Clean Energy Investors Don’t Want Technology Risk

In the venture capital community, one hears a great deal about “technology risk.”  In my most recent meeting with Ray Lane, Managing Partner at Kleiner Perkins a few months ago, he told me: “We want all technology risk removed before we put more than a few million dollars into a deal.” 

OK, but what exactly does that mean?  To illustrate the point, let me tell you about a company I came across at the Energy Storage show in San Diego earlier in the week, that appears to me to be the poster child for technology risk. Check out “Gravity Power.”

The website does a far better job than the description I’m about to provide, but imagine a hole 30 meters in diameter and 2000 meters deep, filled with water, in which a huge stack of pancake-shaped concrete disks rises and falls. The concrete, which is heavier than the water by a factor of 4 to 1, is driven upwards by energy coming in beneath it pushing it up, or falls, releasing that stored energy. In the energy generation mode, as the concrete falls, it pushes water up through a return pipe connected to the main hole. In the charging mode, water is pushed down the pipe, forcing the concrete to rise.

Is this theoretically possible? Of course. But has anything like this ever been built?  Sort of.  Anything of this scale?  No, and the first deployment will cost $600 million. Now that’s what I call risk.

And yes, most of the risk is associated with technology. What if you can’t fabricate a huge concrete pancake with seals sufficient to do the job? What about earthquakes — and hundreds of other issues that I can’t even imagine?

But let’s acknowledge that there are other forms of risk here as well. What happens if a better form of energy storage comes into play in the years that it takes you to get your first implementation in place?  What happens if energy storage is taken over by vehicle-to-grid connected EVs — or somehow doesn’t turn out to be the big deal that most people expect? 

I can find you people who will risk $6 million on an idea like this that has the potential to impact the world of energy storage as we currently conceive it.  But $600 million?  That’s some real risk.