CSP and CPV Opportunities & Issues. Vinod Khosla Khosla Ventures October 2008

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1 CSP and CPV Opportunities & Issues Vinod Khosla Khosla Ventures October

2 not your niche markets anymore! The New Green The Markets You Think Of Engines ($200B) Cement ($100B+) Corn Ethanol Lighting ($80B - US) Water ($500B+) Biodiesel Appliances ($10 sb+) Glass ($40B) Solar PV Batteries + Flow Cells ($50B Home Building (!!!) +) Wind Geothermal BioPlastics ($10 sb+) Gasoline ($500B+) Diesel ($500B+) Jet Fuel ($100B+) Power Generation ($250B US) Solar Thermal EGS Clean Coal New Nukes 2

3 relevant cost relevant scale relevant adoption 3

4 the chindia price competitive unsubsidized 4

5 without alternatives, coal use will increase Source: McKinsey 5

6 1990: Chindia 13% of CO 2 emissions 2005: Chindia 23% of CO 2 emissions 2030: Chindia 34% of CO 2 emissions EIA 6

7 the scaling model brute force or exponential, distributed 7

8 the adoption risk financial, consumer acceptance, market entry 8

9 relevant scale solutions for coal oil materials efficiency 9

10 Khosla Ventures rules of investing Attack manageable but material problems Technology that achieves unsubsidized competitiveness Technology that scales - if it isn t cheaper it doesn t scale Manageable startup costs & short innovation cycles Declining cost with scale trajectory matters 10

11 technology expands the Art of the Possible to predict the future, invent it! today s unimaginable is tomorrow s conventional wisdom 11

12 key criteria Trajectory: What is or What Can Be Cost Trajectory Scalability Trajectory Adoption Risk Capital Formation Optionality 12

13 cost: new technologies require time Undesirable Cost Fossil + Carbon Cost Fossil Fuel Cost Subsidy/Support Needed Ideal Time 13

14 Source: The Carbon Productivity Challenge, McKinsey Original from UC Berkely Energy Resource Group, Navigant Consulting cost: driving down the cost curve 14

15 declining technology cost Generations of Solar Photovoltaics Silicon Crystal Amorphous Silicon Thin-Film Thin-Film Multi-Junction 15

16 but tech cost decline isn t enough Total Cost Cost (Normalized) Construction Cost Inputs (Feedstock/Land) Technology Cost

17 Total cost decline is based on relative proportion of cost types Should we focus on low cost low efficiency cells or high efficiency? 17

18 scalability of solar Wind waves SOLAR OTEC Gas BIO Oil World energy use HYDRO Uranium COAL Source: Gerhard Knies, CSP 2008 Barcelona 18

19 land is not a constraint 3000 km More than 90% of world pp could be served by clean power from deserts (DESERTEC.org)! Source: Gerhard Knies, CSP 2008 Barcelona world electricity demand (18,000 TWh/y) can be produced from 300 x 300 km² =0.23% of all deserts distributed over sites 19

20 capital formation Short Innovation Cycles (3-5 years) Not fusion ; Not nuclear ; Not CCS Mitigate technical AND/OR market risk quickly and cheaply (technical) - solar thermal (market) corn ethanol Investor returns at each stage of technology development Unsubsidized market competition: 7-10 years 20

21 Private money will flow to ventures that return investment in 3-5 year cycles! 21

22 capital formation: pathway for solar thermal 2008: Proof of concept mitigating technology risk Costs at $0.16 per KWh 2010: Deployment as peaking power (vs. natural gas) Costs at $0.12-$0.16 KWh Less with low cost debt Ongoing tech optimization & storage : Deployment as base-load (vs. coal) Costs at $0.10-$0.12Kwh including storage Adoption risk: PUG power, cost 22 Note: All costs in 2006 $

23 solar 23

24 PUG power to drive investment? Cost Competitive with fossil fuels Dispatchability Power availability must match consumer demand Reliability Utility Grade capacity factor 24

25 Economics, not sentiment, will drive solar adoption 25

26 PuG power requirements Coal (PC) Coal IGCC +CCS Scalability High CO2 Storage Nuclear Natural Gas Wind Solar (PV) Solar (CSP) Engineered Geothermal Med** High Low* Low* High High Reliability High Low High High Low* Low* High High Price Stability Carbon Price Benefits Dispatchable Power Med Med Low-Med Low High High High High Low Low High Med High High High High Yes Yes Yes** Yes No No Yes Yes Adoption Ease High Low High** High Low Med High High Technology Risk Low High Med Low High Low High Low Med High *Wind and Solar PV are severely disadvantaged due to the lack of storage power is available when generated, not when needed, stopping them from serving as base-load power generators ** Nuclear energy is always on, generating electricity even when it is not needed (and when prices are negative, such as the middle of night). High decommissioning costs and a lack of effective waste-disposal are both significant factors in limiting its scalability 26

27 CSP and EGS meet Utility Needs! 27

28 solar CPV CSP Storage Next Steps 28

29 CPV 29

30 Source: NREL a concentrated PV cell 30

31 wind vs. grid load (July in CA) 31 Source: NREL, CAISO data

32 Wind needs storage to meet utility grade! 32

33 daily solar vs. grid load (July in CA) Source: NREL, CAISO data 33

34 Solar has greater correlation with load than wind! but it isn t enough! 34

35 Source: Sunpower 35

36 but tech cost decline isn t enough Total Cost Cost (Normalized) Construction Cost Inputs (Feedstock/Land) Technology Cost

37 Total cost decline is based on relative proportion of cost types Should we focus on low cost low efficiency cells or high efficiency? 37

38 Source: Prometheus Institute, Greentech Media CPV breakdown System Concentrator Technology Power Conversion Dish CPV Parabolic Dish MulE- JuncEon or Silicon PV Lens CPV Lens of Fresnel Lens MulE- JuncEon PV LCPV Low- ConcentraEon Reflector Silicon PV Non- Tracking PV Non- Tracking Concentrator MulE- JuncEon or Silicon PV 38

39 Source: Stion, ORNL solar summit breaking down PV costs $7.00 $6.00 $5.00 Variable Cost / W Fixed Cost / W Module Cost / W $4.00 $3.00 $2.00 $1.00 $0.00 CIGS (11%) CdTe (11%) c- SI (15%) High- efficiency SI (19%) a- SI (8%) CPV - Low CPV - High 39

40 Source: Stion is efficiency the goal? $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 Total $/W Variable Cost / W Fixed Cost / W Module Cost / W $0.00 Unisolar (6%) First Solar (9%) Evergreen (12%) Sharp (13%) Suntech (13%) Kyocera (13%) Sanyo (16%) Sunpower (18%) 40

41 Efficiency = lowest cost? Low cost cells = lowest cost? 41

42 CPV questions? Is any configuration cheap enough? What is the trajectory of costs? What concentration? What cell type? Black Swan s: Trackerless concentration? Storage? 42

43 left field innovation New locations: rooftops, parking lots CPV with hydrogen regenerative fuel cells? 43

44 CSP 44

45 how soon Is solar competitive? Residential: $.20+/kWh average Maximum scale limited to 10% Subsidy dependent Centralized: Gas Peaking $.16/kWh Gas CC $ /kWh Coal $.08+ /kwh Cost sensitive to carbon price 45

46 price of power 2011 and Carbon Tax O&M Charge (Fixed & Variable) Energy Charge Capital Charge 150 $/MWh Gas Peaker Nuclear IGCC CCGT Coal Ausra CLFR 24% Ausra 60% (w/storage) Source: Ausra. All prices are estimated as of April 2008, in 2008$; Carbon tax of $30 is assumed. Ausra CLFR 24% price is as of 2011, and 60% w/storage is in

47 Solar Peaking Pricing Solar Baseload Pricing 47

48 solar thermal power systems Dish Tower Trough Linear Fresnel 48

49 dish-engine 49

50 power towers 50 Solar Two, 10MW, Barstow, CA

51 concept of tower technology Storage 51 Source: Bernhard Hoffschmidt, Directior Solar Institute Julich

52 parabolic troughs 52 Solar Electric Generating Stations, 354MW, Boron and Harper Lake, CA

53 parabolic troughs how they work Source: Robert Pitz-Paal, DLR 53

54 compact linear fresnel reflector 54 54

55 questions to ponder Efficiency or cost/kw? Power Tower or CLFR Storage & Dispatchability Peak vs Base Load Capacity Factor 55

56 scalability: CSP CSP in the Southwest >> all US power Low cost storage = base load power CSP: 16 months, not 16 years (Nuclear) 56 Source: WGA Study; Mark Mehos and Dave Kearney, KV

average (not hourly ) load data - plant fleet assumption = current US levels of 1067 GW installed and 789GW non-coincident

57 solar thermal can supply over 95% of US grid Source: Solar Thermal Electricity as the Primary Replacement for Coal and Oil in U.S GeneraEon and TransportaEon, David Mills and Robert Morgan Assumptions: - 16 hrs storage, using national monthly average (not hourly ) load data - plant fleet assumption = current US levels of 1067 GW installed and 789GW non-coincident peak load - Based on current technology, (CLFR with 3X (Sun concentration) this would require land area of 153 x 153 KM 57 11

58 solar: the process heat applications? Lighting Space heating Hot Water Mechanical energy < 200 C Process Heat Process Heat 2/3 of industrial end energy = process heat 1/3 of process heat < 200 C Huge potential for solar energy! Food Industry Textile Industry Chemical Industry Cooling / Air Conditioning 58 Source: Dr. Andreas Häberle PSE AG, Freiburg / Germany

59 Storage 59

60 Storage For Time-shifting To Storage Plant Output Direct Solar Direct Solar Direct Solar From StorageFrom Storage 6 AM 9 AM 12 PM 3 PM 6 PM 9 PM 60 Time of Day

61 solar thermal: day / night power 61 Source: John O Donnell

62 Optionality: thermal storage is cheap Electricity Heat/Air/Hydro Flywheel $4000/kWh Molten Salt $45/kWh VRB batt $ /kWh increased cost of power Concrete $25-45KWh lower cost of power CAES, Pumped Hydro Source: NREL for heat storage (2007), Dr. Doerte Laing, DLR (2008), VRB ba\ery costs from company and Appalachian Power, CAISO esemate for Flywheel costs (Beacon Power) 62

63 Optionality: thermal energy storage Commercial Available Today Steam Accumulator molten salt storage based on nitrate salts In Testing Solid medium sensible heat storage - concrete storage Latent heat - PCM storage Combined storage system (concrete/pcm) for water/ steam fluid Improved molten salt storage concepts Solid media storage for Solar Tower with Air Receiver 63 Source: Doerte Laing, German Aerospace center

64 Optionality: steam accumulators PS10 Source: Doerte Laing, German Aerospace center 64

65 Optionality: molten salt storage Andasol 1 Syn. Oil NaNO 3 -KNO 3 H 2 O Collector field Molten salt storage Conventional steam turbine 65 Source: Doerte Laing, German Aerospace center

66 Optionality: solid media concrete storage Dual medium indirect storage + regenerative heat transfer Modular and scalable design from 500 kwh to 1000 MWh Cost target < 20 / kwh TES capacity 66

67 Next Steps 67

68 the right encouraging innovation < : power generation High-Voltage distribution (DC) grid RPS vs. feed-in tariffs Reduce cost of capital PUG power; Chindia price; scale 68

69 the right encouraging innovation < : HVDC Hydro Geothermal Solar Wind Biomass 69 69

70 DESERTEC concept for EU-MENA 10,000 GW from solar! Gerhard Knies, Taipei e- parl. + WFC /2 70

71 un-sensible things Solar in Germany San Francisco rooftops vs. Mojave Feed-in Tariff vs. RPS 71

72 USA looking good Germany: 57% world PV US: 7% world PV 72 Source: Creating a U.S. Market for Solar Energy, by Rhone Resch, President of the Solar Energy Industries Association.

73 SF or Mojave Desert? Or 73

74 khosla ventures portfolio 74

75 Ausra CLFR 75 75

76 Stion: different position in PV High High Efficiency Si Stion EFFICIENCY Crystalline Si CdTe / CIGS Amorphous Si Low High PRODUCTION COST Low 76

77 PVT Solar generation efficiency is 2-3 times greater than PV alone 77

78 Stirling Engine Technology Concentrated solar power systems using proprietary stirling-engines 78

79 Plans, resumes, thoughts? khoslaventures.com / resources.html 79

80 or get to work khoslaventures.com/resources.html 80

Breaking the Climate Deadlock the future of clean power generation. Vinod Khosla Khosla Ventures Nov 2008

Breaking the Climate Deadlock the future of clean power generation Vinod Khosla Khosla Ventures Nov 2008 1 Where Does Electricity Come From? China and India together account for 79 percent of the projected