Divergent Opinions: Phosphor

We’re incredibly excited to announce Phosphor, our brand new app. Phosphor makes it easy to put animations and other types of motion on the web, without requiring plugins or special browser video support. We’re eager to see how it gets utilized.

On this episode of Divergent Opinions, we cover the ins and outs of the Phosphor development process, the motivation behind the app, and some of the ways we hope people will use it.

Waiting for Energon Cubes

Energy storage is a key component in our inevitable move away from fossil fuels. If we ever want renewables to take over for base-load demand (having a wind farm keep your fridge running even when the wind isn’t blowing), or drive long distances in plug-in electrics, we’ll need a serious revolution in energy storage.

This is a field I’m very excited about, both in the near term and the long term. It’s an area where there are still big problems to be solved, with lots of opportunities for real ground-up innovation in basic physics, materials science, chemistry and manufacturing.

There’s a need to begin developing our language around energy storage, and to develop a more thorough understanding of the tradeoffs involved. This has been made abundantly clear by the coverage surrounding the battery issues of the Boeing 787 Dreamliner. Most mainstream press has been unable or unwilling to cover the science behind the battery issues, or to accurately explain the decision making that lead to the selection of the type of batteries involved.

When we talk about energy storage, there are two key factors we need to talk about. Energy density and specific energy. Energy density is how much energy you can fit into a given space (megajoules/liter), and specific energy (megajoules/kg) is how much energy you can “fit” in a given mass.

Tesla Roadster.

Tesla Roadster.

Let’s look at a concrete example. The Tesla Roadster relies on a large battery pack, made up of many lithium ion cells. The battery pack weighs 450 kilograms, and has a volume of approximately 610 liters. It stores 53 kilowatt hours of energy (190 MJ). So, it has an energy density of 0.42 MJ/kg and a specific energy of 0.73 MJ/liter.

For comparison, let’s look at the Lotus Elise (I could have said “my Lotus Elise” but I didn’t, because I’m classy), which is fundamentally the same car running on gasoline. It can carry 11 gallons of gasoline in its fuel tank. Gasoline has an energy density of 46 MJ/kg, and a specific energy of 36 MJ/liter (those of you screaming about efficiency, hold on). The 29 kilograms of gasoline in a full tank represent 1334 MJ of energy, approximately 7 times more than the 450 kilogram Tesla battery pack. Frankly, it’s a wonder the Tesla even moves at all!

Lotus Elise.  I think this one is particularly attractive, and probably driven by a very nice person.

Lotus Elise. I think this one is particularly attractive, and probably driven by a very nice person.

Now, it’s important to add one more layer of complexity here. Internal combustion engines aren’t particularly efficient at actually moving your car. They’re very good at turning gasoline into heat. The very best gasoline engines achieve approximately 30% efficiency at their peak, so of that 1334 MJ in the Lotus’ tank, perhaps only 400 MJ are actually used to move the car. The rest is used to cook the groceries that you probably shouldn’t have put in the trunk. The electric drive train in the Tesla on the other hand is closer to 85% efficient.

That’s a quick example of why understanding some of the engineering, science, and math behind energy storage is important – without means for comparison, it can be difficult to grasp the tradeoffs that have been made, and why products end up being designed the way that they are.

I’ll dig deeper into the specific types of battery technologies on the market and the horizon in a future post. At the moment, they’re all within approximately the same ballpark for density and specific energy, and simply offer different tradeoffs in terms of charge times, safety, and longevity.

Batteries are not the only way to store energy though, and aren’t nearly as sexy as some of the alternatives.

Fuel cells have fallen out of vogue a bit over the last few years. While Honda forges on, most of the excitement seems to have been supplanted, for now, with acceptance of the fact that the lack of a large-scale hydrogen distribution network dooms them to a chicken-or-the-egg fate for the foreseeable future. Fuel cells operate by combining stored hydrogen with oxygen from the air, to release energy. Because hydrogen can be made by electrolyzing water, fuel cells are a feasible way of storing energy generated by renewable sources.

Due to the increased efficiency of an electric drivetrain and the high energy density (though lower specific energy) of hydrogen, a fuel cell drivetrain can rival gasoline for overall system efficiency. Unfortunately, they achieve all of this using a variety of exotic materials, resulting in costs that are completely unrealistic (think hundreds of thousands of dollars per car) and look likely to remain there for the foreseeable future. That said, just today saw word of a fuel cell technology-sharing deal between BMW and Toyota – perhaps there’s still some life in this space.

There’s another type of energy storage, which excites me most of all – these are the “use it or lose it” short term energy storage technologies, which are designed primarily to replace batteries in hybrid drivetrains, or to smooth short term power interruptions in fixed installations.

I’d like to explore these further in depth in the future, but for now, a quick survey is appropriate. The technology I’m most interested in is kinetic energy storage in the form of flywheels. At it’s most basic, you take a wheel, get it spinning, and then couple it to a generator to convert the motion back into electricity.

This is an old technology. Traditionally, you used very heavy wheels, spinning relatively slowly. This type of system is sometimes used in place of batteries for short term power in data centers. In the last few years, flywheels have gotten interesting for smaller-scale applications as well, thanks to modern materials sciences. A small amount of mass spinning very fast can store the same amount of energy as a large amount of mass spinning very slowly. Modern materials and manufacturing mean it’s realistic to build a hermetically sealed flywheel which can spin at hundreds of thousands of RPM. Ricardo has done just that, as has Torotrak.

These systems have the advantage of being relatively lightweight, simple and low-cost. While they don’t store a large amount of energy, they’re ideal for regenerative braking and increasing the overall efficiency of an ICE drivetrain.

Another category of energy storage is thermal storage. These are what they sound like – means to store heat (from solar most often) for extended periods of time. This is another old technology, with some interesting new twists. Remember that gasoline engines turn lots of their energy into heat. Some manufacturers are experimenting with systems which can convert some of that heat into energy, using good old fashioned steam.

A final type of storage which doesn’t fit nicely into any category is compressed air. This week, Peugeot-Citroen (PSA) unveiled their compressed air hybrid drivetrain. This system uses compressed air pressurized by an onboard pump, driven through regenerative braking and other “waste” energy capture. While more complex than a flywheel, total energy storage is much greater as well, and PSA is talking of 30% reductions in emissions thanks to this technology. Tata has also experimented with cars using the MDI compressed air drivetrain, which is designed to be “fueld” by an offboard compressor.

As I noted at the beginning, part of what makes me excited about this space is that it’s not a solved problem. There are loads of companies all around the world creating innovative solutions. Most of them will probably fade away, but some have a reasonable chance of replacing or supplementing the “status quo” energy storage options we have today. Interestingly as well, no one country is dominating the research in this space. The UK, in keeping with tradition, has a large number of very small companies working on projects (their “cottage industries” are often actually housed in cottages!), while the US does this sort of development primarily via research institutions, and other countries rely on government-run labs.

Until all are one, bah weep grana weep ninny bon.

Crowdfunding: a buzz-worthy buzzword

I recently wrote about my attitudes toward Kickstarter, the imperfect but exciting crowdfunding platform. Now, I’d like to turn my attention to a related and similarly exciting use of crowdfunding as an investment vehicle.

(Aside: for those who are interested in Kickstarter, be sure to read this analysis of Kickstarter’s impact on CES from The Verge)

First, if you’re not already familiar with the concept of an accredited investor it’s worth a brief review. In short, if your income tax didn’t go up at the start of 2013, you’re not an accredited investor. Don’t feel bad – we’re much more fun than them.

Normally, in order to purchase equity in a company, the company either needs to be listed on a public exchange, or minimally, the company needed to register a security with the SEC. Needless to say, that presents a non-trivial barrier to entry. Startup companies have been prohibited from raising funds by appealing to the general public. That’s why you can’t get shares in a company when you invest via Kickstarter.

This situation has changed dramatically over the last eighteen months. First, increased interest in the general notion of crowdfunding has resulted in clever “circumvention” of some of these restrictions (more on this in a moment). Second, the JOBS act, passed in March of 2012, creates (or will create) a variety of provisions for direct investment in startups, regardless of personal income status.

It’s important to draw a distinction between this type of crowdfunding and person-to-person lending, as they often get mentioned in the same breath. Person-to-person lending, either as a non-profit endeavor via services like Kiva, or as a for-profit endeavor like Lending Club, connects lenders with borrowers directly. Groups of lenders are connected to loan money to a borrower, who repays the loan to those lenders with a reasonable interest rate (or none at all in some cases). Lenders can, potentially, resell loans on a secondary market, but generally these are long term illiquid investments. Lending Club loans help fund debt consolidation, home and auto refinancing, and other types of general consumer borrowing, and has proven fairly successful.

These types of investments are regulated primarily on a state-by-state basis. Although they’re an interesting alternative to other types of investment, I don’t find them particularly exciting. Instead, I’d like to highlight two startups in the crowdfunding space which I am incredibly excited about, Fundrise and Solar Mosaic.

When discussing Kickstarter, I explained that I invest because I believe the world will be moderately improved if the thing I’m backing exists. In much the same way, both Fundrise and Solar Mosaic provide the opportunity to invest in the creation of a thing – a building in the case of Fundrise, a solar installation in the case of Solar Mosaic.

Both projects offer somewhat similar narratives. They aim to fund things which require large initial capital investments, and offer relatively predictable returns over a fixed period of time. And both projects aim let you “do good” in your community, without having to repress your capitalistic urges entirely.

Solar installations offer a fairly straightforward business proposition. After the initial installation, solar panels produce power at a relatively predictable rate, which can be sold back into the power grid or directly to a customer. Rather than seeking to fund massive generating plants in the desert, Solar Mosaic targets rooftop or other localized solar installs. This type of installation provides a tangible, visible form of renewable energy production directly within communities. By investing via Solar Mosaic, investors have the opportunity to see their investment take a shape, while also generating a reasonable return.

Solar Mosaic is currently limited to small investors in California and New York, as well as accredited investors anywhere. As the SEC sorts out the implementation of the JOBS act, that’s likely to change. They’ve recently moved out of beta and seem to be “going vertical.”

While Solar Mosaic is interesting and exciting, Fundrise falls into the category of please take my money now – I think it’s absolutely brilliant. For a fantastic breakdown of the process which lead to the creation of Fundrise, and the current legal status, check out this in-depth article from The Atlantic Cities. I’d like to offer my own interpretation, as I see Fundrise as a solution to a problem I’ve identified in the past, but never been able to articulate.

I’ve often been confused by the presence of large numbers of abandoned, dillapidated buildings right in the heart of cities with sky-high property values. How can property sit vacant in a place like San Francisco or Washington DC?

When you dig a bit deeper though, it becomes clear that you’re dealing with a classic “bootstrapping” problem. The value of land is so high that the value of the building becomes relatively insignificant. A piece of land with a cat-infested, burned-out shell of a building may only cost marginally less than a piece of land with a mixed use retail structure. Investors therefore have little incentive to take on the risk and complexity of buying and rehab-ing the “ugly” property.

In cities with lower property values, non-profits, foundations or neighbor-revitalization groups might step in to renovate a property. But, when the cost of entry is in the millions or tens of millions of dollars range, even the most well-heeled foundation can only have limited impact.

Fundrise circumvents this problem by seeking investment from individual community members or others interested in revitalization. Collectively, the investors purchase the property and fund the renovation or construction. The property is then leased to a preselected tenant or tenants. Investors are then repaid via rent paid by the tenant, as well as the increase in the value of the property.

While it doesn’t make sense in all cities (including, very likely, my own), I consider this a potentially transformative solution to a vexing problem.

Taking a step back, it’s worth asking whether all of these crowdfunding and person-to-person lending platforms represent a meaningful “alternative” to traditional investing, or whether they simply supplement the standard vehicles.

Much has been written about Gen Y being scared of investing due to the fallout from the financial bubble bursting. Thirty-somethings are leaving their money tucked under mattresses or in low-yield (essentially no-yield) savings accounts.

As a certified thirty-something, I don’t share these fears. However, I’m also a person who values rationality. I want to invest in a company based on a belief that the company has a bright future. Should that belief prove accurate, I’d like to see my investment grow. Over the long term, that may still be the way the markets behave, but the degree of irrationality over the last five years has shaken my confidence. A political party willing to risk government default combined with an incredibly unclear global economic outlook means that investing feels far more like rolling a dice than it did even ten years ago.

Solar Mosaic, Fundrise, and a whole raft of other companies in this space provide an opportunity to see your investment take shape on a community level, and to know that it will succeed or fail based on far more localized, micro-economic variables. They’re not risk-free by any stretch, but at least if they fail you can take solace in the fact that they’ll feel very bad about it.