Power Revolution

Thanks to Silicon Valley's money and ideas, solar and other alternative technologies finally pay off

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"It brings an absolutely gigantic amount of power into the realm of economic feasibility," says Susan Petty, one of the study scientists, who now is running AltaRock Energy in Seattle, which plans to develop the first "enhanced geothermal" demonstration project in the United States in the next two years. With backing from venture capital firms Khosla Ventures and Kleiner Perkins, AltaRock's goal is to provide 10,000 megawatts within a decade. That's enough to power 10 million homes, and more than four times the power of all the old-style U.S. geothermal plants now operating.

Numerous companies, spurred in part by government subsidies, are also active in Australia and Europe, with one plant to begin commercial operation soon in Unterhaching, near Munich, Germany. Not everything has gone as planned. Earlier this year, a geothermal company's rock-fracturing operations 3 miles underground in northwest Switzerland touched off earth tremors with a 3.3 magnitude felt nearly 10 miles away. But the MIT study said that better techniques can control this and other problems. And since geothermal energy, unlike solar or wind, is constant, MIT said it could provide 10 percent of U.S. base-load energy needs if the nation would spend $1 billion on its development over the next 15 years—less than the cost of one coal plant.

High-pressure ethanol

In alternative transportation fuels, the holy grail quest is the search for the next ethanol. Sure, the business of fuel alcohol distilled from corn is booming, with production having tripled since 2002 and up 33 percent this year to 6.5 billion gallons. Historically, ethanol has been more expensive than gasoline, but crude oil prices are now so high that ethanol would be cheaper even without its 51-cent-per-gallon subsidy. Indeed, one reason pump prices have not skyrocketed along with the price of crude oil is that so much fuel is blended with 10 percent ethanol. Politicians would like to mandate that refiners use still more. But even if you don't agree that diverting corn to energy has strained the food industry or environment—and the ethanol industry most assuredly does not—there is a practical limit to squeezing fuel from the cob.

Hence, the pursuit of "cellulosic ethanol," the same fuel made by breaking down the tough starches found in hardier plant matter—from cornstalks to fast-growing switch grass to paper-mill waste. Ideally, the feedstock would be abundant and wouldn't require a lot of water, fertilizer, or tending. Cellulosic works in the laboratory but at great cost. So dozens of companies are trying to hit on the formula to make it economic, mainly through bioengineering of enzymes that would convert grass, husks, or wood to sugar that could be fermented into fuel. The government predicts the first cellulosic plant will cost five times more than a corn refinery and will come on line no sooner than 2010.

But Range Fuels, a Broomfield, Colo., firm founded by Khosla, aims to beat that projection by two years. One of six companies that received Department of Energy grants to accelerate the new technology, Range will be the first to break ground on a commercial plant on November 6 near Georgia forestland, where it plans to refine abundant timber-industry waste wood. Instead of relying on expensive enzymes, Range will use heat and pressure to turn wood chips to gas, then extract ethanol with a catalyst. It's a greened-up version of the proven Fischer-Tropsch process developed in 1920s Weimar Germany to make diesel fuel from coal. The company's not revealing the plant's cost, only that it will be less than the Energy Department projects and will be pumping fuel into the market by the end of 2008. With the help of extra subsidies for cellulosic ethanol that Congress enacted in its big 2005 energy bill, Range is confident it can be commercially successful selling to nearby refiners.

Range Chief Executive Mitch Mandich used to be a senior vice president for sales at Apple Computer and was chief executive at a Silicon Valley speech technology start-up that was bought out before he switched to alternative energy. "Rather than stay in tech, I thought I'd like to help make a difference in the world," he says. The inspiration came in December 2005 at Stanford University when former Vice President Al Gore gave the slide show that was later immortalized in the movie An Inconvenient Truth. Mandich and his friend Khosla, also in the audience, afterward talked about Gore's presentation and plea for the tech industry to get behind the push for a solution, and the idea for Range Fuels was born.