Energy Literacy And Funding Cleantech

Last Thursday Saul Griffith, CEO of OtherLab gave a wonderful talk on his project that is creating a national data map of energy sources, use and waste. (Fair Saul_Griffiths.jpegwarning: Saul is a co-founder of WattzOn and until recently WattzOn had offices at OtherLab.) As Saul says, how can we make national energy policy if we can't see all the tradeoffs in one place? It is indeed surprising that this data assembly and synthesis has never been done.

You can see the work at The visual tool is a Sankey diagram, and it allows the user to drill down to micro details. (Here's an intro to Sankey diagrams .)

Saul walked through the big and the small and pulled out some surprising facts:


  • 40% of energy use in the U.S. goes through a heat exchanger

  • 8% of petroleum use is to make petroleum products. Every mile in that car adds pollution in Houston too.

  • Industrial farming is energy efficient. Perhaps you want to buy local, but it does use more energy to grow that food than large-scale farms.

  • One-third of aviation fuel in the US is used by the Defense Dept.

But going back to heat exchangers: That 40% fact says this technology is ripe for innovation that would reduce energy waste and GHG emissions. A large impact from one technology, and worth a moonshot effort.

I can't help but juxtapose that rational policy angle, driven by the assembled data, with a paper that came out of MIT this week about the dismal returns to venture capital from cleantech investments. The data on VC returns in cleantech has been in for a while, and no surprise, the MIT paper reports that VCs did not see great returns. And are migrating to software investments.

Here's the point: Heat exchangers are probably not a product category VCs will invest in. But software to better control heat exchangers, software that can be slotted in to existing systems -- now that is investable. Heat exchangers, like many cleantech products, are really industrial goods. Capital intensive, long sales cycles, long installation cycles. Yep, pretty different than WhatsApp. And not a fit for the VC business model. Turns out VCs did an experiment by stretching their model to industrial products and project financing. It did not work. But they (and our planet) need investment in industrial products to enable the software investments. The two add up to smarter operations, less energy waste.

It strikes me that Saul and his team at OtherLab have addressed this problem too. OtherLab holds a portfolio of industrial goods companies that make very intelligent products. Products that beat the competition, products that large industrial companies want to buy or license in. That is a cool route to innovation. The originating funding for many of these innovations are R&D grants from DARPA, DOD, and DOE. Corporate R&D partners for industrial product incubators could be another avenue to fund these super-smart, super-motivated teams.

So, to me the super cool factor of Saul's talk was his living proof that we can use data-driven policy to identify points of great energy waste and use innovative funding to get the solutions started. VCs can come in later and fund the software control layer. Let them do the one thing they are good at. The rest of the world needs other avenues to make change happen.

So yet again, Saul's fundamental optimism comes through. He's doing it. Through a force of will (no sleep, hours of work), he and his team assembled a uniquely integrated and large data set, with a software lens for viewing. Through business model innovation, he and the OtherLab companies are demonstrating a model of R&D funding for energy-smart industrial products.

And Saul's urgency comes through too. Nothing like the thought of looking your kid the eye and saying "my generation screwed up."

And thus the impact of the evening event goes beyond the words spoken. Saul's proof points make a grounded case for optimism. Perhaps we can innovate our way out of the climate change problem.

Thanks Saul!