FYI,

"Renewable Energy - The Next Opportunity for Silicon Valley"
O'Reilly Publishers
http://www.oreillynet.com/lpt/a/5467

: There are striking parallels between the renewable energy industry
: today and the personal computing industry circa 1980. Much of the
: basic technology required for personal computing was already in
: place and was on the verge of becoming economical for mass
: production. The personal computer hardware and software industry
: was characterized at that time by small, under-capitalized firms
: that catered to a hobbyist market (known today as "early adopters,"
: in industry parlance). The software and hardware of that time was
: more complicated to install and use (early computers were generally
: useless except to programmers).

: Since that time, computers have become orders of magnitude faster,
: lighter, and cheaper. While the pace of innovation has been rapid,
: the evolution of computing technology has been an incremental
: process characterized by continuous refinements in materials
: science, mass production, and marketing. These innovations can be
: traced back to two basic inventions: solid-state transistors and
: solid-state light-emitting devices (lasers and diodes). Nearly all
: the advances in computing since 1980 are the result of improvements
: in the way these devices are manufactured and combined to create
: machines that perform new functions.

: The State of Renewable Energy

: The same basic dynamic applies to renewable energy. The basic
: technology required to translate solar energy into heat and
: electricity has existed for decades (centuries in the case of wind
: power). Solar electricity can be produced by means of photovoltaic
: arrays (based on the photoelectric effect discovered by Albert
: Einstein) or by using conventional heat engines whereby solar
: energy is used to power a turbine. Solar heat is simpler still,
: requiring only a blackbody and a mechanism for storing and
: transferring heat.

: The basic technology has been built and proven, and even without
: further investment, some forms of renewable energy, such as wind
: electric, are nearly breaking even with fossil fuels. They are
: actually cheaper when the real costs of fossil fuels are taken into
: account.

: Global spending on energy represents a significant percentage of
: gross economic activity, especially when multiplier effects are
: taken into account because some form of electrical, mechanical, or
: heat energy is consumed in every stage of the production and
: delivery of a product or service. Per-capita energy use worldwide
: will increase as advanced technology and automation spread to
: developing countries. Gross usage will also increase as a result of
: population growth. We are already seeing early signs of competition
: for fossil fuel resources by first- and second-world countries.
: While timing the market is risky, it is reasonable to predict that
: demand for energy is not going to decrease in the years ahead,
: while available supply is not going to increase dramatically.

: Silicon Valley and Green Energy Overlap

: This may present an opportunity for the Bay Area technology
: industry as the computing industry matures and becomes a
: commoditized consumer product business. There are many areas where
: Silicon Valley and green energy overlap:

: - Materials science plays an important role in renewable energy:
: computing is a materials science business. This overlap is
: especially evident in photovoltaic arrays and microprocessors, both
: of which are made from silicon-based semiconductors. Conversely,
: renewable energy technology may also be applied to computing
: technology.

: - Competition in the computing industry is based on cost per unit
: of performance: the IT industry's relentless focus on reducing per-
: unit costs through economies of scale, production technique, and
: efficiency yields annual decreases of 10 to 20 percent, sometimes
: more, in cost per unit of performance. A similar trend in reducing
: the real cost of personal energy production systems translates into
: a ten-year reduction of 65 to 90 percent (not accounting for
: inflation in the cost of fossil fuel-based energy).

: - The technology industry is a packaging and marketing business:
: personal computers were once complicated and intimidating devices
: that are now marketed as user-friendly consumer products. (Apple is
: an especially noteworthy example.) This expertise can be used to
: integrate and repackage energy production technologies to make them
: cheaper, easier to sell, and simpler to install and use (design and
: installation is a significant component of personal energy
: production system costs).

: - The Bay Area tech industry has a tremendous amount of financial
: and human capital that can be directed toward developing and
: marketing green energy technology. Much of the research,
: manufacturing, and marketing expertise learned since 1980 can be
: applied to green energy systems. Silicon Valley's unique
: combination of financial resources, technical leadership, and
: entrepreneurial culture enables it to become an important player in
: this emerging industry. One could argue that Silicon Valley can do
: more than government-sponsored programs are able to do to
: accelerate the development and adoption of these technologies.

: - The information technology industry attracts creative people,
: most of whom see technology as a way to solve problems. Much of the
: computer industry is based on the free exchange of ideas and on
: collaboration, as has been demonstrated first by the industry's
: early hobbyists and most recently by the success of the open source
: movement. This population is highly literate in science, and few
: people among them will argue with the fact that major change is
: necessary to cut our dependence on fossil fuels. Engineers, with
: their focus on practical incremental improvements and innovations,
: are also well represented within this population.

: - The computing industry, semiconductor companies in particular,
: invests heavily in fabrication facilities that become obsolete
: within a few years. Some of these facilities could be retooled to
: produce large quantities of clean energy components such as
: photovoltaic cells, potentially enabling companies to realize a
: better return on investment by extending the useful life of their
: fabs.

: - Last, and perhaps most important, predicting the future demand
: for energy is much less speculative than predicting the demand for
: as-yet uninvented information technology. One can argue that we are
: already reaching a saturation point where most people have more
: than enough access to computing and information services. On the
: other hand, energy is a vital commodity. People are not going to
: voluntarily abandon their appliances, automobiles, and climate-
: controlled homes. The energy to power these devices both in the
: U.S. and abroad has to come from somewhere.

: All of these factors combined position Silicon Valley to benefit
: from the green energy business, should it choose to invest
: aggressively in this area.

: How can Silicon Valley best capitalize on this opportunity?
: Primarily by improving on and simplifying existing energy
: technologies and by looking for ways to retool existing facilities
: to produce energy production components once the fabs become
: obsolete.

: Example: Solar Electricity

: Solar electricity is an obvious opportunity for the tech industry,
: primarily because solar electricity, like computing, is a
: semiconductor business. The basic technology behind solar
: electricity is not new and is fairly mature.

: Even with the maturity of the basic technology, there is a lot of
: room for improvement in production costs, per-unit costs, and
: product packaging. Reducing per-unit costs by 30 to 50 percent
: would make solar electricity very competitive with grid-supplied
: electricity.

: Retooling aging fabrication facilities to produce photovoltaic
: cells would enable semiconductor manufacturers to extend the useful
: life of their facilities, while also increasing the supply of PV
: cells used in solar electric arrays. The increased supply and
: additional competition will force prices downward.

: Even if it is not possible to dramatically reduce direct per-unit
: costs, it is possible to simplify solar electric systems, which
: will reduce design and installation costs (a significant fraction
: of total project cost, especially for residential and small
: commercial sites).

: One thing the computing industry excels at is simplifying formerly
: complex technologies.

: This same skill could be applied to building second-generation
: solar electric modules that are modular, integrated, and fairly
: idiot-proof.

: The current generation of solar electric systems consist of a
: hodgepodge of components, all manufactured by different vendors.

: Factor in reasonable assumptions about improvements in production
: efficiency, say 10 percent per year, and it will be possible to
: reduce overall per-unit costs by 50 percent in five years, more
: than enough to tip the balance in favor of solar electricity in
: many markets, especially if energy prices continue to creep upward.

: The U.S. presently consumes almost four trillion kilowatt-hours of
: electricity per year (worth several hundred billion dollars per
: year depending on wholesale prices). This is a substantial market
: by any measure and one worth pursuing.

: It is interesting to ponder what would happen if the technology
: industry were to invest aggressively in energy. This is an industry
: that invented computers and then made them so powerful and so small
: that today we think nothing of toting a supercomputer in a backpack.

Mark Reiff