Algae What will it take? Vinod Khosla Khosla Ventures October 2008 1
agenda The Innovation Handbook Key Criteria Black Swans 2
not your niche markets anymore! Main Tech The Markets You Think Of Engines ($200B) Corn Ethanol Lighting ($80B - US) Biodiesel Appliances ($10 sb+) Solar PV Batteries + Flow Cells ($50B+) Wind Geothermal Cement ($100B+) Water ($500B+) Glass ($40B) Home Building (!!!) BioPlastics ($10 sb+) Gasoline ($500B+) Diesel ($500B+) Jet Fuel ($100B+) Power Generation ($250B US) Solar Thermal EGS Clean Coal New Nukes 3
relevant cost relevant scale relevant adoption 4
the chindia test only scalable if competitive unsubsidized 5
1990: Chindia 13% of CO 2 emissions 2005: Chindia 23% of CO 2 emissions 2030: Chindia 34% of CO 2 emissions EIA 6
the scaling model brute force or exponential, distributed 7
the adoption risk financial, consumer acceptance, market entry 8
relevant scale solutions for oil coal materials efficiency 9
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
technology expands the Art of the Possible to predict the future, invent it! today s unimaginable is tomorrow s conventional wisdom 11
agenda The Innovation Handbook Key Criteria Black Swans 12
key criteria Trajectory: What is or What Can Be Scalability Trajectory Cost Trajectory 13
Natural Oils trajectory: scalability Transesterification Methanol/Ethanol Fermentation Glycerin BioDiesel (FAME or FAEE) Ethanol, Butanol, Renewable Petroleum FermDiesel Sugars/ Starch Feed Cost Catalytic Conversion Catalysis and Aqueous phase Reforming ETG via catalysis Biogasoline Dimethylfuran Gasoline, Diesel, Hydrocarbons Algae + Sunlight CO2 Cell Mass Hydrocracking BioDiesel (FAME or FAEE) Cellulose/ Hemicellulose Acid or Enzyme Hydrolysis Saccharification Fermentation Ethanol Butanol Diesel Biomass Waste Mixalco Process Pyrolisis Microbial cultures Gasification Syngas Feedstock Supply Volume Fermentation Catalytic Conversion Fischer-Tropspch catalysis Mixed Higher Alcohol Biooil Methane Ethanol/Butanol Ethanol Increasing Technological Difficulty BTL Diesel
trajectory: scalability Gallons oil / acre / year 48 102 635 NREL 15
trajectory: scalability Gallons oil / acre / year ~440 Year round average 7g/m2/day Warning: Extrapolated from small sample Ulva 16
trajectory: scalability Gallons oil / acre / year ~1600 Year round average 16 g/m2/day Warning: Extrapolated from small sample Confidential microalgae 17
trajectory: scalability Gallons oil / acre / year ~3100 Year round average 30 g/m2/day Warning: Extrapolated from small sample microalgae 18
trajectory: scalability Theoretical gallons oil / acre / year ~6500 240 day average 61 g/m2/day Warning: Extrapolated from small sample Kitto et al 1999 Skeletonema costatum 19
trajectory: scalability Theoretical MAXIMUM Gallons oil / acre / year 7.2 GJ US Southwest solar energy x 90% Reaches algae x 45% Photosynthetic active radiation x 90% Photons absorbed by PS pigments x 22% Photosynthetic efficiency x 25% Post light saturation and photinhibition x 85% Post respiration @ 20 Gj/mt biomass, 60 mt/ha-yr, 30% oil ~ 2,000-6,000* gallons oil / acre / year * Maybe 2-3x (2,000 gallons oil / acre / year) with genetically improved algae J Benemann 20
trajectory: cellulosic scalability Miscanthus 17 tons / acre Ethanol 1500-1800 gallons / acre / year Oil 1980-2500 gallons / acre / year 21 Source: Ceres Inc
trajectory: cellulosic scalability Sorghum 25 tons / acre Ethanol 2250-2750 gallons / acre / year Oil 3000-3750 gallons / acre / year (Prof. Holtzapple- Texas A&M) 22
trajectory: yields Oil Oil Ethanol Ethanol Algae Miscanthus Sorgum Today 5+ years Theoretical 23 Miles driven / acre / year 50,000 100,000 150,000
biocrude replaces crude Crude oil Refinery Biocrude 24
Kior: Millions of years Minutes! 50 Biomass Oxygen(wt%) 45 40 35 30 25 20 Catalytic Cracking (BCC in minutes) Thermal Cracking (Pyrolysis seconds) 15 10 5 Geo Thermal Conversion (Million of years) 0 0,0 10,0 20,0 30,0 40,0 50,0 60,0 70,0 80,0 90,0 TAN (mgkoh/g) 25
key criteria Trajectory: What is or What Can Be Scalability Trajectory Cost Trajectory 26
trajectory: fertilizer costs Little fertilizer Vs. Source: Ceres Inc 27
trajectory: harvesting costs 28
trajectory: harvesting costs Vs. x 100?? Source: Seambiotic centrifuge 29
trajectory: containment cost Source: Solix 30
trajectory: containment costs Vs. Source: University of MN 31
trajectory: containment costs Vs. Source: AlgaeLink 32
trajectory: containment costs Vs. Source: Valcent 33
trajectory: containment costs Vs. Source: Live fuels 34
trajectory: containment costs Vs. Source: Algenol 35
trajectory: containment costs Vs. 36
trajectory: energy costs Source: Seambiotic 37
trajectory: energy costs Vs. Pumps & Paddles 38
trajectory: energy costs Vs. Source: Helix BioReactor (Origin Oil) Light 39
trajectory: other cost reduction strategies Co-products like fish or animal feed Fertilizer from human or industrial waste 40
trajectory: costs Algae Miscanthus Sorgum 2010 2015 Theoretical 41 $ / Gasoline Equivalent Gallon $0 $2 $4 $6 $8
agenda The Innovation Handbook Key Criteria Black Swans 42
black swan solutions? Black Swans events are: Outliers: outside realm of traditional expectations Material: make significant, game-changing impact Technology Justifiable: not shocks predicted, but are justified classic on ex-post Black basis Swans! Strategy: More at bats ; shots on goal rarity, extreme impact, and retrospective (though not prospective) predictability 43 Source: Nassim Nicholas Taleb, author of The Black Swan
Black swan algae idea Source: http://www.nies.go.jp/biology/mcc/images/100images/nies-0836.jpg 44
Black Swan? Algenol? Source: Algenol 45
Black Swan? Sapphire Energy Source: Sapphire Energy 46
Black swan algae idea Source: http://assets.panda.org/img/barents_algal_bloom_14319.jpg 47
or get to work vk@khoslaventures.com khoslaventures.com/resources.html 48