GreatPoint Ventures VC and Engineer Outlines “Energy’s Triple Crown”

Aaron Mandell, venture capitalist, engineer, and entrepreneur, delineated for an audience of cleantech connoisseurs the three cleantech sectors that he says deserve their special attention.

In the ever-shifting ranking of the most promising areas of cleantech, three sectors deserve spots right at the top, says venture capitalist and engineer Aaron Mandell: 1) water, 2) storage, and 3) baseload power.

Mandell has dubbed these industries “energy’s triple crown,” and made his case for the designation in a keynote presentation last week to an audience of about 75 who had gathered at the bi-monthly NYC Cleantech Opportunities forum, hosted by law firm Hodgson Russ in Midtown Manhattan.

Mandell is one of the founding partners of GreatPoint Ventures, a VC firm focused on early-stage companies in cleantech, as well as biotech, energy, telecommunications, and semiconductors. He also co-founded Oasys Water, which offers osmosis desalination technology, and Altarock Energy, which is focused on geothermal energy, and has a technical background in environmental engineering.

“All three of these areas are huge emerging opportunities for ambitious entrepreneurs,” he said.

Water

Specifically, Mandell said, the area to watch in this space is advanced desalination using solar energy. Electric power is the largest consumer of water outside of agriculture, he added, and to slow the draw on dwindling freshwater sources, desalination needs to become cost-competitive so that it can be leveraged for energy generation.

According to Mandell:

  • The worldwide market for solar desalination is potentially vast. In Saudi Arabia alone, desalination costs $16.2 billion a year in lost oil export revenues. At 5 percent market share, solar desalination would generate $800 million a year in new oil revenues for the country.
  • Incorporating solar technology into the desalination process (with technology like compact linear fresnel collectors) will drive down the cost of desalination as the market grows, since—unlike reverse osmosis desalination—solar technology isn’t subject to the vagaries of rising fuel and electricity costs. With no fuel consumption required, and with the rapid decline in equipment costs that should accompany the growth of the market, solar desalination’s cost will decrease as the market grows.
  • Solar desalination does not require infrastructure, and can be deployed anywhere.

 

Storage

“Storing energy is the only way to integrate alternative power generation,” Mandell told the audience. To grow the alt-energy market, storage must come at low cost and on a large scale, he continued.

  • Batteries are likely not going to provide the breakthrough storage needs at the utility level that will allow alternative energy to compete with other forms of energy, he said; he pointed to an aqueous sodium ion battery and noted that it costs 10 times more than it must to compete with natural gas.
  • Corporate partnerships are ripe at the moment, since the storage market today is small, but the need is very large. Southern California Edison currently needs to contract for 50 MW of storage, Mandell said.
  • California as a whole has an immediate need for more than 1.3 GW of storage, which represents a $1 billion to $3 billion investment opportunity, he said.

 

Baseload Power

To meet the world’s baseload power needs, enhanced geothermal power (EGS) will need to come to the fore to replace coal and nuclear power, Mandell said. The market has been hindered by the fact that geothermal power comes with high exploration risk, he said, but this presents an opportunity for innovators in the space. Mandell is most excited by what he calls the “low-hanging fruit” in geothermal, represented by the more than 1.5 GW of “stranded” geothermal power in the U.S. left behind in under-explored wells.

New technology allows engineers to access this “stranded” geothermal power, Mandell says, by entering existing wells and using thermo-degrading zonal isolation material (TZIM) to open more fractures and derive more power. Mandell likens this process to plucking low-hanging fruit because no drill rig is needed and no chemicals are added to the water, making for relatively low overhead and a significant return.

  • Drilling a new geothermal well costs $3 million to $12 million; stimulating an existing one costs $500,000 to $1.5 million, Mandell said.
  • Mandell added that returns yielded by investing in geothermal well stimulation could reach 49 percent after five years, 54 percent after 10, and 55 percent after 20.

 

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