong’s version of American Idol, Chung says he has no regrets about choosing business over a singing career. Although he enjoys “bringing joy” to an audience, he’s very aware that it’s fleeting. Such momentary joy pales in comparison to his goal of having a major societal impact, or as he puts it, “Enabling 5 billion people to live like 1 billion do now.”
Chung plans to continue singing the praises of disruptive cleantech innovation. He’s firmly committed to keeping that cleantech fire burning.
ALISON VAN DIGGELEN: Hello and welcome to Fresh Dialogues. Today I’ll be talking with David Axelrod. President Obama’s Chief Political Strategist. David, thank you for joining me today on Fresh Dialogues
DAVID AXELROD: Happy to be here.
ALISON VAN DIGGELEN: Good. Now Obama has started his first (2012) Campaign ad with a defense of his clean energy policy. Why did Obama choose to start with green?
DAVID AXELROD: The ad that it was responding to was an ad sponsored by a SuperPAC… sponsored by the Koch brothers… two oil billionaires … and it was an attack particularly on the Solyndra issue but it was really an attack on the whole green energy initiative of the president’s. And we’re proud of that initiative…we’re proud that we’re on par to double renewable energy during the course of his first term. He believes very strongly that we need to command the clean energy technology of the future and that as a country we need to be encouraging the development of clean energy technology or we’re going to see that go to other parts of the world.
ALISON VAN DIGGELEN: You mention Solyndra specifically. Solyndra seems to be a thorn in the side of Obama. It keeps coming up. How does he intend to remove the thorn?
DAVID AXELROD: All you can do is be open and candid about it. We knew when made investments in clean energy technology that some would do well and others would not. That’s the nature of this…these are speculative investments. And that’s the reason why they needed some nudging from the government in order to blossom…You can look at Solyndra or you can look at the fact that when we started, the US had about 2% of the advanced battery manufacturing for electric cars. We’re on course to get to 40% by the middle of this decade.
ALISON VAN DIGGELEN: That’s impressive.
DAVID AXELROD: That wouldn’t have happened without the investments we’ve made. We’ve seen real growth in solar and in wind energy and so these are investments that are paying off for the country. I’m very certain that we’re going to look back at the seeds that were planted during this period and we will say that it has made a big difference for the country in a positive way.
ALISON VAN DIGGELEN: What percentage of the program’s investment went to Solyndra?
DAVID AXELROD: There were forty under this specific program, so it was a small percentage of the entire program. It was a program… that was begun under the Bush Administration and we accelerated that program because we do believe that we are in a real competition for the clean energy technology of the future and we as a country have a great interest in developing alternative energy and home grown domestic energy and renewable energy. These were investments that made sense. Some will pay great dividends, others unfortunately will not.
ALISON VAN DIGGELEN: Yes.
DAVID AXELROD: Plainly, we have to have our eye on the future and really encourage and develop renewable sources of energy. It’s good for the planet, it’s good for the economy, it’ll create great jobs…high end manufacturing jobs. This is going to continue being a thrust for us. We’re not going to back off.
ALISON VAN DIGGELEN: Thanks for joining us.
The interview took place backstage at Foothill College’s Celebrity Forum on January 27, 2012. Check back soon for more with David Axelrod:
On Michelle Obama’s influence on green policy
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In 2010, Fresh Dialogues produced a video featuring Mark Platshon, a venture capitalist at Vantage Point Capital Partners, one of the leading investors in battery and energy storage innovation. Mark gave a good overview of energy storage, its limits and potential; and explained what venture capitalists are looking for in new storage technologies. Let’s call the VIDEO Batteries 101.
For more videos and interviews with Green Visionary and NYT columnist, Tom Friedman; Nobel Prize winning economist, Paul Krugman; Oceanographer and Titanic discoverer, Robert Ballard et al…check out Fresh Dialogues archives
“When did you see a $10 Billion market grow three orders of magnitude in 20 years?”
(That’s Platshon’s prediction for the growth in the lithium ion cell market as we drive more hybrid cars and new generation Electric Vehicles).
What will attract the attention of venture capitalists?
“We are looking for novelty and creativity…materials, systems, cooling…no one is going to find an execution plan because you are up against Samsung and Panasonic, the gorillas. You gotta do something that is truly novel, truly different and run like hell…cos they’re after you.”
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Elise Zoli, a partner with Goodwin Procter, is a specialist in energy and clean tech law; and teaches at MIT. I caught up with her at a Fountain Blue Green Transport Event where we discussed two hot areas in clean tech: energy storage and nuclear power. Elise explains the important role of energy storage in making solar and wind energy more reliable; and why she’d like to redefine energy storage to make it sexy. She’s coining a new phrase: “dispatchable renewable power.”
On making energy storage sexy
“Energy storage sounds like something that you don’t want to talk about, something that belongs in the closet. But the idea is to enable renewables (solar and wind) to have a greater chunk of the American demand…integrated storage flattens out the intermittency issues.”
On nuclear power
“The N word is difficult in the context of renewable …but most experts who look at climate change and energy security believe there is a significant role for nuclear. “
On nuclear waste and other impacts
“Nuclear has a favorable balance of environmental impacts. Every technology, even solar and wind, have their externalities. On balance, does it advance our climate change goals? The technology deserves to be considered.”
“For the traveling wave reactor they actually consume waste as fuel. The promise of the technology is to reduce waste…The material will be managed in place as opposed to having a long term waste repository.”
This is Part Two of the interview.
To check out Part One, where Elise explores the government’s role in clean tech and the stimulus package,click here.
The interview was recorded at the FountainBlue Clean Green Transport Conference in Santa Clara on July 6, 2009.