Immediate Opportunities
What are the trends and where are the opportunities in the biomass industry? I see three stages - immediate, short-term and long-term.
Immediate opportunities revolve around the organic fractions of municipal solid waste (MSW). Waste supply chains are compelling, and they exist. In the U.S., there are at least 140 million tons of organic MSW produced annually, not including agricultural residues, manure or primary biosolids. These supply chains are built.
The incumbent technology for the organic fraction in the waste sector is a landfill. A landfill is quite an intriguing technology because it uses the earth as its reactor to process organic fractions - likely the cheapest reactor one can use. However, there must be better and faster ways of extracting energy or compost value from organics.
Many factors could drive change in the waste sector, but the major transformation should be the relative value of carbon (and carbon credits) and renewable energy versus tipping fees. These macro trends combined with some government incentives, perhaps a landfill diversion directive like that enacted in Europe, could lead to an era of deployment of many organics recycling and waste to energy technologies that could transform a major share of the waste management market. The waste industry should be open to these changes because they could double the revenues of the industry when the energy and compost value is added to the tipping fees that drive revenues today.
What is perhaps most intriguing about these technology assets is that while they will start by processing organic wastes, it is clear that they could easily switch or expand capacity to processing highly productive energy crops in 5 to 10 years, once others have built supply chains for them. These supply chains may come from emerging sectors, such as cellulosic ethanol. What has happened in Europe - due to both government incentives and rising energy costs - illustrates the point. While this switch or expansion does depend on the technology used, it seems reasonable to presume that energy conversion processes that use organic waste today could conceivably use energy crops in the future.
Short Term Opportunities
I tell my partners at KPCB that biomass is fourth generation solar energy. Capturing solar energy in the form of biomass and using that resource in a distributed way to make energy should be cheaper than solar for many years to come. Even today, after the billions that have been spent, intermittent and unsubsidized solar power costs at least 25 to 30 cents/kilowatt hour. Yet I am aware of distributed biomass gasification systems that can utilize wood chips and make energy for a levelized cost, unsubsidized, of 12 to 13 cents/kilowatt hour with 90 percent availability. While you can't put biomass gasifiers on your roof, you can certainly put them at industrial sites, landfills, compost plants and other locations. This is a technology that is in Kleiner Perkins investment portfolio.
