The high-rolling risk takers who brought you personal computing, the telecommunications revolution, the commercialization of the Internet, and, of course, Google now aim to do nothing less than save planet Earth—and make billions while doing it. If the venture capital industry is successful, it might be the ultimate act of "angel investing," and perhaps no one is more emblematic of this new wave of high-minded technology entrepreneurship than Vinod Khosla, who, after a failed soy milk start-up in his native India, went on to become one of the driving forces of Silicon Valley as cofounder of Sun Microsystems and later as a venture capitalist. Khosla views climate change as the gravest threat the world has ever faced, and he knows others see America's foreign oil dependence as an urgent crisis. But in his calculus, we've been pitching pebbles at these Goliath problems. "Building a biofuels plant here and a solar plant there is not enough," he says, "unless we can replace 50 percent and hopefully 100 percent of the fossil energy sources."
This grand goal is not remotely in sight, even with wind and solar energy and ethanol growing at a breakneck clip. These renewables now provide just 3.6 percent of the nation's energy, and the government predicts their share will grow to a grand total of 4.2 percent by 2030. By those calculations, it sure looks like a fossil fuel future for America.
But Khosla, through his own Khosla Ventures and often working alongside the legendary VC firm Kleiner Perkins Caufield & Byers, where he maintains an affiliation, is in the vanguard of entrepreneurs and financiers who believe their Silicon Valley success stories can be repeated in green energy. They are pouring money and ideas into a new generation of alternatives to fossil fuel—"technologies that scale," in their words. That is, options that can ramp up to serve a large share of the nation's energy needs because they'll cost less than coal or oil. One estimate is that venture capital funds nearly tripled their investment on green energy last year, putting $2.4 billion to work.
Of course, that may not seem like much dough given that some next-generation technologies are massive undertakings, like placing 3-mile-square fields of mirrors in the desert to focus the sun's rays or shooting high-pressure water into the hot rock 3 miles underground to create a man-made geothermal reservoir. And skeptics say that these approaches may not be cost competitive for years. The economic equation might change if Washington puts a limit on carbon dioxide emissions or institutes carbon taxes that make coal power and gasoline more expensive, though that's far from a sure thing. Dan Reicher, a former Clinton administration energy official who heads up a major investment effort on climate change underway at Google, says stronger federal policy, more availability of Wall Street financing, and technological innovation are all equally important in taking green energy to the next level. "If we're going to get to a sustainable energy future, we have to be working hard at all three," he says.
But Khosla believes government policy will move once entrepreneurs take the first step. "Change has to come from somewhere, and our business is about change," he says, recalling the early skepticism that the first microprocessor and telecommunications revolutionaries faced. "All the innovation came from little companies that had breakthrough technologies. The chances of any one experiment failing may be high, but the chances of all of the experiments failing is very, very low. You should have a thousand points of innovation, and for sure you'll get a breakthrough."
Just the sort of optimism that's helped make Silicon Valley the world's leading center of innovation. And just the sort of attitude that seems to be finally cracking the tough technological puzzles whose solutions will change the way we power the global economy and our lives.
Solar energy may be poised to make the leap from the rooftop down to the floor of the desert—where some advocates say it needs to be if it's going to take its rightful place as a member of Big Energy. The nation's largest utility in customers served, investor-owned Pacific Gas & Electric, this fall announced a bold plan to install nearly five times the amount of solar power that is now operating across the United States and do it cheaper, bigger, and faster than has ever been tried before. Instead of using semiconducting material to convert light to energy—those familiar black photovoltaic panels—PG&E and its technology partners, like the Israeli firm Solel, will use nothing more complicated than mirrors, lots of them, to concentrate some of the highest-intensity sunlight in the world. The arrays will heat water to drive turbines just as in an old-fashioned power plant.