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Energy by Algorithm

2012 September 5

In 1972, the future seemed bleak.  The Club of Rome released their report on the limits to growth and it warned that our planet was faced with overpopulation, which would result in economic and societal collapse. Fortunately, just the opposite happened.

Today, 40 years later, although the global population has indeed doubled, poverty, hunger and war have all plummeted.  The Green Revolution has enabled us to feed more people using fewer resources and created a multibillion-dollar market at the same time.

Now, faced with the prospect of global warming, there is a new energy revolution brewing. However, the transformation is not solely, or even primarily, driven by concern about carbon, but represents a shift from resource driven energy to that which is derived from technology and will, like digital innovation, unleash the economics of accelerating returns.

Why Solyndra Failed

When a many people think of solar power these days, they think of Solyndra, the ill-fated company that recieved a half billion-dollar loan guarantee from the U.S. government and still went bankrupt.  All too often, solar energy seems like just another reason for tree-huggers to throw away money.

In reality, Solyndra didn’t fail because the market for solar energy is poor, but because it is moving so fast that the company failed to keep up.

Take a look at the chart above and it quickly becomes clear that solar is set to be an enormous business.  Costs are already near grid parity and the US Department of Energy’s Sunshot Initiative aims to reduce the cost 75% by 2020, making it cheaper than coal based generation.

At the same time installed capacity is growing quickly.  Demand is set to double this year in the US and increase by 15% globally each year to 2015.  As production ramps up new efficiencies are being found in manufacturing, installation and the solar cells themselves, driving costs down even further.

Growing the Next Saudi Arabia

Probably the biggest disappointment in alternative energy is ethanol.  Using conventional crops like corn to make fuel is incredibly inefficient and subsidies for ethanol production have mainly been handouts to powerful agriculture lobbies.  The primary impact has been to raise the price of food and create hunger.

However, as I noted in an earlier post, growing oil from genetically engineered algae can be much more viable.  It’s advantages are that it can be up to 100 times more efficient, it thrives in seawater so doesn’t compete for resources with conventional agriculture and is also able to absorb carbon dioxide from power plants.

The approach is getting a lot of interest from top energy players.  Exxon has invested $600 million in Craig Venter’s effort.  That, in turn, encouraged Chevron to invest in a competing initiative.  Ford is also researching the viability of the algae based fuels and the technology has already been tested successfully by airlines.

Another, more speculative, program is Plants Engineered To Replace Oil (PETRO), which aims to gain efficiency by bioengineering conventional plants like tobacco to directly produce fuel.  In his book, The New New Deal, journalist Michael Grunwald reports that this could potentially increase the yield of biofuels from 50 to 5000 barrels per acre.


Mitt Romney recently pointed out that you can’t drive a car with a windmill on it.  It’s that keen eye for the obvious that makes him so beloved to so many.

However, some of the world’s most creative scientists are actively working on an idea that would use wind and solar to produce fuel from microorganisms  The concept, known as electrofuels, utilizes a special kind of microbe that can produce biodiesel, methane and butane from electricity. Although the technology is still new, it holds a lot of promise.

Like the other biofuel efforts, electrofuels don’t need freshwater, so won’t take food out of our mouths or have other adverse environmental impacts. Further, their efficacy is driven by bioinformatics, the efficiency of which is improving at an exponential pace, so electrofuels have the potential to be cheaper than digging energy out of the ground.

Next Generation Batteries

One of the great barriers to renewable energy is the need to store it.  People still need electricity when the sun isn’t shining and the wind isn’t blowing.  However, one of the hottest areas of investment is next generation batteries.

GM backed Envia doubled the efficiency of their battery to 400wh/KG, which will cut the cost of the next generation of Chevy Volts by about $5000 while increasing their range. IBM is investing in lithium air batteries that have the potential to power electric cars for 500 miles on a single charge within ten years.

These approaches, along with others such as Lithium Sulfur batteries, are also being scaled up to industrial size that can power entire cities even on dark, windless days.  The power to store energy efficiently is almost as important as the power to create it.

So, while you still can’t put a windmill on your car or even, truth be told, on your house, that is really quite beside the point.  What’s important is that technology driven energy is transforming the economics of just about everything.

The Industrial Battlefield of the 20th Century

The market for energy is about 10% of global GDP or roughly $6 trillion per year (that’s trillion with a “T”).  Clean energy has also been, strangely enough, the first high tech industry that America has not led.  China is the top solar cell producer, Europe is ahead in wind production, Japan and Korea have dominated the market for lithium ion batteries.

That seems to be changing fast.  First Solar, a US company, now produces the most efficient solar panels in the world.  GE is investing $600 million to compete with it and Semprius has an experimental solar cell that will double efficiency.  American made components in wind turbines have increased from ⅓ to ⅔ and US firms are set to dominate the next generation of batteries.

Ironically, we have the financial crises to thank.  As Michael Grunwald reported in his book cited above, the $90 billion portion of the stimulus devoted to clean energy financed this resurgence.  Further, ARPA-E, a new agency modeled on the one that created the Internet, is investing in the next generation of cutting edge technologies.

The Great Transformation

As Ray Kurzweil has noted, “all technologies will essentially become information technologies, including energy” and the economics of energy are beginning to harness the power of information.  An article in Scientific American documented that the principle of Moore’s Law applies and that solar power could be half the price of coal by 2030.

As we move from resource-based energy to technology-based energy, a virtuous cycle is taking hold.  Lower costs lead to higher production, which lowers costs further. Geopolitics will also be transformed, as third world strongmen emboldened by the accident of geography will be trumped by engineers wielding algorithms.

As I wrote before, the future will not be made as much as it will be designed and that’s as true for energy as it is for physical products.  The impact will be staggering.

– Greg

13 Responses leave one →
  1. September 5, 2012

    Greg – this is a stunning post – its really got me thinking that as everything becomes mediated by information we really are entering a new transformational age – an “apocalyptic” technium of much wider impact than I was even imagining.

    I wondering if the first decade of the 21st century is like the last decades of the 17th century (UK) – the beginnings of the industrial revolution but now its the Information revolution – its only just beginning – just imagine the next 100 or 20o years !


  2. September 5, 2012

    Thanks Martin. That’s very kind of you to say.

    I do think that energy is only the second stage. The first, is of course, information, which used to be scarce, but now is immensely abundant and and cheap. The next phase will be energy and, if present trends continue, 50 years from now we’ll be in about the same position vis a vis energy that have in information today.

    The final frontier will be health and I have absolutely no idea when that will happen, but the log linear trends in genomics has already begun and therapeutically we’ll probably start seeing concrete benefits in the next decade.

    – Greg

  3. September 6, 2012

    Excellent essay. To the point on photon catch and transformational efficiency – aye, that’s the core of the issue. Too few are aware that the 15% efficiency (and more rarely solar cells capable of the 25%) is a significant issue. I do think it should made more clear that the 2-3 times more efficient number you are referring to is based on the lower bound of 15% and for solar to achieve mainstream scale it really needs to go more in the 50% and higher range AND support large scale manufacturing. But that technical nit aside, I’m with you on your bullishness.

  4. September 6, 2012

    Thanks Lisa.

    Actually, the efficiency numbers have improved a bit. First Solar has managed to squeeze about 17% out of the solar cells (but closer for 15% for the whole panel as you said) they produce and Semprius has achieved 33.9% with their quantum dot technology, although they don’t have a production version yet.

    Also, the cells themselves aren’t the only source of efficiency. There are a lot of costs being cut in their manufacture and their installation as production ramps up.

    Thanks for your comment.

    – Greg

  5. September 6, 2012

    Ooops! This just came out. Silevo has just announced that it can produce cells with 21% efficiency:

    – Greg

  6. September 8, 2012

    Hi Greg,
    Nice to see your interest in this boiling issue.
    For us at NeoCarbons a cheap and green electricity is essential. We transform it again in high energy photons which we use in our patent pending active photo-bioreactors to absorb CO2 and transform it into chemicals of high value.
    The higher the cost of energy, the farther away we are from biofuels, unless the price of crude oil soars. Anyway I don’t think that alternative energies should target the substitution oil market, yet.
    I have seen reports where the nuclear and the windmill electricities are below $ 0.1.
    The aim is $0.5/

    Let’s keep trucking. best

  7. September 8, 2012

    The aim is below or around $0.05 / kWhr of course…..

    can you share the original of the graph?I would like to use it for some of my classes. TIA

  8. September 8, 2012

    Jean Louis,

    Very cool. Have you been following Craig Venter’s venture, mentioned above?

    I’d like to know what you think of it. Apparently, Exxon has invested $600 million in it.

    – Greg

  9. September 8, 2012

    Jean Louis,

    I originally got the graph from this article:

    But the original comes from Emmanuel Sachs, formerly of MIT and now the founder of 1366 technologies. He used the graph in his testimony to Congress where he predicted that solar power will be the biggest manufacturing industry in history, producing about 1 terra-watt per year and total sales of over $1 trillion worldwide.

  10. September 9, 2012

    Greg, Thanks for your comment on synthetic genomics. They look very impressive and focused on delivering a distinctive advantage to their products. It’s exactly the kind of partner that would maximize the productivity of the whole value adding chain:

    The chain needs top performers in terms of algae selection; in terms of algae culture; in terms of downstream separation and purification.

    I like the idea of organisms working on coal in situ because the issue for the coming decades will be the availability of products with high energy density.

    This said, it only morphs non renewable resources in more easily transportable ones (I know, it’s a rough shortcut).

    We have seen the problems with the biotech industry when they suffered from a lack of capacity in the 90’s. So at NeoCarbons we developped a high productivity active photo bioreactor design (too bad I cannot add a drawing on this comment)

    There are many ways to grow algae and the pond is not the most productive. In fact it is limited (45 g/m2 reported in literature) in terms of geography and in terms of energy availability (for autotrophic species) and thus is a nightmare in terms of sustainable development (water waste, land usage). In addition, if you want to to deal with industrial quantities, you have to have the plant close to a source of CO2, and water in case of ponds.I know solutions exist on paper, now try to picture them next door.

    At NeoCarbons we deal with two issues: GHGs / Global warming; plus recycling the carbon in high value chemicals so that we can maintain our living (80% of what surrounds us is plastic in a way) while not destroying our living conditions.

    We have one constraint: availability of (cheap) photons from a green origin. Thanks for pointing us in the direction with your article.

    Hope this is not too long. Will be delighted to discuss further what we propose, be it with Exxon, Synth Gen, or others with a vision and means to make it happen.

    best regards. jl

  11. September 9, 2012

    Good luck with it Jean Louis!

    btw. Synthetic Genomics aren’t selecting algae, they are creating “synthetic life.” In other words, they are trying to genetically engineer entirely new species of algae that can produce oil themselves.

    – Greg

  12. September 10, 2012

    thanks for your kind wishes. Ok selecting, modifying, etc same end point, different words.

    The biotech industry was good at that in the 80-90s, developing all these modified CHO cells and others to produce valuable peptides in 20 m3 reactors….

    deployed the savoir faire on other objectives, somehow.


  13. September 10, 2012

    This is a bit different. It’s synthetic life, where they are engineering the DNA from scratch and then inserting them into cells (Craig Venter is the guy who decoded the human genome). The first organism was created in 2012:

    I’ve written about it before:

    – Greg

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