Bill Gates touts coalition to help energy innovation cross the Valley of Death

Bill Gates, the billionaire co-founder of Microsoft (NASDAQ: MSFT), philanthropist and investor in a small nuclear energy venture, used the impending kick-off of international climate talks in Paris to talk about public and private efforts to commercialize promising clean energy technology.

Gates is founder and chairman of TerraPower, nuclear energy technology company based in Bellevue, Washington.

Along with Gates, Facebook CEO Mark Zuckerberg, Virgin founder Richard Branson, Amazon CEO Jeff Bezos and Alibaba executive chairman Jack Ma have all announced they are launching the Breakthrough Energy Coalition ahead of the COP21 climate change conference in Paris.

“We are creating the Breakthrough Energy Coalition (www.breakthroughenergycoalition.com), a global, private investment group which intends to help promising approaches cross the Valley of Death—to take the risks that allow companies to get innovation out of the lab and into the marketplace,” Gates said in a paper published on his website.

Also Through Mission Innovation (www.mission-innovation.net), more than 10 governments have committed to significant increases, Gates said.

The world is going to be using 50% more energy by mid-century than it does today. That should be good news, Gates said, especially for the world’s poorest, because right now more than 1 billion people live without access to basic energy services.

“Low- and middle-income countries need energy to develop their economies and help more people escape poverty,” Gates said.

“But the world’s growing demand for energy is also a big problem, because most of that energy comes from hydrocarbons, which emit greenhouse gases and drive climate change. So we need to move to sources of energy that are affordable and reliable, and don’t produce any carbon.”

Today, renewables account for less than 5% of the world’s energy. It took four decades for oil to go from 5% of the world’s energy supply to 25%. “Natural gas took even longer,” Gates said.

“The past decade has seen remarkable progress in zero-carbon sources, especially solar photovoltaic (PV) and wind. The cost of solar PV cells has dropped by nearly a factor of ten,” Gates said.

International reports have suggested that wind and solar PV could cut the world’s annual emissions from electric generation by 22% by 2050. But wind and solar are intermittent sources, Gates said.

As a result, world economics still require “a parallel system powered by fossil fuels,” Gates said.

“On bright summer days, the two systems together generate so much electricity that the price drops below zero—utilities pay others to take their product. At night, on the other hand, the only source is electricity from fossil fuels,” Gates said.

“Because energy companies have to recover their capital costs and they are not getting any return during the day, they either raise the price of energy at night, or they slowly go bankrupt,” Gates said.

Energy storage and a more modern “high-voltage grid” are being used in some places to deal with variable power sources, “but we need to make them cheaper and improve performance,” Gates said.

Depending on the type of battery used, it costs between 30 cents and 80 cents to store a kilowatt-hour of electricity. “Given that the price of electricity averages around 10 cents per kilowatt-hour in the United States, these storage costs would at least triple the price of electricity, even if the electricity itself were generated for free,” Gates said.

Today’s batteries also have a far lower energy density—that is, they store much less by weight—than fossil fuels. Coal provides 37 times more energy per kilogram than the best lithium-ion batteries available today, Gates said.

Government research is vital

Gates goes on to say that government research funding is vital. The software billionaire says that during the Cold War, the Department of Defense (DoD) developed computer networks that could survive a nuclear attack. “Today that same technology helps run the Internet,” Gates said.

Unfortunately, the energy industry tends to invest less in research than other industries do.  American pharmaceutical companies put 20% of their revenues into these activities while semiconductor companies invest about 15%.  For energy firms, the research investment is less than 1%.

The U.S. government spends more on energy research than any other country, but even its energy research spending is far less than the government research pie for either healthcare or the military.

Bipartisan Policy Center President Jason Grumet promptly praised Gates’ announcement of an international energy research and development investment fund.

“The Bipartisan Policy Center applauds Bill Gates, other leading investors, and numerous countries for their unprecedented effort to accelerate clean energy breakthroughs. BPC is proud to support innovation through our work with the American Energy Innovation Council (AEIC), a group of business leaders, including Mr. Gates, who are working to reestablish America’s energy technology leadership,” Grumet said.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.