03 Mar 2010: Interview
A High-Tech Entrepreneur
On the Front Lines of Solar
After making his fortune with Idealab and a host of technology start-ups, Bill Gross has turned his attention to renewable energy. In an interview with Yale Environment 360, Gross talks about the solar power plant technology his company eSolar is developing and about the future of solar.
Bill Gross is not your typical solar energy entrepreneur. In a business dominated by Silicon Valley technologists and veterans of the fossil fuel industry, Gross is a Southern Californian who made his name in software. His Idealab startup incubator led to the creation of companies such as eToys, CitySearch, and GoTo.com. The latter pioneered search advertising — think Google — and was acquired by Yahoo for $1.6 billion in 2003.
That payday has allowed Gross to pursue his green dreams. (As a teenager, he started a company to sell plans for a parabolic solar dish he had designed.) Over the past decade, Gross has launched a slew of green tech startups, including solar power plant builder eSolar, electric car company Aptera, and Energy Innovations, which is developing advanced photovoltaic technology.
But it has been eSolar, backed by Google and other investors, that has been Idealab’s brightest light. In January, the company signed one of the world’s largest green-energy deals when it agreed to provide the technology to build solar farms in China that would generate 2,000 megawatts of electricity — at peak output the equivalent of two large nuclear power plants. And last week, eSolar licensed its technology to German industrial giant Ferrostaal to build solar power plants in Europe, the Middle East, and South Africa. Those deals followed eSolar partnerships in India and the U.S.
ESolar’s power plants deploy thousands of mirrors called heliostats to focus the sun’s rays on a water-filled boiler that sits atop a slender tower. The heat creates steam that drives an electricity-generating turbine. Last year, eSolar built its first project, a five-megawatt demonstration power plant, called Sierra, in the desert near Los Angeles.
This “power tower” technology is not new
, but what sets the company apart is Gross’ use of sophisticated software and imaging technology to control the 176,000 mirrors that form a standard, 46-megawatt eSolar power plant. That computing firepower precisely positions the mirrors to create a virtual parabola that focuses the sun on the tower. That allows the company to place small, inexpensive mirrors close together, which dramatically reduces the land needed for the power plant and cuts manufacturing and installation costs.
“We use Moore’s law rather than more steel,” Gross likes to quip, referring to Intel co-founder Gordon Moore’s maxim that computing power doubles every two years.
Now 51, Gross retains his teenage enthusiasm for all things solar. In an interview with journalist Todd Woody, Gross talks about the future of solar energy, his relationship with Google, and how to avoid battles over building large solar farms in the deserts of the Southwest.
Yale Environment 360:
You’ve spent much of your career in software and digital technology. What was the transition like going into power plant building?
It was an amazing transition to go, first, from a company that deals mostly in bytes to one that deals with atoms.
You’ve been to the [Sierra] plant, but to get 24,000 mirrors covering 50 acres — that’s a whole new scale of operation because you’re not just shipping things out the door, you’re actually going on the ground in the desert, working in hot conditions and getting them installed.
Were there any particular lessons you were able bring from the Internet industry to the solar industry?
The biggest lesson that we brought was — I don’t know if it was a lesson, but it was a philosophy — which is Internet-enable everything and put monitoring into everything.
So we have a microprocessor in every mirror and we have statistics second-by-second on the status, position, reliability, pointing accuracy — everything — of every single mirror. We structured ourselves almost like an Internet company from the beginning to have logs of everything — every revolution of the turbine, every control from the control room, every Web cam image captured — so we could do data mining and data analysis on everything.
We want the ability to make software upgrades and impact every power plant around the world. That’s probably one of the biggest differences between our technology and all other solar technology. If you [have] a big field of [photovoltaic] panels, those PV panels are there for 25 years. They’ll have that same performance, and there’s nothing you can do to change that.
We can make a software upgrade and every power plant in the world can suddenly put out 3 percent more power potentially. And we found already a
If we want to renewably power this planet, it’s going to take a lot of capital.”
number of software improvements that we can make even over the past six months, which significantly boosts performance of an already-constructed power plant. There’s new improvements we can make to the actual hardware, too, but even without changing the hardware there are software changes that can make more power, so we’re really excited about that.
What have you found to be the most challenging aspect of the solar power business?
The most challenging aspect is the capital required. Here’s the unique thing about renewable energy, but it’s true of the power plant business in general: When you make a coal plant you still have to pay for the [capital expenditure] upfront, even though it’s going to make power for 20 years. But for a coal plant the [capital expenditure] is only about 20 percent of the lifetime cost of the plant because most of the cost of the plant — 80 percent — is the cost of coal over 20 years.
For renewable energy, about 80 percent, maybe 90 percent, of the cost is upfront and there’s no fuel costs and the only cost over the years is operation and maintenance, which is small. The biggest bottleneck is that these things cost big dollars, and you’re limited how fast you can grow by how much money you can raise to build plants.
Our particular strategy to deal with that is to not have us be the bottleneck for raising that money. Our customers raise that money. If we want to renewably power this planet, it’s going to take a lot of capital, and that capital has to be spent upfront.
In fact, you just announced a deal with [German] power plant builder Ferrostaal to deploy eSolar’s technology around the world.
They have access to capital and they have enough of a balance sheet that they can put a guarantee on a plant that a bank will trust and come up with the money. We’re looking for partners all over that have that kind of strength to make these plants go forward. So [Ferrostaal] can take the experience they have being in the field, in the desert building these kind of plants, and apply it to our [technology].
It was just two months ago that you signed a deal with China for 2,000 megawatts of solar power plants.
That deal is a big landmark for the company because of the magnitude of the deal, the speed at which they want to deploy, and the fact that they have the capital to do it. That they don’t need to beg, borrow and steal to get the money is what makes it exciting.
Our deal in China is not exclusive so there’s many, many other people who have come to us from China since then who would like to build similarly
I think you can build enough solar thermal without going into pristine desert.”
large plants in China. We think China is an enormous opportunity. China right now is sitting on top of the world. They have lots of money, lots of growth rate, lots of demand for power. They’re not doing this out of altruism, they’re doing this out of necessity. They realize their cities are going to be too polluted and their power is going to be too spotty if they keep going the way they’ve been going.
Are you seeing the international market eclipse the U.S. at the present time given capital constraints?
We do. The international market is much stronger than the United States, and we hope the United States will catch up soon. But right now the international market is incredible. We are building in the United States also, just not anywhere near the pace we’re building internationally. I’m hoping that will change. The [U.S. Department of Energy] will start giving out loan guarantees for solar thermal plants later this year. We think there might even be announcements coming up soon. We’re applying for some of our plants, and we hope that we and other solar thermal players can be beneficiaries of that.
The other factor is the economy just has to get better and banks have to start lending again and they’re just not doing that here. They are doing that in some other places. And finally, if there is any carbon legislation of any kind — which is not looking great at this moment but might in the future — that will make the plants even more economical. So it actually makes this market — even though we have great sunshine — a little more challenging than other markets.
At a time when some big solar power plant projects are bogged down in disputes over their environmental impact on desert ecosystems and their water consumption, eSolar so far has avoided such controversies.
We have a strategy at eSolar to never impact pristine land. And the way we address that is several-fold. First, we have a higher output per acre, so we take a smaller footprint. Second, we’re economical at a smaller size. We can be fully economical at our 46-megawatt size. Those two things combined let us use a small enough footprint that we can locate on private land closer to population centers.
An eSolar plant in California
So rather than needing 2,000 acres contiguous to make the economics work — which you almost only can find far away on pristine land or [federal] land — we can locate on only 200 acres very close to a city and we can buy previously disturbed farmland or other properties that’s already been developed so we’re not causing any disturbance to natural habitat. And that’s an important part of our philosophy. It gives us an economic advantage because we’re locating closer to transmission. That’s probably even a bigger factor.
It takes years and years to build the transmission out to the pristine lands. [But] the power plant, for example, in Lancaster [California], is across the street from a transmission line. We didn’t have to build miles and miles of transmission, which takes years and years to get people to approve.
Some environmentalists argue that there’s no need to put big solar farms in the desert because there’s plenty of disturbed land available for such plants. What’s your view? Is there still a need for these plants in the desert?
I think you can build enough solar thermal without going into the pristine desert. There’s enough private land close to population centers, and it’s not that much a percentage of the cost of a project. That land is not the expensive thing. The solar field and the power plant dwarfs the cost of the land. There’s no reason why you can’t locate on disturbed land and not have to deal with affecting wildlife habitat.
Where do you see the next big innovations in solar thermal technology coming from?
I feel we still need to get almost another factor of two in the reduction of energy costs to potentially compete with coal. We’re already close to competing with natural gas. It depends on the sunshine and the region. Another factor of two is going to require two things to make that happen: Approximately 25 percent of that can be gotten by adding [energy] storage, and 25 percent can be gotten by increasing efficiency and lowering costs by volume production.
We produced 500 mirrors two years ago, 24,000 last year, and this year we’ll produce a million. So we’re going to get a quantity break just by going to a million mirrors from 24,000.
And everything gets more efficient in the supply chains as you get up to those volumes. Anything that we buy in our lives that has dramatic cost
I want to compete against fossil fuels with no subsidies.”
reduction has seen a million — a million cars, or a million iPhones, or a million laptops. So far there’s only been thousands of heliostats. So finally this year we’ll cross the million number and that’s when we can get the price reduction to really be competitive with fossil fuels.
Idealab has experimented with a number of solar technologies over the years. What non-solar thermal technologies do you think have the most potential?
I do feel that thin-film [which prints solar cells on flexible materials] is a great solar product and it won’t power the whole planet because it will never have storage. But for distributed power in under 10 megawatt installations, and even under one megawatt installations, it’s really hard to beat.
What I’m saying is that there are many solar markets — in different markets, different technologies will win. ESolar is going after the large, utility-scale market and I think we can be a big winner in that. But in other markets outside the large utility scale, I think there are going to be many other winners.
Google is an investor in eSolar. How has that relationship gone?
Google has been a great investor. I think Google has been a big supporter for a few reasons. First, they have a renewable energy-less-than-coal-initiative [to develop technologies to make the cost of renewable energy cheaper than coal]. They’re a huge electricity user with their data centers, and they’d like to power that renewably some day. And some day maybe we can locate data centers in sunny locations and have solar power to provide for them. But most importantly, they really believe in software and algorithms, so when they saw our technique and technology, they specifically endorsed the idea of throwing more software and less steel at the problem. And if you can do that, that can be a great victorious solution.
After their investment in us, that changed our profile as a company and opened up some of these opportunities. I don’t think Acme in India would have heard about us or NRG would have heard of us had it not been for Google’s investment.
I met with Dan Reicher, Google’s climate change and energy director, recently and he talked about Google’s work on building a better heliostat. Will that be something that will potentially benefit eSolar?
Oh, absolutely. Google is doing research and development and it’s amazing that a company like Google is doing this because you’d think that’s not their core mission, but they believe in this so strongly. Not only have they invested in us, because they want to see us do R&D to keep driving things, they’re doing their own R&D. Not only for heliostats, but they’re working on other technologies to improve receiver designs, and improve the steam turbine — all kinds of work to make the power plant more efficient.
They want to work on things that are even more far-fetched than we can work on. I don’t think Google is ever going to make power plants, but their intent is to help advance the state of the art.
What other green technologies are you interested in beyond solar?
I’m really interested in [energy] storage, and both storage for solar and storage in general, because storage can be a big factor in making renewables have a bigger impact on the world. I’m really interested in more efficient transportation. We have a company called Aptera that is making a super-streamlined vehicle. One way to need less energy is not to burn it up in the first place with aerodynamic drag. With that car we can achieve the equivalent of well more than 200 miles a gallon.
I’m also excited about solar energy for the developing world and ways to make solar power and other energy just cheaper and more distributed even on a small scale. We have a small company working on that in India called Distributed World Power. They make a small village-sized unit, or a family-sized unit. I’d love to find a way to drive the price of that down to make it really, really affordable for people, because I think that could really impact the standard of living for a lot of people on the planet and drive the cost of solar down even on a small scale.
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What metric do you use that will indicate when eSolar has been a success?
Well, I want eSolar to be a dominant form of solar energy, and my feeling of more immediate success is we want to get this next group of plants built and have hundreds of megawatts in the ground in 2010 and 2011 to show the world that this technology can work really at scale. We’ve shown people that we can make our demonstration facility work and it produces commercial power for Southern California Edison. But to show that it really works at scale and people are continuing to deploy it, that would be one great measure of success.
The other one is we want to get the company profitable as soon as possible so it has a long-term sustainability that it will have the chance to continue to iterate the technology and drive the price down to someday compete with coal. I want to compete against fossil fuels with no subsidies, whether those fossil fuels have a carbon tax or not.
If we can do that in three to five years, then eSolar will be the company of my dreams, and the thing I sort of feel I worked my whole life to achieve.
POSTED ON 03 Mar 2010 IN
Business & Innovation Climate Energy Energy Policy & Politics Science & Technology North America North America