Breakthrough Energy Ventures Unveils Its 5-Part Investment Strategy
Details on the investment focus and talent driving Bill Gates’ big energy tech fund.
Two years after it was first unveiled, Breakthrough Energy Ventures — a billion dollar fund to finance breakthroughs in energy technology — is finally pulling back curtain a little bit.
Speaking this week at the One Planet Summit in Paris, Bill Gates, the defacto leader of the group, detailed five areas that the team will look to invest in. The sectors are some of the most difficult, and most important, in energy, including energystorage liquid fuels, off-grid microgrids, low carbon building materials and geothermal.
We’ve also been able to glean a few more details on the BEV leadership team. While the website lists a multiple high-profile clean tech experts, a source close to the group specified that the fund is being led by former Duke Professor and ARPA-E Program Director Eric Toone on the science side, and entrepreneur and investor Carmichael Roberts on the business side. Rodi Guidero, who works as part of Gates’ private office, will serve as executive director and primary liason to the board.
This new information provides the first glimpse at just how this major experimental effort, backed by 21 high profile investors, will look to conduct investments and try to find breakthrough energy technologies.
Investors in the fund include Gates, Silion Valley investors Vinod Khosla and John Doerr, as well as some big tech heavyweights like Alibaba founder Jack Ma, Amazon founder Jeff Bezos, and SoftBank founder Masayoshi Son.
The five areas that the team will focus on probably won’t surprise anyone that’s familiar with the Valley’s tumultous clean tech history. The sectors are some that Gates and Khosla — both board members — have already invested considerable time and money in.
“Incredibly cheap grid-scale storage”
The first topic that Breakthrough plans to focus on is the one on virtually everyone’s minds in the energy business: energy storage. The company says on its website that it wants to invest in “incredibly cheap grid-scale storage with a very long calendar life.”
Gates has long been interested in energy storage and has personally invested in a handful of next-gen battery startups like Aquion, which declared bankruptcy, and Ambri. He’s even backed some more unusual energy storage ideas like Energy Cache, which was described as offering “buckets of gravel on a ski lift” and is no longer in business.
Khosla has also funded a variety of battery companies like Seeo and Sakti3, which were both acquired, as well as energy storage startup LightSail Energy.
As lithium-ion batteries get cheaper, funding new chemistries to store energy has been getting harder. Many startups have gone bankrupt attempting to scale up new forms of batteries.
BEV believes lithium ion batteries may be getting cheap enough to “meet the demand for extra energy at peak times,” but that other forms of energy storage will be needed to turn intermittent energy into baseload power.
These alternative forms of energy storage will be incredibly difficult to fund and grow successfully. The companies that have successfully built businesses off of energy storage these days are mostly piggy-backing low cost lithium ion batteries, like Tesla, Stem and AES Energy Storage.
BEV leaders say they’re looking at storing energy as heat, compression and through next-gen batteries, which means the team has their work cut out for them.
Inspired by solar fuels
The second topic that the firm is looking to invest in is another one near and dear to the heart of Khosla and Gates: liquid fuels. Khosla, in particular, has invested millions into biofuels (with few successes) and Gates has sometimes invested in companies alongside him.
Biofuels is another extremely challenging sector. The cost of liquid fuels needs to be as cheap, or cheaper, than gasoline to compete at scale. However, most companies have found that the cost of collecting biomass and processing it into a fuel is far more expensive than the cost to produce gasoline.
BEV isn’t just looking at projects that convert biomass into fuels, but also at other alternative ways to make liquid fuels like capturing carbon from the air and converting it using the sun.
Bill Gates has been particularly interested in this approach, which he and others call “solar fuels.” Caltech Chemistry Professor Nathan Lewis has been working on solar fuels in his lab and Gates recently visited the lab and called it “inspiring.”
On BEV’s website the group says: “Electric cars hold great promise, but there aren’t enough companies making them and it takes too long to extract lithium to manufacture the batteries at the necessary scale. It is incredibly difficult to electrify air travel and long-haul shipping across oceans. The future of transportation will almost certainly require liquid fuel.”
The electric vehicle industry and Elon Musk would likely disagree. Musk often says that all transportation, other than rocket ships, will eventually go electric.
Developing global microgrids
The third topic that BEV intends to tackle is one that’s a break from the Gates/Khosla cleantech investing strategy, although its one that the Bill & Melinda Gates Foundation is likely interested in.
BEV wants to invest in projects that build microgrids and mini-grids across the developing world like rural Africa and India. Such microgrids would presumably require low cost solar and low cost energy storage, but could also rely on cellular networks.
