The Japan Question

Please help answer my friend Yuji Hashiba‘s question on renewable energy in Japan: “Could you let me know more about renewable energy? As you know, we had and still have a terrible nuke problem, so we are always thinking of some other options.”

I invite my friends to comment on his question. My response below…

Japan has one of the greatest opportunities in energy transformation of any country in the world. As one of the largest economies, but geographically isolated from most of the resources that have historically powered our economies (mostly carbon producing), Japan has the opportunity to build energy independence and economic growth into its economy (which if some people haven’t noticed, hasn’t grown tremendously as of late). With the compounding problem of nuclear failure followed by stark energy efficiency measures from abrupt loss of generating capacity.

At this point last year, we discussed this topic at length at the Aspen Institute’s Clean Energy Roundtable and contemplated assembling a conference to discuss these topics immediately in Japan (Aspen Institute was formed post WWII to help bring Japan and Germany back into the world community and rebuild their economies then). The main points were to be…

1. Stimulate the domestic renewable energy economy and put the pieces to work. Japan already excels in solar production and could massively scale this for its domestic market. So far, Japan has taken on a Germany-like feed in tariff that incentivizes the production of renewable energy (not just installed capacity). Its still early, but this is a good policy that should accelerate Japan’s solar build-out.

2. Increase energy efficiency and build the smartest grid in the world. Japan was already among the most energy efficient economies. By adding building and grid intelligence, better utilization and reduction of existing energy resources can be achieved. This can be done based on Japan’s materials science expertise (high efficiency bi-directional power lines) and information technology / communications expertise. If built in Japan, these technologies can be exported to the rest of the world.

3. Use natural gas as an intermediary opportunity. This was one that i am not too crazy about, but the thinking goes that frack gas is inexpensive and can be exported from the US as LNG. Unfortunately, doing this does not benefit Japan, but serves to expropriate currency from the country that could be reinvested into its domestic energy / manufacturing economy. It is also capital intensive and takes time to build the LNG infrastructure and by the time Japan (and US) does so, natgas prices will likely have risen. My recommendation here is to avoid this and invest into 1. It will have a greater direct benefit to your economy.

I hope this helps answer some of your questions. I look forward to the thoughts of others on this.

Cleanweb Hackathon Comes to Boulder on May 18-20th

Everyone seems to have picked up the vernacular on smart grid, green IT, and technology-enabled services when it relates to cleantech.  But has everyone picked up the Cleanweb meme?  This theme, popularized by Sunil Paul at Spring Ventures and others, asserts that one of the most effective tools to drive resource (consumption) efficiency and awareness is through Web 2.0 business models and social networking.  Popular ideas have already begun to take hold as the cleanweb theme emerges.  For example, AirBnB allows many to use extra space in their homes and apartments as hotel space for guests allowing better use of existing space and thereby not requiring the build-out of additional hotel space.  Car-sharing programs allow for multiple people to their automobiles.  These solutions when scaled through the internet can have a tremendous impact in resource efficiency in their given market segments.

So if its easy to identify these business opportunities that require little knowledge of the energy industry to have cleantech impact, then what happens when you put bunch of developers together over a weekend to brainstorm, use newly accessible datasets and tools, and develop whole new apps?  Voila, the Cleanweb Hackathon.  The first of these events took place last September in San Francisco, followed by larger and increasingly-well publicized and attended events in NYC and Boston.  The next one is happening in Boulder, Colorado, on May 18-20, one block off the renowned Pearl Street at Trada’s offices at 1023 Walnut St.

If you are a developer, cleantech enthusiast, community builder (nudging all you Boulder Municipalization folks), or investor, please stop by over the weekend to check it out.  The kick-off occurs on Friday May 18th at 6 PM and the awards are being presented at 3 PM on Sunday May 20th.

Sign up at  Hope to see you there.

California Needs Texas for Cleantech Success

Originally posted on CleantechBlog on May 28, 2009

By Joel Serface – May 28, 2009

When I moved from Silicon Valley to Austin in 2006, many of my VC friends were left scratching their heads… Why would someone who has been leading the cleantech charge in California want to move to Texas? After all, there was conventional thinking in California that there was no hope for Texas and that only the California-way would lead to cleantech success.

I had many motivations including helping Texas become a renewable energy state.  The rationale was this…. If you want the greatest leverage in mitigating carbon emissions, start with the most carbon-polluting state in the most carbon-polluting country in the world (this was before China surpassed the US in carbon emissions).  If you make progress in Texas, then other states and countries would understand they could make the transition as well.  If you don’t show up, engage, and get the state (more importantly its people, investors, and industry) to buy in, then you cannot expedite progress or bridge the necessary gaps to accelerate the cleantech industry in Texas.

The fact was that Texas has always been a leader in energy including renewables.  Much of the early work in solar happened in Texas at Texas Instruments under the leadership of Jack Kilby in the 1960’s and 1970’s (remember those early solar calculators?).  Like California, Texas had its share of early “successes”, but many of those disappeared in the 1980’s as federal support for renewables waned.  It wasn’t until many leaders in Texas got together to push wind energy in the late 1990’s that renewables appeared as a scalable and reasonable technology.  While California had invested into several generations of wind technologies covering its valuable lands with poorly performing wind turbines, Texas didn’t develop a policy until around the same time 1.5 MW wind turbines became commercially viable.  With the combination of a good wind policy (first-come, first serve REC availability), competitive asset pricing, and low land lease rates, the wind industry in Texas took hold.

Since then, Texas has developed around 8 GW of wind energy with more than 15 GW planned.  To support this, Texas became a leader in transmission policy developing Competitive Renewable Energy Zones (CREZ), which are now being copied in Western states and other parts of the country.  It has also led in transmission development to renewables with 18.5 GW of new capacity approved to be developed to strong wind and solar areas of the state.  Texas will also go live in its own transmission grid, the Electric Reliability Council of Texas (ERCOT), with the most advanced “nodal” market allowing more entry points for renewables, storage, and ancillary services.  In short, Texas has had its own renewable successes even though they are not as sexy or as publicized as what has been done in California.

California’s strengths are well-known and publicized.  There is no better-experienced region in the world in taking ideas from laboratories and technology entrepreneurs and turning them into products.  California has also been an energy policy innovator historically in clean air and energy efficiency, and more recently in policies for carbon (AB 32), transportation (AB 1493), fuels, and cleantech investment (Greenwave Initiative).  The scope of the technology and policy innovation in the state has allowed it to be a thought leader while seeing some of the early returns from its efforts.  California’s strengths come from its researchers, entrepreneurs, and investors that all think they can change the world.  In short, there are no limits to what Californians think they can accomplish and therefore no limits in its scope of innovation.

Texas’ strength in energy runs deep in the veins of its people.  It starts with a “can-do” or “wildcatting” nature of its people, extends to land development, project development, industrial scalability, and energy trading.  Texans have always taken energy risks and developed core competencies in scaling and optimizing massive processes for chemical and petroleum production.  They have also developed critical technologies for extracting and transporting energy from its origin across vast areas to deliver it where it is needed.  Most of this experience is in extracting, refining, and converting hydrocarbons, but it can also be applied to all aspects of cleantech.  In short, Texas knows how to scale energy technologies and once it is given a price or incentive will become the leader in delivering new forms of energy.

If California represents scope and Texas represents scale, then we need both to transition cleantech ideas from lab to market at an ever-increasing pace.  So what needs to happen to achieve the scope of California and the scale of Texas?

First, new interfaces need to be built.  If they are, we can accelerate the early and the late to more broadly deploy renewables.  Both Texas and California need to dismiss their pre-conceived notions that their respective approach is best.  The nation needs policy and technology innovators as well as deployment and market innovators.  In the middle is the need for a new dialog and new interfaces especially around how to tie ideas from California into projects in Texas.  There also has to be acknowledgement that California isn’t the only place ideas come from or can be built into companies.  It might actually be better to develop these technologies closer to the points of adoption or at least understand customer and integration needs from the outset.

Second, Texas needs to learn from California and develop policies that support more renewables and energy efficiency.  In the Texas wind case, the state waited to develop a policy just ahead of the time when asset performance of wind turbines was about to achieve price parity with traditional electrical generation.  We are on the precipice of this with solar and other technologies.  If Texas doesn’t adopt policies in this legislative session, it will be left on the “solar sidelines” while other states and countries continue to develop their solar industries, achieve economies of scale, and geographic advantage.  This would lead Texas down the path of possibly importing solar panels as opposed to developing its own domestic solar industry.  If Texas indeed learns from other states and adopts policies more aggressively, then the scaled industries will take hold in Texas and grow faster.

Third, California needs to recognize the potential in developing projects in Texas.  Texas has created a favorable environment for the energy business and has been ahead of the curve in market transformation in order to do so.  This coupled with their demonstrated success in delivering large energy projects gives them a tremendous lead in deploying new energy technologies at a massive scale.  In fact, many of the incentive approaches for wind, transmission, and transmission grid management for renewables should be examined at a national level.

Fourth, Texas cannot sit on the sidelines on carbon pricing.  It is in Texas’ best interest to have a predictable carbon target and therefore price.  This will mobilize many of the traditional energy companies and utilities to get off the sidelines and begin investing into the future energy industry and building their future business models (new financial, trading, and integration models are likely where Texas will succeed).

Finally, new investing models need to be attempted combining early and late stage investing.  A great deal of attention needs to be paid to the “valley of death” between development of new energy technologies and their delivery in large scale to integrated projects.  While Federal loan guarantees and Federal test and integration centers will be useful here, it will require experienced investors, developers, and corporations to step in, provide financing, and minimizing risk ultimately accelerating these implementations to market.  Texas could become the large-scale test-bed for these implementations.

To make this all work, Texas needs to step forward in this legislative session to begin embracing solar energy and other forms of renewables as well as energy efficiency.  The state’s leadership also needs to announce their support for renewable energy and endorse its associated economic opportunities for the state.  If a pragmatic and immediate approach is developed in working together with industry and California (and other states), the results will be a healthy, high-growth new energy economy, increased numbers of jobs, greater global competitiveness, and enhanced energy and economic security for the United States (and Texas and California).

The Colorado Cleantech Opportunity

Originally posted on CleantechBlog on July 2, 2009

By Joel Serface – July 2, 2009

In June, I took a great camping trip to a truly unique feature that many outside the state of Colorado know little about. It was the Great Sand Dunes National Park – the tallest sand dunes in North America with the backdrop of the Sangre de Cristo Mountains. I arrived at the perfect time of the year when the temperature was warm enough to simulate a beach environment (small waves included), but before the snowmelt ceased over the course of the summer. It was a fantastic experience, but few other than Coloradans knew about this well-kept secret nestled in the interior of a beautiful state.

I found this a good analogy for the Colorado cleantech opportunity. While I have been in Colorado for only a year, I feel that I arrived at that perfect time when all the conditions were right for a unique experience that could only happen here and that few outside of the state know about. Could it be the perfect time for everything to converge in Colorado allowing it to become the leading cleantech state?

When I arrived to Austin in 2006, I conducted an inventory of local cleantech companies. I found around 20 of what I considered viable cleantech start-ups in Austin and over the time I was there helped grow this to around 40 through starting, recruiting, or coaching companies into the community. When I arrived to Colorado, I found a very surprising thing. In the Front Range – the area stretching from Colorado Springs to Fort Collins – alone, I was able to inventory almost 200 cleantech companies (not including the many services companies that comprise almost 1,778 reported by the Pew Center / Cleantech Group in Colorado). After meeting with many of these companies and delving deeper, I found that there was an incredibly fertile environment for these companies in Colorado with only a few key limitations.

Let’s start with the strengths of Colorado that created this environment…

  • Energy and technology industry expertise – The Colorado Front Range boasts something that no other major population center does… A location where the technology industry and traditional energy industry coexist. This translates into one of the few centers where both talent for cleantech company development and project development can both be executed.
  • Ease of recruitment / low cost of doing business – Colorado is a state that carries significantly lower costs than other tech states such as California and Colorado. Colorado also boasts among the of the most highly-educated workforces. Because of the low cost of living, highly-educated workforce, and an environmentally-friendly culture that values outdoors and quality of life, it is not difficult to recruit people from all over the United States to move here.
  • State leadership – Colorado has had strong leadership at the state and national level for a number of years around renewable energy. By setting a 20% Renewable Portfolio Standard and a statewide solar rebate, the state has signaled that it is open for clean energy business. Bill Ritter, the Governor of Colorado, is one of the most progressive governors on renewable energy issues that I have met and has an excellent supporting executive team in its Governor’s Energy Office and Office of Economic Development. Because of their leadership and other factors above, Colorado has attracted major new renewable energy companies including VestasSiemens,ConocoPhillipsAbengoa Solar, and others to the state. They have also been successful in this despite the lack of other tools (see below) that other states have in place.
  • Thought leadership – In addition to research and state leadership, Colorado has a legacy of thought leadership in a number of areas such as green building, energy efficiency, smart grid, and energy analysis. Most already know the great work of Amory and Hunter Lovins and theRocky Mountain Institute, but several other leading analyst firms exist. eSourceIDC Energy Insights, and Architectural Energy Corporation are all located in Boulder. NREL also maintains one of the largest renewable energy and energy efficiency analysts corps in the world in itsEnergy Analysis group.
  • City / community leadership – Boulder and several other communities have taken on leadership in vital areas such as its Smart Grid City efforts with Xcel Energy and in building efficiency standards and protection of open space. It is community and city leadership that are going to provide test beds for the integration of larger technologies at the city level. Denver, Fort Collins, Colorado Springs, and many smaller communities (including mountain communities that are seemingly off grid) each have their respective efforts around energy and environmental leadership.

It’s not all rosy in Colorado. One of the major complaints at the state level are that they have limited economic development funds to help attract or re-locate companies. In my conversations with leaders in the state, I have expressed that their leadership is much more important in creating markets for clean technologies than in providing cash incentives. Leadership, markets, and environment all combine to attract companies to the state; having a little bit more economic development funding could be helpful in rounding out that portfolio, but not a requirement in moving major companies to the state.

A further weakness in building early stage companies in the state is its lack of “domestic” venture capital. Given the ideaflow, creativity, and talent here, it is disappointing that there are no cleantech-focused investing professionals on the ground here to help build early-stage companies providing the coaching and governance necessary to move them to their next stage of development. Several local generalist firms have tipped their feet in the water, but have not made this a large portion of their portfolios. A leading energy technology fund in the state makes very few investments in the state and even fewer in early-stage clean technology companies. There is a robust angel community of former entrepreneurs in Colorado, and a few of them are ramping up their cleantech investments. But still, most of the cleantech venture capital in the state today still comes from coastal VCs.

Like Great Sand Dunes National Park, Colorado is a relatively unknown commodity in cleantech. Many investors on both coasts suspect it has tremendous potential and will occasionally make it to the state to look at opportunities. Unfortunately, unless the investor is on the ground or has native ties here, many of these opportunities will be overlooked.

After a year here, I can attest that this will become one of the best places to build clean technology companies in the United States as all the above conditions converge and successful role model companies emerge.

My Year as NREL’s Entrepreneur in Residence

Originally posted on CleantechBlog on May 14, 2009

by Joel Serface

I just spent an amazing year at the National Renewable Energy Laboratory (NREL), but have no start-ups to show for it (yet).

A year ago, I was asked by Kleiner Perkins to be the first Entrepreneur in Residence (EIR) at NREL. As a person who has been into energy and environmental technologies since gradeschool and as an early cleantech investor, it was an opportunity of a lifetime to become the first NREL EIR. It was a fantastic time spent with some of the best cleantech researchers in the world. I felt like a kid in a candy store. I tremendously added to my depth and breadth of cleantech history and knowledge.

The program itself was a grand experiment that I commend the Department of Energy for attempting. DOE’s calculus was that if they inserted a serial entrepreneur/investor backed by a brand-named VC firm into a lab that magic would happen and that an innovation would turn immediately into a company. At worst, DOE would learn a lot about what it and its labs need to do better to in order to accelerate ideas to market.

In the 11 months that I had the privilege to work inside NREL, I met with more than 300 researchers, identified around 30 promising technologies that I thought could reach commercial potential over the next several years, and honed in on 3 technologies that showed imminent promise. Unfortunately, the EIR program was timed too short to reach its full potential and to get the first one of these ideas set up as a company.

When building a new program into a research institution, timing is critically important. Based on my experience running the Austin Clean Energy Incubator at The University of Texas, it took almost 11 months to start my first company. In 18 months, I had helped start 5 companies. In total, these companies raised more than $200 million, but none surpassed KP’s investment hurdle.

When I agreed to become NREL’s EIR, I set the expectation with DOE, NREL, and KP that starting a company that KP would back within one year should not be expected. While there are a tremendous number of opportunities for commercialization at NREL, they need to temporally match a VC firm’s thesis, meet its perceived portfolio needs, or surpass its hurdle for innovation. Given enough time, many of the 30 technologies described above could be built into companies, but not necessarily into ones KP would fund over the period of the EIR Program.

A more reasonable expectation for all was to use this program to begin developing long-term relationships with VCs and start-ups that helped the lab and DOE develop better tools and processes. If successful, this could help NREL deliver more companies or successful collaborations for the entire industry. With this approach in mind, there were many things learned by all parties that could benefit the entire venture capital and start-up industry. Here is what I learned…

First, NREL truly is “The National Renewable Energy Lab”. There is more breadth and depth of renewable energy and energy efficiency knowledge at NREL than any other institution on the planet. This alone is worth the price of admission. Unfortunately, the admission price has never been posted and there have only been secret alley entrances with secured doors to gain access to the lab. The lesson here is that new interfaces need to be developed by the lab to better expose its collective knowledge and translate it to the marketplace more effectively (thus EIR and other programs).

Second, the value in NREL is not just in its innovation, but more importantly in the value it can deliver across the life cycle of a technology…

  • Innovation – Yes, NREL has a great pool of researchers and ideas. They also have a network of other labs and universities they collaborate with (MITStanfordUniversity of Colorado, etc.). They will also soon be the hub of all DOE renewable energy intellectual property by managing DOE’s IP Portal.
  • Acceleration – NREL’s experience allows them to solve critical issues for external technologies and companies. Success stories abound from NREL helping First SolarUni-SolarClipper Wind, and many others. Identifying new ways to open up NREL to solve critical issues in start-ups is critical to the VC industry.
  • Analysis – NREL has a large division that does market, techno-economic, scaling, integration, policy, and plant design analysis. This primarily is developed for DOE and Congress (which really does not take advantage of this tremendous asset), but needs to be exposed to the financial services and venture capital sectors. I would encourage any thesis-driven VC firm or investment bank to review the work that has already been delivered by NREL.
  • Testing / Validation – NREL provides the service of testing all flavors or renewable energy, storage, transportation, building, and energy efficiency technologies. They even integrate multiple technologies as systems and perform accelerated testing. NREL’s validation not only helps get products designed into projects, it also provides critical feedback for future development.
  • Deployment – NREL has a cities and states program that helps advise on local policies, design parameters, and integrated solutions. NREL will increasingly be involved in regional test and implementation centers that will help scale technologies into cities and integrated pilot facilities.

Finally, NREL will only get better; now is the time to begin forging long-term relationships with them. With additional funding, increased DOE support, stronger linkage to national priorities, and new management focused on commercialization and market needs, NREL will deliver increasing value to the cleantech community. By becoming more intertwined with our imminent national priorities and community needs, the lab will increase its “NRELevance” in our nation’s day-to-day existence.

So, what next’s next for the NREL EIR? Over the short run, I will help deliver a national energy efficiency initiative focused on schools with the help of NREL. I will also continue supporting NREL as an entrepreneur/investor and as an advocate of the lab’s potential. I will also continue nurturing the many wonderful relationships I began forging through this program. And, yes, there will be start-ups forthcoming, unfortunately not within the short period of the EIR Program.

Thanks again to DOE, NREL, and KP for inviting me into this unique and invaluable experience. I hope that my time at NREL has made a difference there. If NREL is successful with its new management team and tools, then the entire cleantech community and nation will benefit.

Chasing Ice on Earth Day

On Earth Day, I had the privilege of attending a private viewing of the upcoming documentary film “Chasing Ice“, a visual story of how quickly our planet’s ice cover is melting away.  James Balog, photographer and founder of the Extreme Ice Survey, has been placing time-lapse cameras at dozens of glaciers throughout the world and is using this film to provide a firsthand look at how rapidly we are changing the world around us.  Produced by Paul DuPre Pesmen, producer of “The Cove” and numerous Harry Potter films, introduced the film with Balog.  The film itself cast a stark, beautiful, and dim view of the most immediate impacts of climate change in visual terms we cannot refute.  Expect to see this film in theaters in the fall (it has already been screened at SXSW, Sundance, and Boulder Film Festival).  One can only hope that more movies emerge combining the visual reality, art, and science of climate change become increasingly evident to everyone… and that everyone can begin to grasp what we are doing to our planet.

Welcome to

After years of tweeting, blogging for others, Facebooking, and providing my commentary on all things cleantech, I have finally launched my site / blog / archive.  Please come back often.  I will also try to re-post other blogs here that have been syndicated elsewhere.  Peace!