Is the Smart Grid a Good Investment? Vinod Khosla Has His Doubts
Speaking yesterday at VentureBeat’s GreenBeat conference, pioneer cleantech investor Vinod Khosla said he didn’t believe smart grid technologies were a good investment. He concedes that some of the technology will foster big returns but they will be limited to developers of energy savings devices. Otherwise, Khosla says, he sees a “lot of fluff, a lot of ambiguity, not a lot of reality… in today’s smart grid discussions.”
Khosla’s investment fund, Khosla Ventures has so far not invested in any smart grid projects, reports GreenTechMedia. The fund mostly focuses on backing cutting edge biofuel startups. It recently closed on two new funds with $1 billion in investment capital, which will support current portfolio companies and invest in new opportunities.
There have been a few successful smart grid companies, including Silver Spring Networks, backed by Kleiner Perkins Caufield & Byers, of which Khosla is a team member. Silver Spring is now involved in some of the leading — and government funded — smart grid test projects going on in Chicago and Miami.
On Silver Spring, Khosla says:
Just because one smart grid company is successful doesn’t create a wave. They’ve been working at it for a long time. Hiding behind that wave is the wrong thing to do. Trying to do what they’ve done slightly better is not the right way to build a company.
Khosla says driving the development of smart grid technology are technological problems, rather than an economic rationale.
One could argue that at the root of any great money making company is an idea or solution to an ongoing inefficiency. Solving that inefficiency creates the economic rationale that Khosla says is lacking in smart grid. Henry Ford launched the modern automobile business by streamlining an inefficient manufacturing process. He spotted a problem and turned it into a business.
For Khosla and a growing number of clean energy investors there’s a growing realization that, as it stands, green energy’s bottom line largely depends on strong, generous and consistent government backing, whether it be for smart grid technology, wind and solar generation or energy storage batteries.
