March/April 2007

Vinod Khosla

A veteran venture capitalist's new energy.

By Jason Pontin

Credit: Bart Nagel

For many years a partner at the blue-blooded venture capital firm of Kleiner Perkins ­Caufield and Byers, Vinod Khosla has been called the best venture capitalist in the world by both Forbes and Red ­Herring magazines. Certainly, he has succeeded more grandly and more reliably, and has failed less spectacu­larly, than any of his peers. In 2004, he founded Khosla Ventures, which advises entrepreneurs and invests in his latest area of interest: the clean energy technologies that might replace the burning of coal and oil.

Technology Review:Whence this newfound preoccu­pation with clean energy generation?

Vinod Khosla: I enjoy looking at hard, important problems that are still manageable.

Funding new energy technologies has been the work of governments and big businesses. Do you really think energy a good investment for VCs?

Not every energy project can be funded by venture capitalists; some have very long time lines and big budgets. But there are plenty of opportunities that are ­amenable to a venture approach.

TR: Why are you skeptical about efforts to make coal-based energy generation cleaner and more efficient?

VK: How fast do you think existing energy vendors will move to these clean coal technologies? Alternatives to coal and oil can get here much faster. That said, clean coal is one option for future power generation. We need reliable, predictable power; many people believe that coal can provide that. But concentrating solar power [CSP] is also a real option for large-scale, high-capacity, dispatchable power. Thermal underground storage of heat can be used for utility-grade power generation, too. If large-scale compressed-air energy storage [CAES] works, then wind power will become scalable. So I think there will be a horse race between clean coal with carbon sequestration, wind with CAES, and solar thermal power generation with storage. I think carbon capture and sequestration will be difficult, making clean coal more expensive than CSP. Today, I would put my money on CSP.

TR: What are the benefits of biofuels?

VK: Biodiesel is a good product, but it's nonscalable unless it can be made from biomass instead of seed product. Ethanol is a good start, and it will transition quickly to cellulosic-based production. But I believe new fuels like butanol will come along. I would not be surprised to see biogasoline either, initially made from corn and later from biomass.

TR: When will solar cells, or photovoltaics, be sufficiently efficient to contribute significantly to the globe's energy needs?

VK: Don't equate solar with photovoltaic. I think CSP, leveraging the large investment in traditional, steam-based power generation, and using passive mirrors to concentrate heat, can get to 35 percent efficiency today at $500 per kilowatt. For photovoltaics to compete, we'll need multijunction thin-film solar cells produced with cheap mass-production technologies, and efficiencies above 30 percent.