Urgent Speed

Capitalism at Work; Steel Factory Re-tools to make Lettuce out of Electricity

In 1909 about 50% of the work force was involved in agriculture, today its about 5%, yet  we don't have 45% unemployment, because capitalism is great a retooling underutilized resources.  In the 1900s Many of those farm jobs went to the Steel Mills.  Ironically, 100 years later, in Japan, the steel jobs are retooling to farming.  This BBC video explains.

 

The Next Bubble – Alternate Energy

Eric Janszen does a masterful job articulating the conditions needed for a massive innovation bubble.  His article is required reading for any entrepreneur looking change the world.     The move away form oil will be as big as the transformation from animal power to steam, or transformation from steam to oil.  
 

Publish at Scribd or explore others: Business economy crash

There are two types of bubbles; asset bubbles and innovation bubbles.  The Asset bubbles are a zero sum game that doesn’t offer anything new to society, but innovation bubbles are critical to rapidly deploying new technology.  

The Tulips Bubble of 1637 is the classic example of an asset bubble.   More recently the assets of real-estate, oil, and gold have all had their bubbles.  I believe asset bubbles are a natural occurrence given our collective human nature.  (I wonder if algometric trading amplifies or dampens our human propensity for froth and panic.) 

But innovation bubbles are a different organism. Innovation bubbles are the markets (our collective intelligence) realization that technological change is afoot. Canals and Railroads are the classic example form the 1800.   More recent examples include Radio, Automobiles, TV, and the Internet.   Fortunes will be made and lost, but in the wake of the bubble a new technology will have taken root. 

I can’t wait to see what technologies replace oil and coal, and even more so; I can’t wait to see what entrepreneurs make it happen.  Will it be microbiologist hackers modifying algae to produce cheep fuel? Maybe nanotechnologists will invent cheep solar cells that are super efficient.  Perhaps some grad student is about to drop out of college to commercialize his ultra-capacitor thus ending the need for batteries.
  
Moving away from oil will take dozens of new inventions and business models; I am just glad Eric Janszen gives us a roadmap.

Just one Word: Arboform

In Mike Nichols’ 1967 classic “The Graduate”, Dustin Hoffman’s character gets “just one word” of advice: “plastics.”  It was a sign of the times; the groundbreaking technology was changing everything from consumer goods to space equipment.  

Today, a new generation of materials is looking to graduate to the status of plastic.  The problem with plastic is its lifecycle.  Plastic production is dependent on oil; therefore, the supply chain is susceptible to the vulgarities of economics and geopolitics.  Plastic disposal often involves landfills, which come at an astounding expense.  The race is on for a greener, cheaper, and more profitable alternative.  Scientific drama will unfold, fortunes will be made and lost, and in the end, plastic will take its place among lead, iron and slate as just another material.   Algae-based, fungal-based, mineral-based and cellulosic alternative are all in the race.  

Paper byproduct Arboform looks like plastic and even employs injection-molding - just like plastic.    

"The cellulose industry separates wood into its three main components -- lignin, cellulose and hemicellulose," ICT team leader Emilia Regina Inone-Kauffmann told DPA.
 
"The lignin is not needed in papermaking, however. Our colleagues mix that lignin with fine natural fibers made of wood, hemp or flax and natural additives such as wax. From this, they produce plastic granulate that can be melted and injection-moulded."

The final product can resemble highly polished wood or have a more matted finish and look like the plastic used in most household items.
 
The transition from Plastic is a saga worth watching, I look forward to the next “New New”.

Note: Greensulate also looks promising.

 

As with Bandwidth, Memory and Processing, the Cost of Solar will drop to near zero

Last week I blogged about falling solar panel costs.  Several readers theorized offline that the economic downturn might slow production and lead to further panel shortages, thus raising costs and slowing adoption.  Good news.  This morning my friend in the semiconductor industry forwarded me this iSuppli study indicating that prices are expected to fall a record 20% in 2009.  

“In 2009, average prices for panels for new installation contracts will collapse to the US$2.50 to US$2.75 per watt range by the end of 2009, down from the current level of US$4.20 per watt. – iSuppli”

In addition to the advances in solar electric production, we are also seeing advances in power storage, including nano-capacitors.    

All this activity further validates my underling theory: we have seen this game before (CPUs, Memory, and Storage).  The solar game is just like the computer hardware game, and the winners will be businesses and consumers.

So I ask… who are the Robert Noyce, Gordon Moore, Andy Grove, Steve Jobs and Jack Simplot of solar?   

also related: Wall Street and Solar

Solar keeps getting cheaper -- Growing like lillies on a lake

Back in October, I blogged about the dropping price of solar and the inevitability of cheap electricity.

This Report  illustrates the massive 40% increase in global solar panel production capacity.  The report indicates that “incentive schemes and technical advances are having a positive downward impact on photovoltaic costs.” Market value is estimated to reach €40 billion by 2010 while prices for customers continue to drop. 

Though today solar is an immaterial component of global energy production, if production keeps growing at 40%, solar could get very big fast.

There is a nice summary at mokkikunta

To Blog or To Email, Climate Change makes the jump

I have a group of friends that are passionate about solving global warming.  We e-mail around articles, observations and opinions.  These friends are mostly tech-entrepreneurs, economists and wall-street-types, so the conversation is usually very action-oriented… as opposed to political or academic policy/theory.   But this week something changed.  Now that the election is over, even my political-policy-wonk friends started talking about climate change. 
 
My theory is that now that the election is over, global climate change will start to get the attention it deserves.   Looks like the new administration agrees, because they seem poised to appoint a “Climate Czar”   
 
Global climate change is as big as a problem as problems get. To solve it, we are going to need innovation from everywhere.  Historically, I have trumpeted the innovation form industry, scientist and entrepreneurs.    (Full disclosure am a huge fans of Joseph Schumpeter’s theory of creative destruction).  However, climate change demands innovation in public policy (translation: governments).  Let’s hope that now that the election is over, we can move the conversation about climate change off the listserve and onto the web. 
 
I predict Global Climate change will get solved:
    By technology,
        Invented by scientists,
            Commercialized by entrepreneurs,
                Spurred on by investors,
                    and supported by public policy.
 
Let’s hope a more public discussion adds fuel the fire, (Wow, that is a bad use of metaphor).

Oil Parity, Wall Street and Solar

Much like Gordon Moore’s chart that predicted chip performance, this Deutsche Bank chart and reflects Wall Street’s predictions for solar/electricity costs. 

There are about 80 known solar manufactures, all scurrying to increase capacity and drive down cost.  Plus, who knows how many stealth mode solar manufactures are coming on-line in China?  Costs will keep dropping. 

It reminds me of the hard-drive, processor and memory chip industry in the mid 1980s.   

The big question is this: if there is a global credit crunch, as some predict, how will it impact the dissemination of solar panels?  Solar ROI is directly tied to cost of capital.

If credit dries up, grid party will get pushed out and deployment will be slow.

If credit is free flowing, the force of capitalism will deploy solar on every available business roof.  

In August of 1858 Edwin Drake proved what I call “oil parity”,  the point at which it was cheaper to drill than hunt for whales.  Wall Street sprang into action and rammed money down the throat of the opportunity. By August of 1859 there were “oil wells as far as the eye could see in Titusville.”

Moore:

Drake:

Moore's Law:

CPU and DRAM charts:

The Saudi Arabia of Innovation

Saudi Arabia wields enormous political and economic might because of their vast oil reserves. True, there are many other countries that produce oil, but no other country dominates like Saudi Arabia. Their geological advantage is not just quantity, but also quality -- they can pull it out of the ground a faction of the cost most countries incur. 

Lately, with oil over $130, it seems America’s importance is shrinking as we wire much of our national income (700B/yr) to oil producing nations.  All might flows from economic might, so there is a real reason for concern -- but there is no reason for despair.   As John Pierpont Morgan use to say "Never Bet Against America". 

The United States is the Saudi Arabia of Innovation.

We are good at taking risks, we are good at commercializing technology, we reward innovation and we admire creativity.  Core to our culture is a bias towards action, that does not get bogged down in history or tradition.  I am continually impressed by the caliber of my coworkers abroad, but autonomous risk taking is seldom their strongest suit.   

America, by no means have a monopoly on innovation, but our “reserves” are awesome.  Lets just say I have Techno-Optimism. In the coming months and years there will be great advances.  I expect America (especially Wall Street and Silicon Valley especially) to play a critical role. 

Solar – A Moore’s law of solar mean grid parity is just a matter of time.

Digital Power. – Electrical drive trains and sensors are displacing mechanical ones in factories, ships, hybrid cars.

Biotech/Genetics. – Biochemists are starting to hack genetic code.

Bio-Fuels – Algae, Bacteria, Modified weeds, etc. Expect crude oil to become an antique source of hydrocarbons.

Nanotech – From Super-Materials to Sensors, Microengineered materials will transform everything.

Internet – Data, Application and Communications will continue to evolve.

CleanTech – Transportation, Energy, Recycling, Water, Construction and Manufacturing will all be transformed.

Machine Learning and Computational Linguistics – Unlocking the semantic knowledge in text will have a bigger impact than the database.

And each of these technologies will support great companies.  We should expect a….

Chevron of solar
Microsoft of genetics
Ford or digital power
Standard Oil of Bio-Fuels
Google of the Internet….(no wait, what I mean is expect more Goggles)
McDonalds of CleanTech
IBM of NLP

Who knows maybe the next Henry Ford is this guy.

GreenHouse Gases and the Rising Ocean

I live on an island, so you would think my neighbors and I would be very in tune with the impact of greenhouse gases on rising sea levels, but actually my island is Manhattan, and I think New Yorkers are more concerned with fashion, finance and media than environmental trends.  Although city dwellers usually have smaller environmental footprints, it is easy to forget nature when you live in an urban jungle.  So I encourage my neighbors to check out JPLs Climate Time Machine.   

The value of Manhattan real state is so high that the engineering challenges of raising water will be easily overcome.  The Hamptons may not fare as well, but the big problem is the impact on millions of people that live close to sea level.  Bangladesh, Micronesia, Southern Florida and parts of Northern Europe are toast!  This type of mass relocation will make New Orleans look like a summer field trip. 

Although years ago I turned down a job at JPL, I still appreciate their excellence.  Thank you JPL for the Climate Time Machine. 

Moving from Oil-based to Electricity-based Economy

My guess is we can look to history for clues.  This is what I did in 1994 to understand the then-emerging web transformation.  I locked myself in a cabin and studied how technology drove economic transformations in the past, such as:

- The Printing Press
- Steam Power
- The Rail Roads
- The Telegraph
- Electricity (1.0)
- Broadcast
- Motion Pictures
- The Phone
- Automobiles
- Personal Computer

This self-education was not only fascinating, but also gave me the mental framework to profitably navigate the internet revolution. (Maybe I should sequester myself again in preparation for the coming clean-tech transformation).

Look at each transformation and four clear patterns emerge:

1.) Many Fortunes will be made
2.) Incumbents will be disrupted
3.) Change will impact everyone in multiple ways
4.) Average citizens will benefit

So where are we?  Or, even more important, “when” are we?  Which innovation wave most resembles the clean tech wave?  Many of the technology entrepreneurs I talk to say it is like 1995 and the internet; investors I talk to say it is like 1998 and telecommunication…but I disagree.  I think it is like 1982 and the PC.

Why?  Because like the PC:

- An entire ecosystem needs to be developed (distribution channels, supply
chains, sales channels)
- Technology (often semi-conductor) is at the heart of much of the innovation
- There is a “big iron” legacy

In 1982 the mainframe still ruled the computer roost, but nimble “micro” suppliers like Lotus, Compaq, Apple and Microsoft were really driving the innovation.  I think the same is true today.  In Alternative Energy, big utilities and project finance companies are building big instillations, but the innovation at household scale (at the node) is breathtaking.  Small scale solar innovations, Fuel Cells, and break-through efficiencies have the potential to change the game in energy, much like the PC changed the game in computing.

The good news is there is lots of talent that still remembers the 80s, and much of that talent is in the Valley and up on route 128.  My advice to any young clean tech entrepreneur is to listen to the 80’s guys.   When 80’s guys ranging from a semiconductor expert like Andy Grove or an oil man like T Boone Pickens are all floating thought provoking new ideas for clean tech, something transformative is happening.   If founders can involve advisors or investors that made their fortune in the PC revolution, I think their knowledge and perspective will prove valuable in ways we don’t yet understand.