Green Tech 101

Adam Grosser: Hi, I'm Adam Grosser; I am a general partner at Foundation Capital. Today, I am going to talk to you about Green Tech 101. Green Tech is hard to avoid these days. You hear it everywhere and you can't imagine the rush of venture capitalists, the stampede of venture capitalists rushing to put a billion dollars into the ground. But what does it mean? What is Clean Tech?

Here is what I would you like to think about, it is very simple. I would like you to think about E, E, E, M, I, T and that is all you need to know. And the first three Es all stand for energy.

The first E stands for energy management and intelligence and that is all about enhancing the efficiency of what exists today. So a great example would be something called demand response. So, if you have power lines going to a building and that building can afford to turn off some electricity, demand response automatically sheds that load. Or the smart grid or AMI, that is going to revolutionize what a utility can actually provide to a customer by having two–way connectivity and a lot more granularity of information. The challenge here has been the mindset. The technologies have existed for a long time, but the utilities haven't really had any incentive to migrate. Now it is changing and you are going to start to see both demand response and the smart grid rolled out in large scale in the next couple of years.

The second E is energy generation. And that is focused primarily on renewables and there are two categories here. One is direct generation, which is wind and solar. And in wind power, there are large scale projects mainly for utilities, wind farms. In solar, there are two categories. One is the photovoltaics that could be put into your house or a small light industrial park or you have got large solar thermal projects that harness the power of the sun directly. On the fuel side, there is biofuels and mostly that is ethanol and ethanol today is produced from corn or sugar and in the future hopefully from cellulosic sources. It is also things like biodiesel and enzymatic direct production of combustibles. The challenge here has been on both sides, both in the direct generation and fuels is cost. Today, only wind energy is cost competitive with what you can produce on the grid.

The third E is energy storage. The big problem is with renewable energy, they are intermittent. They are on, they are off, they are on, they are off and that is not the way demand works. Demand is fairly constant. So we have to figure out a way to store energy. And historically energy is produced as it is consumed. So there is a lot of research going on into advanced batteries or flywheels to store mechanical energy, ultra capacitors to store high current loads and even compressed air. The challenge here is it is all basic research. There are some applications, but it is still a ways off from being commercialized.

Moving over to the M; we have done the Es. We have got materials. And the thing to think about is many of you heard about LEEDs and what is LEEDs? LEEDs is a new standard for how green your building is, how efficient it is in terms of energy consumption and in the embodied energy of the components that are in it. So everything around you needs to be reinvented. We need to think about how much energy goes into producing it. A great example is cement. To make cement today takes 9% of the world's energy and emits 11% of the world's carbon. That is amazing. There is a lot of ways to do it better. So there is no challenge here. It is happening now. We are very excited and you are seeing a lot of new products hit the market this year.

So we are onto I; industrial processes. This has historically been kind of a grungy field, but it is really important because the world thinks that our dependence on petroleum is really the issue at hand. It is not. It is water. In the next 25 years access to clean water is going to be the overriding thing in population development and with economic growth in new countries. Water is tied into food safety and recycling and we have got to find a solution. Here is the challenge. It is not sexy. People haven't thought about working in it and it is also very energy intensive.

And we are onto T. T is for transportation. Transportation is all about efficiency. We have to make personal vehicles, freight vehicles and large scale transport dramatically more efficient. The mindset problem here is all behavioral. And so what we have got to do is get large industries to change the way they think and consumers to demand I need better.

So there you have it. What I want you to remember is "EEEMIT" and emit less, change the world. I hope that gives you a framework for understanding Green Tech. Thanks very much.