Vinod Khosla: In energy, ignore the experts

Techno-optimist and investor Vinod Khosla thinks that innovators need to think big and ignore the conventional wisdom when it comes to energy technologies.

NATIONAL HARBOR, Md.--Monkeys throwing darts have the same predictive powers as experts forecasting the price of oil or when grandmas will surf the Web with mobile phones, says Vinod Khosla.

The high-profile investor, who raised over $1 billion for a green-technology fund last year, argued here Wednesday that technology change in energy will happen faster than most expect because energy has now become a focus on technical innovation.

Khosla spoke at the ARPA-E Summit, a conference dedicated to showcasing breakthrough clean-energy technologies , where he challenged attendees to think big.

Venture capitalist Vinod Khosla at ARPA-E Summit. Martin LaMonica/CNET

As an example of missed forecasts, he cited McKinsey's 1980 prediction that there would be fewer than 1 million mobile phones sold in 2000 when the actual number was over 100 million. Handicapping the price of oil, too, is often off-target because experts' assumptions are wrong.

"It's technology change that people miss and fail to forecast and I see that happening all over again in energy," he said. "A better way to forecast the future is to invent it because it's been proven that extrapolating the past doesn't work."

Not surprisingly, Khosla cited examples of companies that he is funding to demonstrate how technology can tackle the primary challenges in energy, which he said are coal, oil, materials, and efficiency.

Calera, for example, is a company that uses carbon dioxide as a feedstock to make building materials, such as concrete. Another is Kior, which is making gasoline and diesel replacements from wood.

His investment philosophy is to seek companies that can create technologies that compete with fossil fuels on price and can be scaled. Making biodiesel from restaurant grease, for example, is not "relevant scale" and selling hybrids to consumers in India and China is unlikely to happen because the price tag is so much higher than that on gasoline cars, he said.

Regarding policy, Khosla said the transformation of the energy industry will happen even if the U.S. does not put a price on carbon as a way of lowering total emissions. "A carbon price will definitely help...The right policies will definitely accelerate innovation and likely make the U.S. more competitive," he said.

More important is that energy has become a focus for innovation, particularly among young people and start-up companies.

"I think we're doing all the right things," he said. "The most important thing we did is make energy an interesting area for Ph.D. students over the last five years."

 

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