That sentiment may be surprising given a political climate when the word Solyndra, the failed greenpower company that got federal funding, is thrown around like a machete. But then again, it’s really not shocking given that solutions to these problems — unlike the latest iPad app — often require big capital spending, tons of research, and usually some sort of public-private partnership. That  means public dollars.

“VCs are the best but even they are afraid of failure and when you don’t have failure as an option you can’t push the boundaries,” said Rodney Brooks, CEO of Rethink Robotics and professor emeritus at MIT. “Governments are scared to invest in high-risk research [but] we need more of it to come up with fresh ideas to solve global problems.”

Fear of failure cripples big-time innovation

“For solving externalities like carbon warming, the idea of government buy-in is essential,” said David Keith, CEO of Carbon Engineering. a Calgary, Alberta startup working on technologies to reverse the impact of climate change. “I don’t know of any other way but the government to do coordination of a common price to pay for using the atmosphere as a wasteland.”

GigaOM has written before about the need to fund really critical — and expensive, long-term projects — to address these big problems. But that theme surfaced again big-time  this week.

$300B on clean tech spending, much on "green bling" and it needs to be better David Keith #emtech—
Greg Fischer (@gregfischer) October 24, 2012

Government as prime motivator or traffic cop?

Keith called for a limited role for government, however, because he sees it doing a bad job when it comes to innovation. “Ideally the government will set rules in a simple way and will include a  substantial price for using atmosphere as storage for carbon– but beyond that we need to find ways to get real competition going — a marketplace for new ideas and technologies at scale.”

For complicated projects like Terrapower’s proposed new nuclear reactors — which would use existing nuclear waste as fuel — the expense is too large to be borne privately. Each reactor would cost $1 billion to $2 billion, necessitating some sort of government buy-in, said Nathan Myrhvold, founder of Innovation Ventures, a Terrapower investor.

Some entrepreneurs said government in the US has nibbled around the edges of the energy problem without touching really important issues like rationalizing the power distribution grid which is a patchwork of state-regulated systems.

“Ask politicians for a national way to run power from wind farms in South Dakota to Illinois. That’s where you really need political will power — it’s not a physics problem,” Myrhvold said.

Granted, many of the speakers were academics and researchers who rely on government grants  – but the capital expense needed to design, test and build these new technologies outstrips the ability of most startups to finance. There needs to be a way for innovative companies to try things out and fail. They should be able to fail with consequences but not fatal consequences.

Photo courtesy of  Flickr user loop_oh

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Nucleon, nuclear power car, once under development by Ford

When greentech investing was in sort of a bubble in 2007/2008, it wasn’t all that uncommon for a former web or computing entrepreneur to take on a crazy dream in the energy sector. But now, after the recession and a difficult year for greentech, it’s quite a bit less common. However that’s not stopping entrepreneur Russ Wilcox who is the former CEO and co-founder of display-maker E Ink, and according to Boston.com, has just joined next-gen nuclear startup Transatomic Power as its CEO.

Transatomic Power is a startup designing a new type of nuclear reactor that can run off of nuclear waste and also produce significantly less waste than the traditional lightwater nuclear reactor. Called the “Waste Annihilating Molten Salt Reactor” or “WAMSR,” the reactor uses liquid fuel and molten salt — in contrast to solid fuel rods — and also has a more safe way to power down the system than a traditional lightwater nuclear reactor.

Happy, low waste, nuclear

In a TED talk video (see clip below) Transatomic co-founders Leslie Dewan and Mark Massie — both PhD students at MIT’s nuclear engineering department — point out how there’s been little innovation in the nuclear tech space over the years, partly because it’s hard for nuclear developers to adopt new technology in a world dominated by the lightwater nuclear reactor. Another reason for some slow periods of nuclear innovation was the nuclear incidents, Chernobyl and Three Mile Island (and probably add Fukushima to that list).

However, decades ago, there was a brief era of innovation for nuclear in the U.S., says Massie, who showed a slide of a nuclear powered automobile once under development by Ford called the Nucleon. Nowadays, though, new nuclear technology will likely be deployed first outside of the U.S., particularly in China, where there are dozens of new nuclear sites proposed and under development.

Waste Annihilating Molten Salt Reactor

Transatomic is only in the early stages of research and development. The company has raised less than a million dollars to start work on a prototype. Building full scale nuclear reactors can cost in the hundreds of millions to billions range.

Partly because of the high costs, and also because of the long time tables, there’s only a handful of new nuclear startups out there, and most focus on waste and safety says Dewan. TerraPower is a Bill Gates and Intellectual Ventures-backed nuclear startup building a so-called traveling wave nuclear reactor that can also use waste fuel for fuel. Kurion is a startup developing nuclear waste cleanup tech; Hyperion is a startup developing a micro-scale nuclear reactor; and NuScale is another startup building small scale nuclear power.

Most next-gen nuclear technology is being developed by scientists and old-school power execs. But some former web and computing entrepreneurs have found their way to nuclear. Bill Gates and Intellectual Ventures’ Nathan Myhrvold made their fortunes off of Microsoft. Amazon’s Jeff Bezos has invested in nuclear fusion startup General Fusion. Perhaps the fortunes made off of computing and the web will be large enough to spark innovation in nuclear.

Images courtesy of Transatomic’s TED talk.

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Gates said that it is particularly important to make sure that the “rewards are there,” for these crazy energy entrepreneurs, and “that is very unclear right now,” for grid-related generation technologies. You have to think why don’t we have more people doing things like that — what is holding these people back? said Gates.

Gates himself has invested in a variety of energy-related startups, including nuclear company TerraPower, and battery company Liquid Metal Battery. In his talk he also said he is backing a startup doing gravity energy storage, which he referred to as “gravel on ski lifts.” He’s also a limited partner in Khosla Ventures, Vinod Khosla’s fund, and Gates jokingly referred to Khosla as “the pay master of crazy people — some of whom we’ll declare sane,” in the future. That’s what venture capital is all about, said Gates.

Gates also had a word of encouragement for the energy entrepreneurs:

“I would encourage people who work in this area that the importance of this is right at the top.” The reason I spend time on it is because I think it is so critical to the environmental challenge and for helping the poorest. Cheap energy is like a vaccine.

While Gates has long said that the U.S. government needs to at least double its funding of energy research, he is heartened that the U.S. owns the majority share of the world’s energy startup portfolio companies, he said. But to help these entrepreneurs out we need to help make it possible for them to get capital, to scale up, to have access to China, and we need to create a framework that is very favorable to them, said Gates.

This not going to be as easy as the IT revolution, said Gates, energy miracles are fundamental breakthroughs in science and engineering.

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If you have Bill Gates as your liaison, doors tend to open. The company was also reportedly in talks with Japanese giant Toshiba to jointly develop a small nuclear reactor. TerraPower also has high-profile investors including Khosla Ventures — Vinod Khosla’s venture fund — Charles River Ventures, Gates himself and the investors at Intellectual Ventures, which is an invention think tank founded by former Microsoft chief technology officer Nathan Myhrvold (here is my “From Microsoft to nuclear, 10 questions for Nathan Myhrvold”).

TerraPower is actually a spin-off from Myhrvold’s incubator, and the company is building nuclear traveling wave reactor technology, which is a relatively new type of small nuclear reactor design that can use the waste byproduct of the enrichment process, or waste uranium, for fuel. Traveling wave nuclear reactors have been under development since the 1990s, but TerraPower is one of the first companies to develop a practical design for the technology. (See “6 nuclear power startups to watch” and “Nuclear power by the numbers.”)

The benefits of the traveling wave reactor design are that the reactor doesn’t have to be refueled or have its waste removed until the end of the life of the reactor, which is theoretically a couple of hundred years. Using waste uranium reduces the amount of waste in the overall nuclear life cycle and extends the available supply of the world’s uranium for nuclear by many times. According to a presentation by TerraPower CEO John Gilleland, “operation of a traveling wave reactor can be demonstrated in less than ten years, and commercial deployment can begin in less than fifteen years.”

Not surprisingly, with its Microsoft connection, TerraPower has leaned heavily on supercomputing to design and model the reactor and the life cycle of the fuel. The TerraPower team is using “1,024 Xeon core processors assembled on 128 blade servers,” which is a cluster that is “over 1000 times the computational ability as a desktop computer.”

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Kartik Chandran, a professor of earth and environmental engineering, is working on a process to produce biodiesel and methane from fecal sludge. Methane can be used to generate electricity and heat (read about Landfill Methane Outreach Program by the U.S. Environmental Protection Agency).

Chandran wants to develop the technology to give people in poor countries a less expensive and energy-intensive way to process human wastes and to minimize wastewater contamination of local rivers and lakes.

Energy cost has been going up for wastewater treatment plant operators, according to an EPA report issued last September. Government mandates to reduce environmental contamination often require newer and more expensive equipment that also uses more electricity, the report said.

The professor and his research team want to use the technology to build a refinery in Accra, Ghana. Chandran is an advisor for the Ghana team at the Engineers Without Borders’ Columbia University chapter. Engineers Without Borders is a nonprofit that matches engineers and engineering students with community projects worldwide.

The Gates Foundation is known for financing public health and anti-poverty research and deployment projects. Bill Gates also is a big supporter of renewable energy and has used his tech celebrity status to advocate for more government funding for clean energy research. He has invested in nuclear startup TerraPower and algae-to-fuel company Sapphire Energy.

The idea to produce energy from human wastes isn’t new and has been explored by other companies and academic researchers around the world.

Photo courtesy of U.K.’s Foreign and Commonwealth Office via Flickr

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When it comes to climate change, the clock is ticking. Last June, Gates and other well-known American CEOs and venture capitalists called for the federal government to spend $16 billion per year in energy innovation. The spending suggestion caught on with the White House, which issued a report last November on energy innovation and trotted out Energy Secretary Steven Chu to warn that the U.S. was falling behind on science and technology R&D.

But so far, that push for more spending hasn’t gone anywhere. If anything, the administration is fighting to continue the same levels of R&D funding as it wrestles with Republicans over spending cuts. It’s a fight that will take us through at least 2012.

At the event on Tuesday, Gates said he’s been surprised at how difficult it has been to convince U.S. politicians they need to increase funding for clean energy R&D, in order to create energy solutions to fight climate change and supply the globe with clean power. “Maybe we are not creative enough or patient enough,” he said toward the end of his talk.

Gates said he understands that asking political leaders to commit to supporting spending over decades is a tough thing. But he also believes the government is the best source of R&D money. The U.S., in particular, is still the hub of innovation that rewards high-risk takers, and that culture is worth preserving, Gates said, adding: Of the “100 great energy ideas, 70 percent of them are based in the United States.”

With such a road block, getting clean energy solutions quickly will be difficult. At last year’s tech conference, TED, Bill Gates said he wanted to see big innovations that can cut energy costs by half and lead to zero carbon emissions by 2050. He said achieving the goal is possible with 20 years of intense innovation followed by 20 years of deployment.

The longer the delay on boosting energy R&D, the bigger the breakthroughs will need to be. Citing his favorite author in energy, Vaclav Smil, Gates said the time it takes to come up with new energy sources and to deploy them widely typically is about 60 years.

During his interview, Gates also reiterated his support of nuclear power, despite the safety problems that have occurred at Japan’s Fukushima reactors. Gates has been putting his money behind nuclear innovation, and backed nuclear startup TerraPower. Another tech titan also has found nuclear attractive: Amazon Founder and CEO Jeff Bezos recently took part in a $19.5 million round for General Fusion.

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“If they do what they are supposed to, nuclear reactor construction will be much more costly and much less inviting as a policy option as a result of the Fukusima accident,” said Cooper in a research note.

According to Cooper’s research, the construction costs for reactors after Three Mile Island (the nuclear incident in 1979 in Pennsylvania), but before Chernobyl (the incident in 1986 in Ukraine) were 95 percent higher than those completed before Three Mile Island. That resulted in electricity costs that were 40 percent higher. The construction costs of the reactors constructed after Chernobyl were 89 percent higher than those completed between Three Mile Island and Chernobyl, which delivered electricity costs 42 percent higher.

It’s not rocket science to realize that major disasters would cause extra safety costs, but that’s a massive leap. Cooper says the cause was a continued extension of the construction period and new design changes required by safety concerns.

The Nuclear Regulatory Commission (NRC) is already reviewing nuclear plants planned for construction in the U.S. and has a task force assembled to see if there are lessons to be learned from the Japanese disaster. Nuclear provides 20 percent of the electricity in the U.S. Other countries like Germany are reviewing their nuclear plans, too.

Beyond cost, the Japanese nuclear disaster could lead to the development of next-generation nuclear technology coming “to a screeching halt” in the short term. That’s what Ray Rothrock, a partner at venture firm Venrock and a former nuclear engineer, predicted. Rothrock was working as a nuclear engineer back when Three Mile Island occurred and witnessed at least a six-month clamp-down on nuclear tech as the NRC reviewed the industry.

For a startup like NuScale, which is making a modular nuclear reactor design and is planning on submitting its application to the NRC for review within 18 months, a very busy and cautious NRC could mean a significantly longer time to pass regulatory hurdles and get to market.

It’s generally believed the ongoing situation at the nuclear plants run by Tokyo Electric Power Co. looks to have surpassed the severity of Three Mile Island. Department of Energy Secretary Steven Chu made that assessment in a hearing before the House Energy and Commerce committee. That could mean the cost effects, tech ramifications and policy decision are even greater than after previous disasters.

Image courtesy of rowens27.

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1. The Bloom Box: What All the Fuss Is About. After 8 years and after reportedly raising $400 million from investors like Kleiner Perkins, 60 Minutes aired an exclusive look inside the Bloom Box, and the company officially launched.

2. 10 Things To Know About Bloom Energy. The company had been in stealth for so long, readers were craving for this handy 10 things to know piece.

3. TerraPower: How The Traveling Wave Nuclear Reactor Works. When Bill Gates backs a nuclear startup, people pay attention.

4. 10 Monitoring Tools Bringing Smart Energy Home. You want to monitor your home energy use, but you just don’t know how (or where to buy this stuff). Here are your best options.

5. Bloom Energy: Close to Unveiling Fuel Cell. Back stories about Bloom Energy from 2008 got traffic from the unveiling traffic bump.

6. 15 Algae Startups Bringing Pond Scum to Fuel Tanks. This is a really old post. Like, from 2008. But it just keeps drawing traffic due to its list nature. I even updated the list, but this one just keeps churning out the page views.

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8. Google Invests in Human Monorail Schweeb . . . Sheesh. Because it was Google and a ridiculous idea about a human monorail we can ride from our second story windows.

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Image courtesy of Horia Varlan.

Unlike traditional investing, Intellectual Ventures focuses on creating the invention itself (like an incubator) and Myhrvold tells me that a third of its inventions are now in the area of greentech and energy innovation. Not all are as ambitious as TerraPower — it’ll take a decade and several billion dollars to build its nuclear reactor commercially — and Myhrvold says that he’s also excited about energy efficiency tech and electrical transmission. Just don’t expect to see ideas like TerraPower land first in the U.S., as the U.S. is “stuck in the mud,” by regulation and politics.

While you might think the innovations behind TerraPower and Microsoft are vastly different, when you put a software guy on an energy problem it becomes a software problem, says Myrvold, and TerraPower relies heavily on super computing. The problem with today’s nuclear plants is that they were designed using computers with the same amount of computing power as our current cell phones, he notes. Here’s an edited excerpt of 10 questions for Myhrvold on how to create energy innovation:

Earth2Tech: Intellectual Ventures is not a traditional investment or VC firm, and has been described as a Intellectual Property firm. Can you tell me about how and why you founded it back in 2000?

Nathan Myhrvold: I considered going into venture capital, but I would have been the 20,000^th venture capitalist in the world. I thought it would be better to be the first invention capitalist. Our idea is to invest in invention. Venture capitalists invest in companies, plans and teams to form organizations. We invest in the process of inventing something. Sometimes its an existing invention and other times we doing the inventions ourselves.

Earth2Tech: TerraPower was a company you brought in or you invented?

Myhrvold: We invented TerraPower. We had a series on energy and one on nuclear energy. Some of the people involved in that had worked on nuclear at government labs, including Lawrence Livermore Labs. We invented around this idea and we created TerraPower.

Earth2Tech: How much of Intellectual Venture’s projects have been focused on energy innovation?

Myhrvold: A good chunk. A third of our inventions are focused on energy and cleantech in someway. We try to look broadly, from conservation technologies, which aren’t as dramatic as nuclear, all the way up to TerraPower which is stunningly ambitious. One of the things we decided early on, was key to the energy problem is how to provide energy, in a carbon-free way to the billions of people in China, India and Brazil that are becoming way more prosperous, and raising their standard of living?

There is no existing technology that will not emit enormous amount of carbon emissions and can accommodate them. Renewables are great, but we don’t have the technology yet. Coal isn’t going to work. The one we like best is TerraPower, and it’s the only technology that could conceivably get you to this goal.

Earth2Tech: The TerraPower nuclear reactor will cost around $4 billion to commercially produce and take a decade to develop?

Myhrvold: Nuclear is like that. Any important technology is like that. Gigawatts of power needs giga-sized dollars.

Irrespective of the funding, we need to partner with others. Our organization doesn’t have the expertise, but there are a lot of companies that do. It is very likely that we will work with a commercial nuclear power plant company. We will also likely partner with some other part of the world to build  the new reactor in their country. One of the problems of any new type of energy, is that people don’t want this in their backyard. The U.S. isn’t particularly good and doing something ambitious and new. Once we were, but now we’re not hungry enough.

Earth2Tech: Given the difficult regulatory framework do you think TerraPower will ever build nuclear reactors here in the U.S.?

Myhrvold: Ever is a big term. The U.S. will not be the first. I love our country but we are not taking a leading role in developing new energy techniques. There are companies that are working at the forefront of solar and other renewables, but in terms of deployment we’re a stuck in the mud and very regulated. We’re a law suit kind of country. Are we moving quickly to solve our energy problems, and carbon emissions? The answer is no. A lot of people think we need to move faster, and I agree. But I wouldn’t bet the future of this project on it.

Earth2Tech: Have you been inspired by Bill Gates and his recent attention on energy innovation?

Myhrvold: Absolutely, I’ve discussed it quite a bit with Bill. In order for us to solve energy problem we need new ideas. It is an expensive proposition to fund it at every stage. But if we really want to have an energy future, we need to do some forward-looking work now. It’s that simple. It’s amazing how little the world has invested in energy given how big a problem is now. One reason is the price of energy fluctuates so much. When its cheap people care less, when it’s expensive they invest.

Earth2Tech: In terms of creating the needed energy innovation, there’s varying approaches from the VC model, to your model of creating invention, to the federal government. Do you think your model will work best?

Myhrvold: Ultimately we need all of them. The advantages for government funding is that the basic needed investigation is expensive. The government is the only one that can fund basic exploration. It’s not a smart thing for private investors to do. Venture is good, but the problem with the venture world, is that it assumes that there are enough ideas out there to latch onto. We actually help create the idea itself.

One approach you didn’t mention is that we need to raise money for new energy infrastructure. Most of the existing energy companies, whether its utilities or oil companies spend almost all of their money on the here and now. If we want to create new power plants, we need to develop new financing mechanisms.

Earth2Tech: What is the business model of your invention process?

Myhrvold: When you’re the founder, you own 100 percent of the company, at the beginning, then that percentage goes down, and the value goes up. The point of the business model is not to own larger percentages, its if you fund the creation of an idea, you can do that in a cost effective way. We invent for a living. In case of TerraPower we created it and hopefully get stock down the line. In other cases we might license the technology.

Earth2Tech: What’s next for your energy innovation after TerraPower?

Myhrvold: There’s a ton that we’re excited about but not a lot we are speaking about publicly. Most are generally not as far along as TerraPower, which we spun out as a separate company. We’ve got some striking energy efficiency, and electric transmission ideas.

Earth2Tech: Are there lessons from the software and computing world for energy?

Myhrvold: When you put a software guy on an energy project he turns it into a software project. One of the reasons were innovating around nuclear is that we put a huge amount of energy into computer modeling. We do very extensive computer modeling and have better computer modeling of reactor internals than anyone in the world. No one can touch us on software for designing the reactor. Nuclear is really expensive to do experiments on, so when you have good software it’s way more efficient and a shorter design cycle.

Computing is something that is very important for nuclear. The first fast reactors, which TerraPower is, were basically designed in the slide rule era. It was stunning to us that the guys back then did what they did. We have these incredibly accurate simulations of isotopes and these guys were all doing it with slide rules. My cell phone has more computing power than the computers that were used to design the world’s nuclear plants.