Like in today’s U.S. electoral politics, energy is an overwhelmingly partisan issue. On one end are the oil and gas types such as Dr. Matthias Bichsel (Shell), who believe that conventional energy can supply the world with all its energy supply now and in the future. On the other end are the clean energy types such as Bill McKibben (350.org), who believe that we must move entirely to renewable energy in order to avoid the worst impacts of global climate change. While both sides may be right, the former will break the planet and energy security and the latter will break the economy – neither will provide a secure, healthy and prosperous world for future generations.

The answer is clearly somewhere in between, and that’s what I appreciated most about the open-minded dialogue I found at the recent Harvard Business School’s Energy & Environment Symposium, where I attended presentations about cleantech, distributed generation, unconventional fuels and global energy policy. All of these areas and more, according to Matthew Nordan of Venrock, “are bursting with opportunity.” There are some big names below – from the CEO of A123 Systems to a high-level policymaker at the World Bank – read past the break for the transcript of the day’s presentations and join the Green Light Distrikt Facebook group for updates on new events, blog posts and more.

Opening Keynote with McKinsey

• Tommy Iglesby, Principal, North American Natural Gas Practice and Global Unconventional Oil & Gas Line, McKinsey & Company
• The solution to the energy crisis is both to increase resource productivity of supply and find new supply.
• The break-even point of unconventionals means crude is inevitably going to increase in price.
• Regardless of supply growth, economic growth and policy decisions, demand will outpace supply in the long-term.
• There is hope for disruptive technologies in mature industries as can be seen from shale gas, wehere we have found 40-50 years of gas in the last three years. It’s the same story with tight oil. Other markets around the world are following the lead of the U.S. and starting to explore the application of these technologies.
• This is not that different from industry transformation in biotech, telecom, software and semiconductors, except that we’re disrupting the base economy.

Cleantech 2.0

• How is the world of cleantech investing different now than it was 5 years ago? What have we learned from the successes and failures of the last five years? Where has cleantech investing succeeded? Are some industries that investors thought were ideal for VC five years ago been proven unsuccessful? Has the focus of Cleantech investing shifted to the demand-side and away from supply-side? Do we think these trends will continue?
• Steve Vassallo, General Partner, Foundation Capital
• Bilal Zuberi, Principal, General Catalyst Partners
• Jim Matheson, General Partner, Flagship Ventures
• Matthew Nordan, Vice President, Venrock
• Introductions:
• S: We didn’t invest in solar because it’s highly competitive and capital intensive. There are 15 states now where it’s economic to do solar, representing 20 million houses, a trillion dollar opportunity. The poor upstream solar business has benefited consumers because per kw price has come down dramatically. The lesson for those interested in a clean tech career: it’s not going to be easy in the next few years so you have to be committed to stick with it.
• B: Downstream solar will also have challenges because it’s an increasingly competitive space. I’m concerned about biofuels in the next few years because there’s a risk that companies may not successfully scale up before they show results. But I’m super excited about shale gas and also excited about LED lighting and the lighting sector globally.
• M: There will be less investment in energy storage in the coming years because now we have much more room in the energy space. I think there will be a rush into shale gas investments, some of which are not going to be profitable. I can’t think of a single area that is not bursting with opportunity.
• J: There will be ups and down over next ten years. Solar and biofuels are in a bubble. All commodities industries have bubbles and have opportunities afterwards.
• What is the impact of cheap gas on clean tech?
• J: Cheap gas is both a plus and a minus. You have to build a portfolio to hedge risk.
• B: It has changed the conversation from innovation to a commodities-based conversation.
• S: If you’re an entrepreneur selling into a commodities market you’re going to get yourself killed because you have no control over the markets.
• Are there opportunities in energy conservation?
• S: Because energy transmission is inefficient, energy saved on demand has an outsized impact on supply. You also doesn’t get hit as much when commodities prices come down. There are huge opportunities to look at demand side in electricity and utility industry.
• M: I disagree. Commodity markets do impact demand, which have seen with the challenges at Enernoc.
• Where will solar development be?
• B: Everywhere. Residential, commercial and industrial.
• What are the trends in venture capital?
• M: Solar isn’t that profitable so moving we’re investments into other industries.
• Moderator: There’s a significant learning curve, which can be seen in biotech, which is why people made bad bets early in clean tech. I think this will improve in clean tech over time.
• S:  There is a risk that clean tech investments become victim of short-term approaches of limited partners.
• How is the lack of cap-and-trade influencing the investment landscape?
• J: Most believe there will not be a law in the next 5-10 years. Many firms made bets that there would be one in effect in 2009. The biggest barrier to investment has been regulatory uncertainty regardless of your opinion of the regulations themself. The big U.S. economic concern is the ability to compete in the future given the lack of regulatory support.
• B: Global business is becoming the norm. There is a lot of innovation going on in China, similar talents to what you would expect to find at MIT.
• M: Don’t invest in anything where profitability depends on regulation. The level of trust that financiers have in policymakers is near zero, which is very different from trust in regulators in Asia.
• What is your perspective on grid-scale energy storage?
• M: Grid-scale energy storage is competing with natural gas peaking facilities and global hydro facilities. It’s hard to compete with these cheap technologies. This prevents a number of solutions. I think there is a lot of opportunity on the demand side.
• What is the potential of concentrated solar power (CSP) grid storage?
• B: We’re starting to see most plans in Spain have storage for solar built in, and the economics are much better today than they used to be. I’m starting to see this in India, too. This is only practical when you don’t have heat, because it’s inefficient to convert to electricity and then to heat.
• What trends are you seeing in entrepreneurs approaching you for support?
• S: It’s down to people who have conviction about clean tech. My belief is that there are 5-10 great clean tech companies starting every year, so VCs want to be in 1-2 of these companies. I’m optmistic but cautious on how choose to move forward on career paths.
• Is clean tech more geographically disperse than in IT?
• B: Yes, clean tech is global. People aren’t concerned with finding talent in areas that aren’t Boston or Silicon Valley, as the IT industry is. Another trend is that I no longer see MBA students sitting around coming up with ideas but sitting with experienced advisors to develop ideas before pitching to money. This is a good trend.
• M: Geographical dispersion is a real problem in the water industry. Ideally companies should be near where can both recruit the best minds and convert customers. If can’t have both, decide which is more pivotal and choose that.
• J: Success is mostly about context. We value intellect and creativity. What’s most encouraging is that entrepreneurs are partnering with big companies to have a bigger impact.
• Moderator: The lay of the land will get clearer because governments will support clean tech less as they cut budget deficits. I suggest looking up where we are on Gartner Hype Cycle. Since the world isn’t going to work without fundamental changes to resource use, this offers massive opportunity.

Distributed Generation

• A discussion on the potential future roles of distributed and centralized generation technologies in developed energy markets. Specifically, we will examine on the challenges and opportunities faced by various players across the energy value chain, and who may stand to benefit from the transition to a world where distributed energy plays a bigger role.
• Lawrence Gelbien, Vice President of Engineering, NSTAR Electric & Gas Corporation
• David Vieau, President and CEO, A123 Systems
• Paul Grana, Director of Marketing, Tigo Energy
• Asim Hussain, Director of Product Marketing, Bloom Energy
• Introductions:
• P: The costs of distributed generation are coming down faster than most people realize. Solyndra will not be the last company is go under. The solar value chain is a distributed value chain, meaning that there is innovation at each phase. No one is making a lot of money right now in solar. With a distributed value chain the profit center moves around as capacity moves. Geography plays a bigger role than in other industries. Government supports, and the constant changes in them, is bad for the industry. It’s becoming increasingly profitable to manufacture locally. Grid parity is very complex, but we’re getting close to it. But grid parity isn’t going to save the industry. The bottleneck is permitting.
• A: Bloom Energy was Kleiner Perkins’ first clean tech investment. We deploy the product behind the meter in commercial and utility systems. Barriers to new products are safety, affordability, ease, noise level and reliability and our product addresses these problems. The longest process for our product is permitting. Because you can lock in low natural gas for 10-15 years but can’t do it for more than 1-2 years for electricity, we took advantage of this to provide consistent energy costs for clients. The product provides both the primary and backup power. Our biggest challenge is inconsistent policies across states.
• L: Our biggest challenge is large-scale solar in areas that don’t have electrical wiring to the transmission system. Another challenge is surges and sags throughout the day with solar. The opportunities are in technological advances to improve storage and address surge issue and collaboration between projects.
• D: Our products can charge batteries quicker, last longer and store more energy. The main barrier now is price. The Department of Energy (DOE) says price parity point for electric vehicles (EVs) is $250/kwh; we will be at $350-400/kwh next year. There is technology that will get us to price parity in the next 8-10 years. EV penetration will be low over the next few years, with plug-in and gas hybrids with higher share. The vehicle market is critical to getting to scale and price points. What about for grid storage? A123 tested this successfully in a 16MW Chilean project recently. There are applications in pinch points, and the increases in this application of storage will make products more cost effective and open up new application opportunities. There will also be opportunities to partner to address grid storage problem.
• How will the U.S. smart grid effort evolve?
• L: NSTAR did get a grant to support several projects: real-time metering, grid self-healing and sensors to understand underground energy flows. I think the smart grid is as important as solar and wind and is going to play an increased role in the U.S. energy system.
• What are the regulatory barriers to a smart grid?
• D: Incentives. The smart grid offers the benefit that it can respond immediately whereas natural gas takes 15-20 minutes to respond. FERC came out with a decision that incentivized systems such as grid-scale energy storage that can respond to energy shortages immediately.
• P: Consistent state regulations. Utilities that have a high percentage of natural gas could also be places with strong solar support because of their ability to deliver peak load, if state regulations were consistent.
• A: Compensation for stabilizing the grid. Bloom’s technology can help stabilize the grid because it’s a base-load system. This helps utilities, but there’s no compensation for helping utilities. The challenge is how to monetize this similar to how demand response and solar operates.
• How take into account variability of rare earth material costs?
• D: Rare earths are not a component of storage. There are concerns from customers because of rare earths in motors. I don’t see this as a primary constraint on the smart grid.
• What shifts have there been in your business focus?
• A: We make decisions in order to drive adoption, not because of core capacity.
• What is the role of the smart grid to solve renewables’ intermittency problem?
• D: The smart grid will make renewables viable.  It’s profitable to use older lithium ion car batteries in storage capacity as a second use after in EVs, which brings down the cost.
• What is your ability to solve the lack of cooperation between grid operators?
• L: The real issue is who pays to improve infrastructure if it benefits more than one operator.
• What technologies will disrupt the industry?
• D: Lithium ion used with fuel cells with make storage cheaper. Sodium and lithium air are also moving forward. Their view is to bring on the solutions, and the industry will find ways to utilize them. I think we will see these technologies in a 5-15 year time frame. I do see some technology coming on sooner in terms of fast charge. If storage batteries could charge faster, there could be a smaller battery, which would also bring down costs. Also, fast wireless charging, which has already been developed, could advance broad adoption of electric vehicles.
• A: I see trends coming together to bring down costs and improve adoption. I’m not sure what this will look like, whether it will be micro or centralized. I believe it will happen in 10-15 years. I also see changes in the way electricity is consumed. Many AC-DC conversions are inefficient.
• P: The solar value chain will continue to squeeze costs to compete with new technologies on the generation side. I see broader adoption of sensors on solar modules.
• Should we look for careers in distributed generation?
• All: Yes!

Unconventional Conventionals

• Experts with a diverse investment horizon will share their thoughts and perspectives on the supply of conventional hydrocarbons. They will address questions regarding technology and its impact on the global supply and demand equilibrium. Additionally, we will hear how investors are planning for these future shifts.
• Dr. Matthias Bichsel, Member of the Executive Committee, Regional Director of Russia, Ukraine, Central Asia and India and Director of Projects and Technology, Royal Dutch Shell plc.
• Osmar Abib, Managing Director, Global Head of Oil and Gas, Credit Suisse
• David Hayes, Managing Director, Natural Gas Partners
• Dr. Nicola De Blasio, Vice President, ENI
• Introductions:
• M: Even is renewables grow in double digits, due to increased global demand for energy, fossil fuels will need to account for 70% of energy demand. Offsetting nuclear is going to add a huge gap in the energy mix. Gas is not a bridge fuel but a destination fuel. It’s affordable, which is critical since global growth is slowing and what people want is cheap, reliable energy.
• O: There have been major technological advances in oil and gas as well as huge profit opportunities in renewables because of rapid growth.
• N: Technology is the only lever that the oil and gas industry has to get access to resources. This is the motivation between technological leaps lately in the industry.
• D: Advances happen with both majors and independents. The development is on the margin, such as bringing down drilling times and allowing longer laterals to be drilled. What’s unique to Canada and U.S. is that natural resources are privatized which allows for experimentation.
• Is there enough conventional energy to support global growth?
• M: Yes. But a bigger problem is the lack of young petroleum engineers in the U.S., while there are a huge number of young engineers coming out of Asian countries.
• O: However, young engineers don’t have enough experience and need time to gain it. The problem with nationalized oil companies is that without profit opportunities companies won’t take risks.
• M: I disagree. You underestimate the willingness of people such as Asian engineers to take opportunities from U.S. engineers.
• What technologies may be considered conventional in the near term due to technological advances?
• D: Shale oil has been around for nearly a century. Technological advances have helped access tight oil and oil sands.  The focus has been on increasing recovery and reducing costs. Nothing’s new; it’s just much more profitable.
• M: What’s happening with fracking is that is uses too much water. There is significant opportunity for technological advances with fracking to reduce water consumption. We’re also transferring these technologies to Chinese oil company PetroChina. I see carbon capture and storage (CCS) as something the world has to do if we’re serious about greenhouse gas emissions. We need government clarity about the price and storage of carbon dioxide. I think there will need to be incentives to jump-start CCS.
• What is the perspective of unconventionals in the banking world?
• O: Investors are focused on new technologies because there are large returns and first mover potential. Companies are making portfolios of bets because they don’t know where the technological wins are going to be.
• What are the trends in the gas market?
• M: I do not believe we will see a global gas market in the next decade. The regional markets are the U.S., Far East and Europe.
• What is the cost of conversion to LNG vehicles?
• Guest: Infrastructure is the major barrier to LNG vehicles. There are fewer regulatory barriers than in the past so conversion costs are dropping. The most I’ve ever paid is $1.40/gallon.
• How hedged are you against changes in oil and gas subsidies?
• M: We can adjust investment quickly in natural resource plays to adjust to subsidy changes.
• What infrastructure is needed for new fuels?
• N: The advantage is that shale gas supply is close to demand.
• D: Unconventionals have mostly discovered in places where pipeline already existed.
• Any final thoughts?
• O: People should care more about the importance of energy to our everyday lives.
• M: It’s an exciting industry with a lot of growth potential.
• D: There are ways to bring an entrepreneurial spirit to energy industry and make a lot of money doing so.

Global Energy Policy

• A discussion on the current state and likely evolution of global energy policy covering: (1) The role of policy for the industry (2) how different regions and countries are drafting policy in light of their economic objectives, resource endowments, security needs and perceptions of climate change (3) What’s working, what’s not and how will this myriad of strategies change the current landscape; (4) What still needs to be done – required action on a national and supranational level.
• Manuel Pinho, Visiting Professor, School of International Public Affairs, Columbia University
• S. Vijay Iyer, Director of Sustainable Energy Dept, World Bank
• Guilluame Aubert, Managing Director & Partner, Boston Consulting Group
• Introductions:
• M: The management of energy and the environment is one of most important changes in this century. 14 of the largest 15 oil companies are nationalized. There is no ministry of energy in China. I’m not optimistic about CO2 tax or cap-and-trade anytime soon.
• G: The variables are a secure supply, environmental target, costs to rate payers, overall competitiveness, jobs and public funding. For most of the country and the world price is the most important thing. In order to meet 2050 goals, the cost would be a trillion dollars in today’s dollars. It would pay back up to 3 trillion but who’s willing to put this kind of cash up front? Natural gas doesn’t solve the issue of reducing to 80%, though it could put CCS to solve CO2 emissions though this is very expensive. Daniel Yergin, author of “The Prize” and more recently of “The Quest,” said that people should be more rational about energy. The problem is that it’s very difficult to pass on CCS costs to utility payers because it benefits others. The U.S. has to decide, is preventing climate change worth a trillion dollars?
• S: Developing countries care about getting power, not about carbon emissions. The challenge becomes how do you balance access and climate change. This is the issue for energy policy outside the U.S. and Europe. The UN Secretary General proposed 2030 goals that are in lieu of a climate deal since Kyoto expires next year. Low-carbon energy plans are driving innovation more than climate science.

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About Aaron Desatnik

Aaron is a research analyst at Iridian Asset Management, an equity management firm in the New York City area. Part of his work is to investigate mid- and large-cap energy efficiency and renewable energy companies to evaluate their investment potential. Previously Aaron was the Director of Marketing at the Sustainable Performance Institute in Boston, MA. He is also active in the community and has organized campaigns to increase awareness about the benefits of purchasing local food in the Greater Boston Jewish community as well as to develop a growth strategy for the transportation advocacy group LivableStreets Alliance. Ping Aaron if you want to talk about strategy, investing, energy or cycling. hello@aarondesatnik.com @aarondesatnik www.aarondesatnik.com

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