Funding strikes back

In a previous post, Fuel cell energy, I debate a new product by Bloom Energy, the Bloombox. In a nut shell, it is a giant box full of fuel cells that run on natural gas operating as a small electrical generator. Online Fortune magazine has an update on the Bloom boxes' debut. Their view of the technology is similar to mine with many downfalls. Without 30 % state economic subsidiaries, the box would not compete with more traditional electrical sources on the grid. No surprise. In the end after the fanfare, it is all about the money and pleasing investors. Two patterns emerge from this story reflecting the current state of research and development towards product commercialization in the US. The cruel cycle of funding and the half truths concerning the current state of alternative energy.

To put the record straight, I like the concept of fuel cells generating electricity. The technology is NOT ready for prime time yet. It needs more development. We should have an army of scientists and engineers working on this technology. It will have twofold benefits:
1. Add to the US economy through employment
2. Viable product to sell in the end.
This is where the first ugly reality shows its face, the current state of research funding.

In a way I feel for the inventor, K.R. Sridhar, and the decision he was forced to make when founding his company. Venture capitalist (VC) invested in his company. VC have high expectations. Companies will demonstrate progress towards a product with an actual deliverable product by a certain date. What if the product is not ready in this time frame? The VC funding goes away. End of game. If Sridhar wanted his dream to come to fruition, he took the money with terms. In many cases, successful product development time is longer than allotted, the final product flops. Darn if you do, darn if you don't.

I propose investing more capital into long term research and development laboratories (national labs or corporate) to develop these technologies. Yes, I know over along time R&D loses money, but nothing significant will ever be developed again without extensive research. What about universities? Universities are in the business of producing researchers and most projects end with Ph D students graduating. The same short term issue as VC funded projects. Our technical competitive edge depends on long term research and development funding in appropriate venues.

Second, the development stage most alternative energy currently stands lacks commercial viability. Even with economic subsidiaries, most alternative energy sources will not eliminate our dependence upon foreign oil. Click here for a more complete argument. One exception comes to mind, wind turbines. Wind turbines are commercially viable. They share the similar drawback of low energy density through. No one ever mentions another obvious problem, what happens when the wind stops? Solar, geothermal and various other alternative energy sources are just not at a development stage that will displace more conventional fossil fuel based technologies.

I repeat, this post's intention is not about bashing venture capitalists or alternative energy, it is to inform about the current reality. Venture capitalists have a vital role in the US economy in funding successful technology start ups. The VC success key is funding technologies that are close to production stage, not products that require a significant amount of engineering. As for alternative energy, I would love to see solar panels on every roof. Commercialized economically competitive versions of the fuel cells would be outstanding. The new technology has significant potential. As we currently stand though, the lack of funding and efforts to develop alternative energy sources will doom them to failure. We as a society need to accept the situation's reality.