Jason Wells

Generations of villagers grow gorgeous pedestrian walkways across rivers. (4:30)

Something I read got me thinking. Let’s say you’re an energy company and you want to build a new power plant. Such an investment is extremely capital intensive, costing billions of dollars just to build with a return on investment taking decades. To take the risk of investing like this, you have to have confidence that you can in fact get that return. Historically this hasn’t been a big problem, since it’s not like people won’t be demanding electricity in 30 years.

But there’s an assumption built into that thinking: that things will pretty much be as they are now in the future, at least substantively. Maybe we’ll have fancier dishwashers and faster computers, but all in all, things won’t be that different. So we can dare to make the big capital investment, as long as we’re prudent.

I think this assumption is looking more and more like magical thinking. Consider the companies that made a massive investment in coal power. Decades ago it was easy to justify on paper. A very cheap, plentiful fuel, familiar technology, relentless demand. But what they didn’t know was that climate change was in the wings, and that it was upon us within the ROI timeframe. Power companies are beginning to see pouring billions into another coal plant as very risky. Even if they don’t care about climate change, they worry that the government does and could do something unpredictable, like forcing them to capture all the carbon, create a carbon tax or do something else that makes the math not work any more. So why take the risk?

The same goes for nuclear power, which is even more capital intensive. After Fukushima, a number of countries have announced they are phasing out nuclear altogether. Not just Japan; countries like Germany, for example, the most economically powerful country in Europe. If you’re a power company, are you going to be building new multibillion dollar nuclear power plants while one country after another makes them illegal? Can you really be sure that the US won’t do the same sometime before 2041?

I think things are changing faster than they used to. Technology for sure. These changes aren’t constrained to the energy industry, but that’s where they are most obvious. The rise of wind power has almost entirely occurred within the ROI timeframe of a power plant. That’s an entirely new area of energy production that wasn’t even taken seriously 30 years ago. Now it’s a giant global industry growing by leaps and bounds every year. Solar energy is in the early stages of a similar revolution. If Saudi Arabia invests in a gargantuan oil project, what happens if the US shifts substantially to electric, or natural gas, or even fuel cell vehicles in the multi-decade ROI timeframe? Or gets good at growing biofuel crops at enormous scale, reducing or eliminating demand for Saudi oil? It may not happen, but it’s certainly not impossible. It’s a serious risk.

The question increasingly becomes: if I invest for the long haul, how can I protect against these risks? And the answer increasingly becomes: you can’t. Not unless you have a crystal ball and can foresee the next technical or economic revolution. So what to do? The only answer seems to be to make lots of small capital investments rather than a few huge ones. With smaller capital investments, you have shorter ROI and you aren’t putting all your eggs in one basket. That makes it like agile software development: if things turn on a dime, you can turn with it. In an increasingly unpredictable world, what else can you do?

So maybe we’re looking at the beginning of the end of the big-commitment industrial megaproject. The monolithic mainframe gives way to the cloud of small machines; the giant power plant gives way to a zillion wind turbines or rooftop solar panels; the big factories gives way to 3D printers. Maybe industrialism really is on the cusp of truly fundamental change, much deeper than any it has experienced to date. This could create a lot of interesting possibilities and a much more diverse and nimble economic environment that is more competent to rapid unforeseen developments. Ultimately it seems like a good thing, if a painfully expensive transition.

Then a new challenge emerges: how do you make lots of small investments scale the way megaprojects do? Not my problem, I’m glad to say.

It turns out that solar power is keeping the BLM busy lately. Since 2006 a tremendous land rush in the deserts of the Southwest has developed, and it’s taking a very novel form. Rather than following the ancient tradition of looking for valuable resources in or on the land–ore, petroleum, water, etc.–they’re looking for value coming toward the land. That is, photons blasting towards it from the Sun. The land is just a place to stick the panels or mirrors that’s flat and preferably conveniently near a road and a transmission line. Whether the land is physically like the moon or the Hanging Gardens of Babylon is irrelevant. In one sense, land on the more moon-like end of the spectrum is better. If it lacks alternate value, there’s less competition for it.

Except for one other form of competition: other solar prospectors. Here the competition is very intense. It’s interesting that Goldman Sachs is buying up a lot of this desert through an investment subsidiary called Solar Investments. Obviously these bankers aren’t about to put on hard hats and gloves and get busy building solar plants. Nor are they barefoot eco-hippies looking to save the world. They’re East Coast speculators. And the fact that the “smart money” (ahem) is moving in to buy huge swathes of desert suggests that solar power is finally real. It also suggests a big-ass bubble is inflating. It recalls a folksy piece of wisdom: the pioneers get the arrows, the settlers get the land. The presumed first mover advantage may ultimately destroy a lot of wealth. This is the essence of speculation.

It is happening now, and it will be transformative. It is the harbinger of major economic and cultural change. This virtually worthless land has abruptly become a hot commodity. I just went camping in Monument Valley and drove through desert all the way there and back. I can tell you, there is a lot of room for solar plants, and not just on BLM land. Some of these dusty little towns are going to get flush. And I wonder if the Navajo, Hopi or other tribes that got screwed out of the then valuable land in the 19th century, and literally force-marched into the deserts to eke out a marginal living, will suddenly find themselves sitting on prime real estate. That would be an incredible historical irony and a super business opportunity, one that’s healthier and a lot classier than casinos.

Pure electric, 150mph top speed, 150 miles per charge… I want.

HelixWind has made a splash. Ecogeek has an article all about them and it attracted a lot of attention on Digg. Cleantech Blog mentions them and the Residential Wind Turbine blog has an article about them too. (Update: Inhabitat has an article about them too. Thanks Nadia!)

For those who don’t know, HelixWind is a startup that makes small wind turbines. The company was founded by Ken Morgan. There’s more detail in this Wikipedia article and I have a few photographs of the turbines at Burning Man 2007 on crispyneurons. They did it for free in support of the environmental theme of the 2007 burn.

Here’s a promo video, courtesy of YouTube:

The company is well-placed to tap into a massive opportunity. Seems like everyone is searching for cheap green power–precisely what HelixWind delivers–like never before. It looks like they’re just hitting at the just right time with the right product. They’ve attracted tremendous attention from a blizzard of interested parties all over the planet. The world really is banging down their door, and I’m elated–A number of my friends work there and I’d love to see them succeed. Go get ‘em, guys.