Tony Seba is currently a lecturer in clean energy, entrepreneurship, finance and technology strategy at Stanford University. He is also an internationally known keynote speaker on the future of energy, entrepreneurship, innovation, and cleantech and high-tech market opportunities.
I recently sat down with Tony Seba to discuss his latest book, “Solar Trillions,” which is about market and investment opportunities in the emerging clean-energy economy.
CleanTechies: What is the premise of your book?
Seba: The clean energy economy will provide the largest wealth-building opportunities in history. The world will spend $382 trillion in energy over the next 40 years and every aspect of this industry is up for grabs: from generation and transportation to storage and use. The race for dominance has already started and the entrepreneurs, investors, and countries who win will dominate the 21st century. The problem is that the whole conversation about energy is wrong. In researching my book I looked at two aspects of energy starting from 2050 and backtracking to the present. I looked at the science of energy (where is it going to come from? What are the primary sources of energy? ) and the technology aspects (how are we going to transform that into usable energy? How are we going to store it and use it?) My conclusions are as fascinating as they are devastating.
- No other primary source of energy can scale like solar can. Not even close. Therefore the 21st century will be powered mainly by solar energy.
- The architecture of energy will change radically. The way we generate, transmit, store, and use energy in 30 years will be totally different from the way we do it today.
Then I put together these two premises and realized that the market opportunities are going to be gigantic. In Solar Trillions I focused on seven market and investment opportunities worth tens of trillions of dollars. I know that the boggles the mind but if anything I think I was conservative in the book. By the way, many of these opportunities are wide open today. In the fall I taught a course at Stanford based on Solar Trillions and at least a half a dozen of my students have already started cleantech companies based on the ideas in the book.
CleanTechies: In your book you speak about the creation of a new energy economy, what does it mean to you?
Seba: That’s a great question since there seems to be no clear definition. In principle the clean energy economy encompasses all economic activities from sourcing energy to generation, distribution, storage, and use of energy. Since basically all aspects of our economy consume energy different people have chosen to focus narrowly or broadly depending on their interests. In the book I focus on seven opportunities including generation, the smart grid, water, energy storage and use. The clean energy economy will transform many industries not just the traditional energy industries.
Let me step back in history and then come back to this. Think about the information economy. The transition from the mainframe model thirty years ago to the personal computer, Internet, and cell phone model of today totally transformed computing and created new trillion-dollar industries and powerhouses like Intel, Apple, Microsoft, Oracle, and Cisco. The information economy also transformed many industries including telephony, publishing, tourism, aviation, television, transportation, retail, even politics.
Similarly the clean energy economy will radically transform not just energy but many industries including construction, real estate management, automobile, and appliances. CEOs of companies in these industries who ignore this will find themselves in bankruptcy court or being swallowed up by the competitors who do get it. For instance, advances in solar technology like Building-Integrated-Photovoltaic mean that commercial buildings will become power plants themselves. Windows will not just sit there. They will generate power for the landlords!
CleanTechies: How did you decide to write a book on this topic?
Seba: I’m a tech entrepreneur and teach entrepreneurship at Stanford. A former student who had co-founded a solar technology company asked me to help them build the company. I did. I joined the executive team and helped them with fund raising, doing business development with plant developers around the world, partnerships, and so on.
That was an intense learning process that combined with my research and teaching as well as engineering and business mind helped me realize and catalyze many of the main points in the book.
CleanTechies: What are the steps that will lead us to the this new energy economy?
Seba: In Silicon Valley we’re used to developing new technologies that create new markets, new companies, and new industries. In the past Washington had a hand in seeding some of these industries (the Internet and biotech come to mind) and then we took it from there. Apple, Oracle, Cisco, and Google didn’t really need Washington to create technology powerhouses. Energy is different. Very different. At this point policy is probably the most important factor in energy industries. Governments around the world massively subsidize the coal, oil, and nuclear industries. According to the influential Stern Report, governments spend more than $250 billion every year subsidizing the incumbent energy industry. So the most profitable companies in the largest industry on earth are also the most heavily subsidized. But it’s not just cash, the fossil fuel and energy industries have also written rules and regulations including land use and tax policies that favor them. So solar and wind power and clean energy in general is at a huge disadvantage to start with.
Policy is what led Germany to build the world’s leading solar power and clean energy economy and policy is what’s building China into a clean energy world power (no pun intended here!) long term.
Many folks talk about finance being a problem. A web2.0 company may just need a few hundred thousand dollars and siz months to go to market and a software company might take a few million to prove the concept and maybe $20 million to be fully financed. Clean technologies may need an order of magnitude more time and money. They become part of multi-hundred million or multi-billion dollar infrastructure investment and will need more time to develop industrial quality technology. For this reason many silicon valley companies haven’t been able to raise money. However, once the policies, rules, and regulations to support clean energy are there the finance will follow.
We are building great technologies and great companies in clean energy in Silicon Valley but unless the government level the playing field with dirty power and help seed the clean energy economy like it did with biotech and the Internet and allow startup clean energy companies to grow it’s going to be very hard to maintain our technology edge.
CleanTechies: Will solar technology change the developing world/countries and how?
Seba: Absolutely. Two billion people around the world get their energy from kerosene or diesel and they pay up to $2 per kWh. Compare that with today’s cost of solar photovoltaics which is about 20 cents per kWh. It turns out that they’re paying for dirty energy rates that are up to 10 times what solar costs! Half a billion people in 500,000 villages in India alone are not connected to the grid. But solar power doesn’t need a power grid just like cell phones don’t need a telephone grid. So just like China went from a country with barely any phones to providing cell phones to more than 500 million people so will solar be able to gain market penetration around the world without the need for a grid. By the way, China has announced the two largest solar power plant developments (2 GW solar PV an 2GW solar CSP) in history so solar is being built up from both the bottom and the top of the pyramids.
CleanTechies: What can we do to be part of this movement?
Seba: First of all we need to educate ourselves about clean energy. Energy is too important to leave to the energy industry. For instance, you should know that food biofuels are not clean. If you take into account the whole production lifecycle they produce almost twice the CO2 as gasoline. You should know that clean coal will never be broadly adopted, that nuclear has never been financially viable and it’s getting even more expensive as we speak. You should know that water is tightly linked with energy and that our energy policies are contributing to drying up our most important aquifers. Once you know that Hawaii pays for electricity twice as much as the cost of solar power today. Once you know that solar is already cheaper than fossil fuels for 2 billion people around the world. Once you know that by 2020 unsubsidized solar will be cheaper than subsidized coal in most areas around the world then you become an educated energy consumer.
Secondly we need to be active participants in this conversation. There are lots of myths, half-truths, and plain lies in the political and media conversation. For instance, one of the things that you hear is that clean energy has a storage problem. The fact is that there is a solar plant in Spain that has 7 hours of storage. This technology, called molten salts, is cheap and environmentally safe. For instance, energy is being narrowly defined in many places as the pursuit of lowest cost of electricity, grid-parity, and so on. The truth about the clean energy economy is so much larger than that. For instance, we believe that by 2020 solar will be produced at the equivalent of $20 per barrel of oil (maybe even $15 per barrel.) We also know that the cost of car batteries is going down 80-90 percent over the next decade thus making battery-electric vehicles a mainstream product.
Put these two points together and you come to the conclusion that in 10 years millions of us will be driving battery-electric vehicles that take less than $1 to fill up (yes, less than $1). So it doesn’t make sense for us to invest in offshore drilling not only because it’s dirty but also because that oil is very expensive – more than $70 per barrel. Same thing (and more) can be said about nuclear power which many are pushing as the answer to climate change.
Third we need to vote for candidates who will support and invest in the clean energy economy. As I said, right now policy is probably the most important driver in clean energy. The battle for clean energy dominance has already started and the next few years will determine what the epicenter of the clean energy world will be. That epicenter in turn will determine where the clean energy Googles, Cisco Systems, Apples, Intels, and Oracles will be headquartered.
CleanTechies: Tell me about one or two clean energy market opportunities.
Seba: Sure. Clean water is a multitrillion dollar opportunity. We will hit “peak water” before we hit peak oil. Many regions around the world have stressed their aquifers beyond the point of no return and are turning to desalination to supply their populations, agriculture, and industry with the water they need. This industry is growing exponential.
However, water desalination is very energy intensive. So the first, short term, set of opportunities is for companies to reduce the energy intensity of cleaning water. More importantly the only way in which cleaning water makes sense is to do it with solar energy. There’s a high degree of correlation between areas with water problems and areas with high solar radiation. Saudia Arabia and other Red Sea and Gulf countries burn about 1.5 million barrels of oil per day to desalinate water. At current market rates of about $80 per barrel this means that Gulf countries spend $120 million per day to desalinate water.
Clearly burning fossil fuels to power these desalination plants is not financially (or environmentally) viable –- even for oil producers. Solar energy on one square kilometer (less than half a square mile) of desert land is sufficient to desalinate 165,000 cubic meters of water a day, with zero carbon pollution. It only makes sense to use that huge solar power to desalinate water.
Another multitrillion dollar market opportunity is solar air conditioning. Many people will do a double take before continuing. They will not put solar and cold in the same conversation (unless they think about a cold beer.) The truth is that it takes energy to drive a chiller. This energy can be in the form of electricity or in the form of heat (hot water.) The best way to generate hot water is with the sun. Use that hot water to drive a chiller and presto, you have solar air conditioning. Again I don’t need to tell you that there is a high correlation between lots of sun and high air conditioning usage!
Here’s a video by Michael Killen of Tony Seba talking about his book:
The book is available on Amazon: Solar Trillions: 7 Market and Investment Opportunities in the Emerging Clean-Energy Economy