NEW ENERGY INNOVATION EMERGES FROM ISRAELI CHAOS

CA investors turn to Israel’s clean tech sector
Karin Kloosterman, May 24, 2009 (Israel 21c)
and
Israel's Clean Technology Pioneers; They're pros at getting the most out of limited natural resources. The world is taking notice—especially U.S. venture capitalists
Roben Farzad, May 7, 2009 (BusinessWeek)

SUMMARY
Right after the Pope and his Catholic pilgrim followers left Israel, a new group of seekers arrived. The California Israel Chamber of Commerce (CICC) brought 40 California venture capitalists (VCs), representing some of the biggest and richest players (including Kleiner Perkins Caufield & Byers, Sequoia Capital, Khosla Ventures, Good Energies, Mohr Davidow Ventures, as well as the Google CEO, the Sempra Generation CEO and the Mayor of Phoenix, AZ), searching Israel for New Energy opportunities.

They visited Yavne, a hazy industrial corridor in central Israel, where geothermal power plant developer Ormat Technologies has built a $2 billion multinational corporation.

They visited a site in the Negev Desert, where entrepreneur Amit Ziv recycles runoff water from a nearby spa to raise sea bass and a white fish delicacy called barramundi and channels the water to grow olives that he exports to Spain.

The VCs also met with big names like Metrolight, an electricity ballast company, and Better Place, the electric vehicle innovator, little known breakthrough companies like GreenRoad Technologies (energy efficiency), TaKaDu and AquaPure (water tech innovators) and HelioFocus and ZenithSolar (solar energy) as well as President Shimon Peres, one of Israel's biggest New Energy advocates.

Israel is a tiny nation of 7 million with a lot of desert, a dwindling freshwater supply, few natural resources and neighbors on all sides inclined to see it fail and disappear. Some say it has a “siege mentality.” Whatever the mentality, it drives a quest to get ever more from what little there is.

Israel recycles 70% of its wastewater, 3 times more than the 2nd-most water conserving nation (Spain). Drip irrigation innovator Netafim exports its technology worldwide. And solar power plant pioneer BrightSource Industries is arguably the world leader in utility scale solar energy innovation.

The solar power tower at Dimona. (click to enlarge)

Arnold J. Goldman, chairman of BrightSource, founded Lexitron, the first word-processing software maker in the U.S., and sold it in 1977. He formed Luz International and built 9 breakthrough solar power plants in California but was driven out business in 1991 by low natural gas prices.

BrightSource Industries, launched in 2004, is Goldman's comeback. BrightSource has raised more than $160 million from VCs (including VantagePoint Venture Partners, Google, Morgan Stanley and JP Morgan Chase) for its solar power plant technology. Its test center in Dimona has a semicircular array of 1,641 mechanized coffee-table-size mirrors that track the Negev Desert sun and reflect it onto the boiler at the top of a solar power tower where liquid is superheated and flows to boil water into steam that turns turbines. The steam is recaptured and recycled to miminimize the use of water.

Looking down on the mirrors from the tower. (click to enlarge)

David Faiman, director of Ben-Gurion University's National Solar Energy Center, pioneered solar power plant technology with Goldman and has survived as one of the industry's sages. He wants Israel to put more resources into research and development and to find the technological breakthroughs that will bring down the cost of solar energy-generated electricity.

Luz is reborn in BrightSource. (click to enlarge)

COMMENTARY
Israeli innovation is not government driven. It emerges from Israel's tumultuous, contentious, contradiction-riddled society and the urgency of meeting the needs of a nation under the gun for more than half a century and a people outcast for 2 millenia.

Example: Israel’s success in drip irrigation technology is the product of how precious water is in the desert.

Example: Israel’s lack of fossil fuel resources created the opportunity for and the urgency of exploiting the sun.

With people and a bus in the picture, the scale becomes apparent. (click to enlarge)

The California Israel Chamber of Commerce (CICC) calls Israel a “petri dish” for New Energy development. The desperate and exuberant chaos of the society and the obsession of the government with national security issues somehow leaves open the opportunity for New Energy entrepreneurs to get things done fast.

BrightSource's Goldman says his company's technology will reshape some countries' population centers. Deserts in California and Nevada, Saharan Africa, Saudi Arabia, and Australia can become energy centers of immense wealth with ever-renewing power sources.

Demonstrating the potential, BrightSource signed a deal with California utility giant Pacific Gas & Electric (PG&E) for solar power plant installations totalling 900 megawatts in the Mojave Desert, starting in 2011. It then signed an even bigger deal with Southern California Edison (SCE), another huge California utility, for 1300 more megawatts of solar power plant installations. It was the biggest solar-power purchase agreement anywhere, ever.

Validating Goldman's point that solar power plant technology can reshape geography, the contracted California solar power plants will nurture the essentially resourceless megapopulation of Southern California that grew up on now exhausted oil wealth and stolen water.

Goldman says BrightSource could fill the U.S. Southwest with enough solar power plants to meet 2/3 U.S. electricity demand if it could get the contracts and the necessary new transmission.

David Faiman, the solar power plant pioneer, believes it is the intense sun and the chaos that have made Israel the world's leader. It was natural for a country without fossil fuel under a burning sun to move on solar energy. That it has yet to achieve its full potential, however, is attributable to the same chaos and "seige mentality." Political disarray, he argues, doesn't lead to effective long-term planning.

Still, there are a lot of countries in the immediate vicinity that have the same burning sun and a lot less innovation.

click to enlarge

QUOTES
- President Barack Obama: … interestingly enough, you're seeing the Saudis make significant investments both in their own country and outside of their country in clean energy…I think they recognize that…we have a finite supply of oil…If everybody is dependent solely on oil as opposed to energy sources like wind and solar, if we are not able to figure out ways to sequester carbon and that would allow us to use coal in a non-polluting way, if we don't diversify our energy sources, then all of us are going to be in trouble…
- Jacques Benkoski, VC, Venture Partners: "The world is now realizing it has to deal with things that Israel has had to tackle for 50 years...Doing more with less is becoming the standard."
- Glen I.A. Schwaber, founding partner, Israel Cleantech Ventures: "The cleantech economy here hums independently, on market forces and innovation, despite the political situation..."
- Waiter, Tel Aviv cafe: "The government has been promising more freshwater since I was a kid...But they will spend it on the next war instead. We'll all die of thirst first."

click to enlarge

- Arnold J. Goldman, chairman, BrightSource Energy: "All that light, all that heat...is practically begging you to use it."
- Jack Keenan, COO, PG&E: "We see solar making a big impact in the Southwest and California...Partnering with BrightSource will enable us to increase the growing amount of renewable energy demanded by our 15 million customers."
- Jonathan Shapira, corporate attorney/New Energy blogger: "Israel has such a geopolitical vested interest to steer this innovation...Innovating around scarcity is increasingly the world's story."
- Shuly Galili, executive director, California Israeli Chamber of Commerce: "Investors are excited to make investments because valuations are down, and there is less noise in the market. We tend to see good entrepreneurs at these times… Both the Obama administration and governments worldwide are pouring money into this sector. It won't be an area that investors will neglect…"