For many startups, the dream is invention: to land upon a technical breakthrough that will unlock a market. But in climate tech, could that pursuit be slowing the progress toward net zero?
Andy Lubershane thinks so. The partner and head of research at Energy Impact Partners explained that the so-called “better mousetrap fallacy” is the mistaken belief that a technically superior product will outcompete the incumbent technology — and certain industries are more vulnerable than others.
Speaking on an episode of Catalyst with Shayle Kann, Lubershane offered energy storage and nuclear fission as examples of sectors experiencing a proliferation of new, and perhaps counterproductive, innovations. Those technologies, he said, “are likely to get better incrementally on their own, such that funneling a lot of capital into trying to build a differently better mousetrap is probably a bad use of capital at this point.” (Editor’s note: Kann is also a partner at Energy Impact Partners.)
In industries with existing technologies, he argued, a winning playbook instead involves deploying them iteratively, to reap the benefits of experience and economies of scale.
“I’ve watched and talked to dozens of companies and founders … [that] underestimated the pace at which the cost could come down… just through that kind of incrementalism of economies of scale and learning curves,” he said, adding that it’s been “bigger and more factories” that have driven the growth in both lithium-ion batteries and solar — not some technological breakthrough.
Case in point: years ago before crystalline silicon technology won a lion’s share of the solar PVmarket, dozens of startups were pursuing a range of other technologies, like cadmium telluride, amorphous silicon, and CIGS. But in the early 2000s there was a filtering out of those competitors, leaving crystalline silicon to mature and experience steep cost declines, driven by mass production in China.
In short, the faster a technology deploys, the faster it can come down the cost curve and reach mass deployment.
Lubershane is quick to acknowledge that some industries do need breakthroughs, so the question isn’t which strategy to follow, innovation or deployment; it’s which strategy to use in which sector. But industries that already have promising technologies ought to follow solar’s playbook, he said, lest they waste capital — especially as zero-interest rate policy comes to an end — or contribute to analysis paralysis for would-be customers.
And that latter problem has big implications for cutting emissions, he added..
“What I’m more worried about is that the proliferation of options in certain areas can almost be paralyzing and lead to the inability to deploy at the pace we need or to focus on deployment in certain instances,” Lubershane said.
Storage
Energy storage has no shortage of technology options. A stream of potential solutions — compressed air, flow batteries, alternative chemistries, and others — has trickled steadily out of the space in the last decade.
“I work with lots of large incumbent energy infrastructure operators,” Lubershane said. “And I think there is a little bit of analysis paralysis in the market right now, where it’s very difficult for operators who are assessing their options for deploying novel storage technology to pick a lane and try to get comfortable with it just because there’s so many out there.”
They often claim to be anywhere from 20% to 50% better than lithium-ion, he added — but nonetheless have been “crushed over and over.”
But there are exceptions that represent tangible, incremental improvements on lithium-ion. Lithium-ion-phosphate, for instance, is a chemistry of lithium-ion, and Lubershane described sodium-ion as “technically a fairly close cousin of lithium-ion,” especially in terms of how it’s manufactured.
He also sees Form Energy’s iron-air batteries as a fundamentally different use case. Where lithium-ion can serve as mobile storage or multi-hour stationary storage, Form’s iron-air batteries can serve as multi-day storage. (Both Lubershane and Kann are investors in Form).
“What was attractive about Form is that the fundamental cost of the materials that go into their battery and the way that they’re building the battery enable them to build this multi-day system at a target cost that is so far beyond what lithium-ion has achieved today,” he said.
Nuclear fission
Meanwhile, Lubershane said that the many advancements in next generation nuclear power may not be as productive as just scaling up existing nuclear technologies.
“The problem with nuclear power has really not been a technology problem … I think it’s been a public relations and opinion and regulatory and policy problem,” he said. “We first built nuclear power plants starting in the late 50s and through the 60s and into the 70s that are operating well today. And we built those plants before we had computer modeling software and all of all the wonderful engineering tools we have at our disposal today. So nuclear technology works.”
It’s a point underlined by the fact that other countries like China and South Korea have built nuclear reactors far more affordably than the U.S. does.
“There are dozens of better mousetrap developers out there that have what are probably very clever and very promising from a technical standpoint — new takes on nuclear fission with different types of coolants and lots of passive safety features — but ultimately I think the hurdles to proving out a new fundamentally new nuclear reactor design in the vast majority of those cases are just not worth the effort,” he said.
If he were an “omnipotent energy czar of the world,” he said he would pick up to three designs and build ten reactors each: “I almost guarantee that that would lead to much faster cost [declines] and maybe even just ultimately lower cost than what any of the next generation designs that we’re seeing could really achieve.”
Listen to the full episode of Catalyst:
