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U.S. News Cover Story on Energy; Battery Leasing Startup; VMWare's CEO on PHEVs

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  • Felix Kramer
    Some mornings these days, we have to postpone our work plans because of breaking news. Today the news stories came so frequently we could no longer be
    Message 1 of 1 , Oct 29, 2007
      Some mornings these days, we have to postpone our
      work plans because of breaking news. Today the
      news stories came so frequently we could no longer be comprehensive.

      Below is the text of one of our favorite articles
      in months. In the US News & World Report's cover
      story, Marianne Lavelle, who has previously
      written on PHEVs and renewable energy, highlights
      some of the promising new technologies we've
      talked about in the context of Iceland (Enhanced
      Geothermal) and when discussing the new book
      Break Through (solar thermal) -- see CalCars-News
      Archive. It ends with a stirring endorsement of
      PHEVs by Google.org's Larry Brillian and Dan Reicher.

      Before that, here's this morning's sampling:

      * The San Jose Mercury News runs the transcript
      of a dialogue on global warming with California
      Attorney General Jerry Brown and Diane Greene,
      the CEO of Silicon Valley's latest large IPO
      company, VMWare, at the "Public and Private
      Sector Accountability and Action" panel at the
      Silicon Valley Leadership Group's "Clean and
      Green" Projections 2008 event at Santa Clara University on Sept. 26.
      Mercury News Editorial Page Editor Stephen E.
      Wright says, Now, for some audience questions.
      Here's one for both of you. What kind of car do you drive?
      Greene: Well, we own two cars. We own a Prius and
      a hybrid Camry. And my husband is working on the plug-in for the Prius!

      "Handicapping the Environmental Gold Rush," runs
      an article, The Economics of Hybrids" that
      concludes their payback is poor (some of the
      assumptions are questionable. But it includes two
      sections of great interest to PHEV advocates

      * Following a discussion of declining US tax
      credits for hybrids, the author, Mike Spector, points out that
      "In Europe, by contrast, several countries offer
      significant tax breaks. In Belgium, for example,
      drivers get 15% of a car's price back -- maxing
      out at Euro 3,280 ($4,640) -- if the vehicle
      emits less than 105 grams of carbon dioxide per
      kilometer, according to the European Automobile
      Manufacturers Association. Cars that emit between
      105 grams and 115 grams get a 3% break; vehicles
      emitting more than 115 grams don't get anything.
      Europeans also face high fuel taxes, encouraging
      them to buy more-efficient cars."
      (PHEVs can be under 105; hybrids around 125;
      diesels may approach 200 -- see slides in our
      presentation, http://www.calcars.org/calcars-photos.pdf

      * Then, after raising as serious issues the
      lifetime and replacement cost of hybrid
      batteries, then concluding that it's not a problem, the author says
      Auto makers are gradually pushing toward electric
      plug-in hybrids, which will allow drivers to
      recharge a battery with a traditional outlet and
      go much further on electric power alone. Such
      cars could be a "game changer" that eventually
      displaces conventional hybrids, says Mike
      Jackson, chief executive of AutoNation Inc., of
      Fort Lauderdale, Fla., a nationwide dealership
      chain. That article is found
      at http://online.wsj.com/article/SB119335110403372123.html

      The front pages of the business sections of the
      New York Times and the Wall Street Journal and
      Business Week break the story of the announcement
      today that former software entrepreneur Shai
      Agassi has raised $200M for what's provisionally
      called "A Bertter Place" to build a rapid charge
      and battery swapping infrastructure for 100-mile
      range batteries that would be leased to
      car-owners for a monthly service fee. The idea
      includes "smart grid" features including easy
      ways to locate the nearest charging station and
      providing distributed storage to electric utilities.
      Half of the backing comes from an Israel-based
      holding company with interests sin oil refining,
      chemicals and shipping. Other investors include
      Vantage Point Venture Partners, Edgar Bronfman
      Senior and James Wolfensohn formerly of the World
      Bank. This strategy of course faces many
      challenges in gaining automotive partners and
      standardizing components. It does provide
      important additional legitimacy to the concept of
      removing the battery's high initial cost from the
      pricing decision, and removes automakers' final
      objection to plug-in hybrids and EVs: battery
      lifetime. Agassi hopes to have pilot projects
      with thousands of cars in 2009 and a hundred
      thousand in 2010, starting on islands.
      NYT: Reimagining the Automobile Industry by Selling the Electricity.
      WSJ: Sofware Executive Shifts Gears to Electric Cars
      Business Week:
      To follow the company, see http://www.projectbetterplace.com/

      COVER STORY: Power Revolution
      Thanks to Silicon Valley's money and ideas, solar
      and other alternative technologies may finally pay off
      By Marianne Lavelle Monday, October 29, 2007

      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 concentration
      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.

      Although solar PV arrays have been crowning more
      and more American buildings--the 1.6-megawatt
      project opened this year at Google's headquarters
      in Mountain View, Calif., is the largest--they're
      expensive. Developments are underway to bring
      down the price by reducing the silicon from its
      usual wafer form to an ultrathin film deposited
      on glass. But at this point, PV cost estimates
      span from an uncompetitive 23 to 32 cents per
      kilowatt-hour, while residential electricity
      prices in this country range from 5.8 to 16.7 cents.

      With current technology, "concentrating solar
      power" would cost about 40 percent less than
      PV--tantalizingly close to competitive in areas
      like California with high energy prices. Exactly
      how the mirrors will be configured could bring
      the cost down more. Rows of curved reflectors
      work well; since the 1980s, a dazzling "parabolic
      trough" display has provided reliable power to
      California, the only operating concentrating
      solar power project in the country. But Spanish
      firm Abengoa this summer aimed for greater
      efficiency by focusing circles of mirrors onto a
      central "power tower" near Seville for the first
      commercial European Union CSP plant. The company
      would like to do the same in the U.S. Southwest.
      One firm that has been working with PG&E is
      Ausra, which recently relocated from Sydney to
      Silicon Valley and received $40 million in
      backing from investors led by Khosla Ventures to
      promote its big idea. Ausra thinks it can drive
      CSP costs down with simpler, flat mirrors and
      turbines that run at a cooler temperature, like
      those in nuclear power plants. Ausra also aims to
      engineer into the system the ability to store
      thermal energy so it can provide power when the sun stops shining.

      Engineering firm Black & Veatch of Overland Park,
      Kan., estimates that outside of environmentally
      sensitive areas, there's enough available flat
      "high solar resource" land--also known as
      desert--in California to provide six times the
      power that the Golden State uses today.

      Deep geothermal
      Geothermal is lower profile than a range of other
      alternative energy technologies, even though many
      homes--including President Bush's Crawford
      ranch--have heat pumps that tap into the Earth's
      steady, reliable warmth. But few realize that the
      United States is the world's biggest mass
      producer of geothermal power, with long-running
      plants in western hot springs and geyser areas
      that generate more electricity than all U.S. wind
      and solar energy combined. It was long thought
      that big-scale geothermal had reached its natural
      limit. Few locales are graced with steamy water
      reservoirs close enough to the surface (less than
      2 miles under) to be easily tapped to run
      electric turbines on the ground above. And many
      hot spots happen to be beneath scenic treasures
      like Yellowstone National Park or on American Indian reservations.

      But recent study shows deep-drilling and
      seismic-exploration techniques developed in the
      oil industry could be exploited to draw out the
      geothermal energy found 3 or more miles
      underground, locked in dry rock that's more than
      300 degrees Fahrenheit. A developer could drill a
      well and use high-pressure water to open
      fractures in the rock. Then, injection wells
      would be drilled to circulate the water in the
      man-made reservoir and extract steam to the
      surface to run electric turbines. This year, a
      government-sponsored study led by Massachusetts
      Institute of Technology concluded that these
      "heat mining" methods could offer access to a
      staggering amount of energy. Just 2 percent of
      the U.S. geothermal resource base could yield
      nearly 2,000 times the power that the nation now consumes each year.

      The limiting factor is the cost. The
      old-fashioned geothermal sites now operating in
      geyser areas aren't any more pricey than old coal
      plants, at about 3.5 cents per kilowatt-hour. MIT
      looked at a half-dozen potential enhanced
      geothermal sites across the country and came up
      with estimates ranging from a potentially
      competitive 10.3 cents per kilowatt-hour to a
      sky-high $1.05 per kilowatt-hour. However, if a
      few well-defined technical problems were tackled
      to boost what's known as the "fluid production
      rate," MIT said costs would plummet to 3.6 to 9.2 cents per kilowatt-hour.

      "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.

      New efficiency
      Congress is dithering over a proposal to force
      American cars to average 35 miles per gallon by
      2020, a seemingly modest goal with smaller cars
      and more-efficient diesel engines helping the
      European Union near 44.2 MPG and Japan attain
      more than 45 MPG. But a race is on for the
      technology that could blow all those numbers
      away. "You see the difficulty Congress has in
      setting a new...standard, and we know the best
      way to help is to have some cars that get 100
      miles per gallon and to make them gorgeous and
      affordable," says Larry Brilliant, executive
      director of Google's philanthropic arm,
      Google.org. That would mean more than 70 percent
      oil savings, since the current fuel-efficiency
      standard is just 27.5 MPG goal set in 1975 and reached by the late 1980s.

      Google is putting its considerable muscle behind
      the drive for the "plug-in hybrid," technology to
      take the hybrid gas-electric engine system
      already found in the Toyota Prius to a new level.
      Add a larger battery that can store electricity
      longer and can be charged with an ordinary
      household outlet, and the car could run on home
      electricity instead of gasoline most of the time.
      The plug-in advocacy group CalCars estimates that
      with today's electricity prices, drivers would be
      paying the equivalent of 75 cents per gallon. As
      a first step, Google is putting together a small
      fleet of retrofitted hybrids to gather data that
      demonstrate the technology's capabilities.
      (Anyone can log in to rechargeit.org to see that
      it is averaging 68.4 MPG.) But Google wants to
      see the big automaker mass-produce plug-ins. Last
      week, Google closed bidding on its request for
      plug-in or hybrid technology proposals it plans
      to fund to the tune of $10 million. The goal is
      to make renewable energy more attractive to
      utilities through the use of green vehicles. One
      problem those companies have with wind and solar
      is that they are intermittent. Some days, the
      skies are cloudy and the air still. "But if you
      had a large number of plug-ins with significant
      battery capacity plugged into the grid, we'd have
      a very compelling storage opportunity," says
      Google.org's Reicher. "If we can crack the code
      on plug-in vehicles, I think it will be
      transformative." Now that's thinking big.

      -- -- -- -- -- -- -- -- -- -- -- --
      Felix Kramer fkramer@...
      Founder California Cars Initiative
      -- -- -- -- -- -- -- -- -- -- -- --
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