# Khosla on Smart Grid Stimulus: Not the Best Use of Funds

Robert Rapier, energy blogger and engineering director for Accsys Technologies, has been poring over an interview that Vinod Khosla did recently with Forbes journalist Elizabeth Corcoran at the Milken Institute (Paul Kedrosky’s video clip here). Khosla and Rapier have a long history of arguing over the ethanol industry (Khosla is bullish on ethanol, while Rapier says Khosla is overhyping ethanol), but in Rapier’s transcription of the interview I just read about Khosla’s stance on the smart grid funds in the stimulus package and his experience with Silver Spring Networks.

Around 36 minutes into the video Khosla says:

The smart grid is a good thing to do. It is very fashionable among environmentalists. . . But if I was asked, the money that was allocated for the smart grid from the stimulus, is that the best use of money? Absolutely not.

He goes on to explain that if he had to pick between a transmission grid (which just builds out power lines for transmission) and a smart grid (which makes the grid responsive) he would pick the transmission grid. A transmission grid is priority one, he says, while a smart grid is valuable but a secondary priority. Hmmm, he has a point, though I don’t think it has to be as “either/or” as he puts it. If anyone has an interesting take on this, leave it in the comments.

But, of course, Khosla has still been looking to invest in smart grid technologies, given smart grid is going to be such a big market. He says he would have absolutely invested in smart grid leader Silver Spring Networks if he had seen the company when it was raising money at a $20 million valuation, but he saw the company closer to a$300 million valuation. We don’t invest at those types of valuations, he says.