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To Encourage Innovation, Make It a Competition

Wed, 19 Nov 2014 11:08:12 -0800

By Anil Rathi
CEO of Skild
Harvard Business Review

The competition format has fueled major successes in business. Fortune 500 companies like AT&T and American Express often sponsor online creativity contests to inspire innovation among their customers, while Kickstarter and other crowdfund platforms have ideas compete to win funding. And organizations can also use competitions to drive innovation within their own workforces.

For example, Thompson Reuters created a “catalyst fund” to encourage and support new ideas. To access it, teams of employees compete by presenting and defending their most compelling ideas to an innovation investment committee. The Department of Health and Human Services also recently launched a “Shark Tank”-style competition where multiple employee teams compete to pitch their best ideas to senior officials.

However, while internal competitions may sound easy enough to deploy, there are key design and management principles to consider if you want them to yield good ROI. Having helped over two hundred companies and large organizations deploy internal and external competitions, we’ve found four elements that will lead to success:

Frame the competition around a specific need. “Design the next big thing” is not a good challenge statement. Open-ended questions yield open-ended answers. Make your challenge statement or question focus on a specific problem to be solved. Consider the XPRIZE Foundation’s famed spaceflight challenge, which offered $10 million to the team first able meet these very specific criteria: “Build a reliable, reusable, privately-financed, manned spaceship capable of carrying three people to 100 kilometers above the Earth’s surface twice within two weeks.”

According to my colleague Michael Timmons, who helped drive promotion of contests at XPRIZE, this specificity was very important to the competition’s success. “If they had just announced a very open-ended challenge, such as ‘Prove commercial spaceflight is possible,’” Michael said, “they probably would have ended up with ambiguous results. Instead, teams were able to visualize the requirements of the challenge and work toward those specific goals.”

Break up challenges into manageable, implementable steps. Lay out a step-by-step process for how to participate so your employees aren’t overwhelmed. For instance, rather than ask competitors to turn in a 50-page business plan for their idea, ask them to first submit a one-page pitch. Once you narrow the candidate pool, quarter-finalists can then flesh their ideas out into full-fledged proposals. This way, all contestants get immediate, actionable feedback on their ideas, and know whether they’re on a fruitful path before committing any more time to it. This process also encourages them to learn and practice different skill sets along the way: pitching, analysis, plan preparation, etc.

Provide company resources and internal mentors. As companies grow, they build up massive repositories of knowledge, resources, and IP assets that become so large, even their own employees and executives aren’t fully aware of its breadth. Leverage this content by encouraging contestants to access this data. A similar course of action was done in the Reed Elsevier Environmental Challenge, which awarded projects that best demonstrated new ways for developing nations to access safe water. The multinational publishing company gave contestants access to all its relevant materials (e.g., maps), so they could integrate this knowledge into their submissions.

However, a company’s best resource is its staff, which is why we also recommend competitions come with internal classes, tutorials, and when possible, executive mentoring, to better guide the contestants through the idea submission process. TC Transcontinental, Canada’s largest printing company, did this to award $2 million in development funding to four ideas presented across the organization. The multidisciplinary teams of employees worked with facilitators over the course of three workshops, while coaches and subject matter experts offered their unique perspectives, feedback, and expertise to help teams further hone their ideas and concept plans.

Draw value from the competition process, not just the results. As with most new businesses and patents, most innovation contests do not lead to substantial results right away. This is true even of the best competitions designed around the principles outlined above. For that reason, it’s important to emphasize the benefits that contests yield. No matter what ultimately happens with the eventual winning idea, well-managed internal competitions teach employees new skills, connect them across multiple departments, and amplify the company’s overall creative ambience. And in our experience, after companies design and execute one competition, they often gather the important data and ideas they’ve learned to use in subsequent competitions. As this process plays out, the greatest benefit may be for the hosts of the contest, since they learn to leave their teams free to be daring so they can cultivate great ideas over time.

Anil Rathi is founder of Innovation Challenge, the world’s largest and longest running university innovation competition, and CEO of Skild, a competition studio based in Los Angeles. Over Skild/Innovation Challenge’s 11+ year history, he’s helped hundreds of organizations inspire change and highlight creativity through the power of online contests. Follow him on Twitter @mrrathi.

https://hbr.org/2014/11/to-encourage-innovation-make-it-a-competition

Hedging Carbon

Thu, 24 Jul 2014 16:41:06 -0700

By Jim Spiers
Former Senior Vice President Business Strategy,
Chief Technology Officer,
Tri-State Generation and Transmission Association, Inc.

The business of an electric utility is to manage the risk of producing and delivering a reliable and affordable power supply. Utilities do this on behalf of tens of thousands, if not millions, of customers across large areas through an economy of scale only known in the last century.

For decades, utilities have well managed operational, market, financial, and regulatory risks to provide the electricity that has allowed economies to thrive and quality of life to improve. The responsible use of fossil fuels has been the foundation of this prosperity, and fossil fuels will continue in this role.

Fossil fuel-based power generation has not been stagnant; over decades, incremental technological innovation has driven constant improvement in power plant efficiency and emission controls. As a result, coal and natural gas offer not only energy security and the low cost that drives economic growth, but also increased sustainability.

For Tri-State Generation and Transmission Association, Inc., a not-for-profit wholesale power supplier in the rural western U.S., its mission to produce and deliver affordable and reliable electricity to its 44-member electric cooperatives is founded upon stewarding membership resources and insulating its members from market volatility, managing risk, and maintaining options. Throughout the association’s 62-year history, it has focused on cooperative planning and, where appropriate, the joint development of resources to mitigate risk.

CO2 Is a Unique Risk across Many Industries

The U.S. Environmental Protection Agency has proposed CO2 limits for new and existing fuel power plants. In fact, all fossil fuel-consuming industries face the same issue and may face a similar challenge. The discussion and imposition of these limits conveys a clear fact: In the U.S., power providers must be ready for a carbon-constrained regulatory environment.

The emergence of this challenge poses tremendous risk to the industry, including the nearly 900 GW of installed fossil-based capacity in the U.S.,1 the installed fleet globally, and any new fossil-based capacity or industrial facility affected by other CO2 emission regulations.

Although the aggregate industry impacts of CO2 regulation are daunting, the risk profile for individual utilities is highly driven by its existing generation and transmission fleet, operational characteristics, and access to resources.
The regulatory exposure of managing CO2 emissions from power plants presents a unique risk to Tri-State, its member electric systems, and their consumers. A plentiful and affordable fossil fuel supply and a modern, efficient baseload coal fleet complemented with natural gas, hydropower, and other renewable resources ensures that the association is in a position to effectively manage many of the risks of its industry.

To manage risks associated with CO2 regulations, there has been a push for utilities to fuel switch, moving from coal to natural gas and renewable resources. In the U.S., fuel switching to natural gas has been catalyzed in recent years by the discovery of major new unconventional sources of methane, brought on by advances in hydraulic fracturing. However, for many utilities, including Tri-State, switching resources, and reducing fuel options, introduces new risks, such as exposure to market volatility. With Tri-State’s significant capital investment in its modern production fleet with advanced emissions controls, fuel switching for the purpose of CO2 management would be a high-cost CO2 management option and is not a viable strategy for our association.

It is clear that CO2 management strategies must offer ways to reduce regulatory risk without introducing new operational, market, and financial risks.

Technology Options Manage Risk

The challenge of managing CO2 emissions presents a wholly different proposition, compared to other emissions control. Aggressive CO2 regulation adds risk to the use of fossil fuels in power production until technology to manage emissions is commercialized.

In response, publicly and privately funded research, development, and demonstration efforts are incrementally improving existing CO2 capture and storage (CCS) technologies. Pre- and post-combustion capture technologies aim to increase efficiency and reduce costs. Geologic storage and variations of this approach, such as enhanced oil recovery (EOR), remain the focus of CO2 disposal options. We believe that, in a carbon-constrained world, this narrow range of technology options, in light of the enormous challenge to manage CO2 and its associated liability, presents significant risk.

A technology hedge is needed. At Tri-State, we believe that another technology path exists. This new direction is based on the belief that CO2 can be an asset that can be used to create value. With radical thinking and revolutionary technology development, spurred by innovation models currently underutilized in the energy industry, breakthroughs can lead to options to meet energy and environment challenges.

CCS Offers Incremental Advancement

To ensure the ongoing viability of existing fossil capacity, the energy industry has placed its “bet” on the capture and storage of CO2, including EOR. Yet, for an industry in which managers place a premium on technical and strategic options to ensure predictability and reliability, I believe it is ironic that this sole bet seems to have been placed on an approach to manage CO2 risk when viability is not yet certain.

CO2 storage faces challenges. One is cost: According to Dr. S. Julio Friedmann, Deputy Assistant Secretary for Clean Coal at the U.S. Department of Energy (DOE), the first generation of CCS technologies capture CO2 at a cost between $70 and $90/ton for wholesale electricity production.2 Current technologies for trapping and storing CO2 can increase the fuel needs of a coal-based plant by 25–40% and subsequently drive up the cost of energy from that plant by 21–91%.3 Another is communal activism (i.e., lack of public approval).

Having technological options at the industry’s disposal when the price of CO2 regulation becomes untenable will increase the odds that the industry can preserve its ability to provide affordable, reliable electricity to its customers. As prudent managers, hedging the CO2 bet by pursuing options in addition to storage is essential.

CO2 Is an Asset

The good news is that potentially viable CO2 management alternatives exist. However, the conventional thinking in research and academic circles has been that other approaches to CO2 utilization are too difficult, if not impossible. Yet, for innovators involved in the CO2 utilization space, a significant body of work is being developed in both novel CO2 capture and utilization sciences.

As part of our effort to assess its risks and potential mitigation strategies, Tri-State commissioned research that identified more than 90 emerging CO2 capture approaches.4 New solvents, enzyme-based systems, physical sorbents, precipitated calcium carbonates, ionic liquids, gas separation membranes, and metallic organic frameworks have the potential to leapfrog over current approaches to industrial CO2 capture and dramatically decrease capital and operating costs.

If the potential of these new capture approaches can be realized, the challenge turns to utilizing CO2 when and where geological storage is not feasible. EOR is appealing precisely because it affords economic value to displace some of the costs associated with CO2 capture and transportation. There are other options that can afford economic value to CO2, thereby changing what is currently deemed a liability into an asset. This asset leads to a reduction in net CO2 emissions by displacing carbon-based fuels or effectively storing CO2 in useful products.

CO2 utilization technologies, in theory, can produce virtually any carbon-based material. The key then is ensuring that new innovations can utilize a portion the 2158 Mt of CO2 per year produced from the U.S. fossil-based electric capacity5 or the 948.5 Mt of CO2 per year produced from the U.S. coal-based electric capacity that is appropriate for CO2 capture retrofits6 to be a meaningful CO2 management tool. CO2 utilization is an invaluable option that can complement a portfolio including CO2-EOR, CCS, or other technologies to be developed.

Further syndicated research sponsored by Tri-State identified 136 emerging companies and institutions that are working to convert CO2 into valuable products, such as transportation fuels, chemicals, synthetic plastics, and concrete and other building materials.7 A recent Advanced Research Projects Agency-Energy (ARPA-E) conference showcased promising CO2 utilization technologies, including fuels production technology from Dioxide Materials, which is receiving ARPA-E funding, and chemical production from Liquid Light.8

These technologies are nascent and are not yet demonstrated at scale. Even the basic logistics and physics of CO2 conversion are daunting, because the CO2 reduction process is thermodynamically uphill. The carbon and oxygen molecules in CO2 are linked with double bonds and splitting them apart requires a fair amount of energy, which is a challenge to overcome.

With new breeds of biological organisms that can better synthesize CO2 and excrete valuable oils, advances in proprietary catalysts using lower-cost materials and more efficient methods of application, or better applications of renewable energies to heat catalysts and power the CO2 conversion processes, breakthroughs can occur.

If we can facilitate these breakthroughs, our research has shown that these technologies could have the potential to produce between approximately 237 and 1079 Mt of product from the 948.5–2158 Mt of supplied CO2 per year, depending on various preliminary conversion assumptions, which are explored in our syndicated research. Given that the U.S. consumed approximately 1.07 billion tons equivalent of crude oil in 2010,A we immediately see that this one market alone offers a virtually unsaturable outlet for CO2-produced product.

The challenge is technical, and history has shown us that it is unwise to bet against technical innovation. For instance, we all remember rather widespread predictions that we would currently be living in a world impaired by “peak oil,” a prediction that was upended by hydraulic fracturing and horizontal drilling innovations. Realizing these breakthroughs is a matter of creating an innovation model that maximizes the chances that a breakthrough can emerge and doing so in a thoughtful, cost-efficient way that accelerates results faster than envisioned through traditional research and development approaches.

Innovation Model to Drive Solutions

Over the past several years, Tri-State has pursued a unique collaborative effort to bring awareness to the opportunity for CO2 utilization. This includes Tri-State’s initial development work for a CO2 utilization inducement prize in collaboration with Canadian energy companies. With Prize Capital, a firm focused on catalyzing advanced energy technologies, the association has developed a comprehensive model that affords a practical, cost-effective approach to fostering breakthrough innovation in the field of CO2 capture and conversion. This is a logical extension of the association’s view of risk management through collaboration that is prevalent across its operations.

Rather than taking a traditional research and development approach to innovation—which, to a large extent, requires the judgment and validation of technologies before they have exhibited any ability to meet utilities’ need—Tri-State’s innovation model crafts a platform that attracts and supports emerging innovation focused on clearly defined performance requirements. The platform subsequently nurtures and supports those technologies that are able to not just claim, but also actually prove their abilities to meet these requirements.

It is a seven-component, decentralized process designed, in part, by referring to and mimicking common characteristics present at the beginning of successfully emerged industries. Its intent is to foster the arrival of a fully commercialized, self-sustaining CO2 asset industry. This commercialization pyramid process is captured in Figure 1.

Test Center Drives Market’s Acceptance

One component integral to the commercialization pyramid is the establishment of a real-world CO2 solutions “test center” adjacent to an operating power plant. One of the greatest challenges that utilities face in validating new technologies is the transposition of laboratory data to the real world at utility scale.

Laboratories are inherently small scale and their environments are meticulously controlled. Thus, understanding how an emerging laboratory technology will perform in larger scale, uncontrolled environments—especially ones that place a premium on predictability and reliability—is an exercise in estimates.

A test center fills a critical need in the transition between laboratory and scaled operation by affording easier access to real-world testing conditions. A test center establishes a platform by which technologies can move in or out of real-world testing, thus bypassing much of the hurdle that innovators face in convincing utilities to pilot test their technologies. It also bypasses much of the risk that utilities take in choosing to test one technology over another.
The current vision of the test center, to be located at a coal-fired power plant and matched with a natural gas-fired facility, is to establish five testing “plots.” A slipstream of flue gas as well as water, electricity, land, and shared resources will be provided and will remain in place as innovators create units to “plug into” this preexisting format.

Although the notion of energy test centers is established—approximately a dozen are in current operation around the world—research reveals that the test center we envision will be the first to focus on a full CO2 “solution”, including breakthrough early-stage CO2 capture, as well as diverse conversion, technologies. The state of Wyoming, through the vision of Governor Matt Mead and legislative leadership, has set aside funding for such a test center at a coal-fired power plant in Wyoming. Figure 2 plots the value propositions afforded by known existing energy test centers and reveals the opportunity to capitalize on a new type of test center.

Conclusion

The establishment of new types of test centers is one component of seven needed to develop a commercial CO2 asset industry. Other efforts underway include the development of a global, multimillion-dollar inducement prize competition, the seeding of a global CO2 asset network, and deployment of “advanced market commitments” from industry to purchase yet-to-be-developed technologies. These components are designed to work together and leverage one another to maximize outcomes, but they will not yield results overnight.

The challenge of managing CO2 emissions by spurring the creation and commercialization of multiple “solution” paths is not going to be fast or easy, but research indicates that through the diligent, calculated application of this comprehensive approach, we have the best chance of affording the industry with a portfolio of CO2 management options that can manage risk and ensure the continued provision of reliable, affordable energy in a carbon-constrained world.

REFERENCES

U.S. Energy Information Administration. (2013). Electric power annual 2012. Table 4.3. Existing capacity by energy source, 2012. www.eia.gov/electricity/annual/html/epa_04_03.html

Friedmann, S.J. (11 February 2014). Testimony before the Committee on Energy and Commerce Sumcomittee on Oversight and Investigations, U.S. House of Representatives, Washington, DC.

Metz, B., Davidson, O., de Coninck, H.C., Loos, M., & Meyer, L.A. (Eds.). (2005). Carbon dioxide capture and storage. IPCC special report prepared by working group III, Intergovernmental Panel on Climate Change. New York/Cambridge: Cambridge University Press.
Peak, M. (2012). Emerging carbon capture technologies overview. Prize Capital, LLC.

U.S. Environmental Protection Agency. (2011, February). Draft inventory of U.S. greenhouse gas emissions and sinks: 1990–2011. www.epa.gov/climatechange/ghgemissions/usinventoryreport.html

Specker, S., Phillips, J., & Dillon, D. (2009). The potential growing role of post-combustion CO2 capture retrofits in early commercial applications of CCS to coal-fired power plants. Palo Alto, CA: Electric Power Research Institute. www.epri.com/abstracts/Pages/ProductAbstract.aspx?ProductId=000000000001019552&Mode=download
Peak, M. (2011). Carbon capture & recycling industry overview. Prize Capital, LLC.

Ling, K. (2 April 2014). Entrepreneurs vie to turn heat-trapping gas into a red-hot commodity. Greenwire. www.eenews.net/greenwire/stories/1059997195

The content in Cornerstone does not necessarily reflect the views of the World Coal Association or its members.

http://cornerstonemag.net/hedging-carbon/

Can Canada's worst polluters lead the battle against CO2 emissions?

Wed, 2 Apr 2014 11:20:12 -0700

By Marc Gunther
The Guardian

We recycle paper, plastic, aluminum and glass. So why not carbon?

Taking carbon dioxide, a greenhouse gas, and making it into something useful could help solve the climate crisis, if it could be done on a large scale. But capturing carbon emissions from power plants and turning them into fuels, feed, chemicals or building materials has so far proven to be an expensive and difficult proposition.

Lately, though, a burst of financial and technical support for recycling carbon emissions has come from an unexpected source: the Canadian oil sands industry.

Reviled by environmentalists, pilloried by Canadian rock legend Neil Young and denounced by crusading climate scientist James Hansen, the oil sands industry seems an unlikely partner in the battle against carbon emissions. But its interest in finding a carbon-dioxide solution actually makes sense.

After all, the coal, oil and natural gas industries produce more CO2 than anybody else. And given current legal trends, it's clear that they don't expect to be able to dump it into the atmosphere, willy-nilly, for free and forever. Alberta, the western province that is home to the oil sands and is Canada's closest thing to Texas, enacted a $15-per-ton carbon tax in 2007. Next door, British Columbia charges a $30-per-ton carbon tax.

That's not nearly expensive enough to persuade fossil fuel generators to capture CO2 from their plants, but if the taxes get higher – and companies could find a way to recycle CO2 into new products – the economics of carbon capture might begin to make sense.

"We know that we are headed to a carbon constrained future," explains Bob Mitchell, senior director of the oil sands business unit at ConocoPhillips Canada. "We need a whole portfolio of options for getting our costs down and revenues up from the capture and reuse of CO2."

Mitchell spoke about carbon recycling last week at Globe 2014, North America's biggest environmental and business conference.

Carbon recycling could become a pillar of the so-called circular economy, where waste of all kinds becomes the nutrients for new products.

Thirteen fossil fuel companies that operate in Alberta have formed an unusual partnership to limit the environmental impact of oil sands development on land, water and the climate. Formed in 2012, Canada's Oil Sands Innovation Alliance (COSIA),has emerged as a key entity in the carbon recycling movement.

Among other things, COSIA is supporting a pilot plant being built by Canadian Natural Resources Ltd, a member company, that will use waste carbon to produce algae-based fuel. The biorefinery will capture carbon dioxide from oil sands facilities and feed it to algae grown in large tanks warmed by waste heat, which is also produced by the oil sands. If all goes well, the algae will produce a low-carbon bio-based oil that could be used for jet fuel or blended into synthetic crude oil.

COSIA is also collaborating with Prize Capital, a small California company that provides early-stage capital to startups; with Tri-State Generation and Transmission Association, a Colorado-based coal-burning power generator that has financed research into carbon recycling; and with the X-Prize Foundation, which is developing a prize for carbon capture and reuse.

These collaborations aim to reframe the conversation about CO2. "Most people think of CO2 as a problem," says Lee Stein, the founder and CEO of Prize Capital. What would it be like, he muses, to live in a world where CO2 is an asset, to be embraced?

Separately, the Climate Change and Emissions Management Corporation (CCEMC), an independent agency funded by Alberta's carbon tax revenues, has launched what it calls a "grand challenge" to find ways to "convert carbon dioxide arising from greenhouse gases (GHGs) into valuable carbon-based products." CCEMC says it will invest up to $35m in carbon tax revenues to fund promising technologies with breakthrough potential.
"There's a tremendous amount of activity going on in Alberta," says Nicholas Eisenberger of Pure Energy Partners, a consultancy that works on carbon recycling, among other things. Eisenberger describes carbon recycling as a "compelling, potentially world-changing idea that could create a tremendous amount of value". But, he adds: "We're a far cry from that today."

It's not for lack of trying. Merely capturing carbon-dioxide is expensive: it costs more than $90 to recover a ton of CO2 from the smokestack of a coal or natural gas plant. The US government has spent billions of dollars trying to bring down the capturing CO2 from coal plants. Canada has offset some of the costs by using captured CO2 for enhanced oil recovery. This has economic benefits, but at least one environmental downside: it produces more oil, which ultimately results in more emissions. Meanwhile, China, which burns nearly as much coal as the rest of the world put together, has a dozen carbon capture projects underway. Despite the costs, some environmentalists believe that capturing carbon from power plants is an essential climate solution.

Recycling is essentially a "way to buy down the cost of capture," says Lee Stein of Prize Capital, which has extensively researched the technology. In a 2011 report, Prize Capital identified 136 companies, entrepreneurs, university labs or governments that are seeking ways to use CO2 as a feedstock for valuable products. The report identified three basic approaches to recycling: a biological approach, which uses organisms such as algae to absorb CO2 and produce fuels; a chemical or catalytic process which breaks the carbon-oxygen bond in CO2 and then combines carbon with other elements; and mineralization, which locks CO2 into solid structures to make building materials or plastics.

In a new report, Commercializing the CO2 Asset Industry (pdf), Prize Capital seeks to identify the elements that will be needed to develop a capital-intensive CO2 recycling industry, absent significant government support. The report suggests an international prize; an investment platform to connect startups with financiers; and "integrated energy" test centers, where innovators could try out their technologies in collaboration with potential partners and customers.

Recycling CO2 has proven a lot harder than recycling paper or plastic. But the stakes are higher – and the potential rewards much greater.

http://www.theguardian.com/sustainable-business/canadian-oil-companies-carbon-capture-recycling

A Story of Carbon and a New Model of Clean-Tech Investment

Fri, 21 Jun 2013 12:51:09 -0700

By Tom Schueneman
Triple Pundit

Like Prometheus handing down fire from the Gods, harnessing the immense power of fossil energy has made possible the modern world we inhabit. But, as in the Greek legend, with that sudden power comes the threat of unacceptable cost for generations to come. In the more prosaic world of our daily lives, carbon emissions are the consequence of the “fire” we have tamed from ancient sunlight, upsetting the finely-tuned balance of carbon reservoirs on our planet.

With some halting progress in carbon reduction programs at the regional and national level notwithstanding, an international climate agreement regulating carbon emissions remains years away from implementation and likely not up to the task at hand in any case.

Even with emissions decreasing in the United States, globally, where it counts, the rate of increase continues. As concentrations of atmospheric CO2 slip past 400 parts per million (ppm) it is increasingly clear that a new energy economy requires not only innovation in renewable energy sources, but innovation in how we manage carbon from fossil fuels, which are not going away anytime soon, whether we like it or not. What might a new “outside the box” way of thinking about and dealing with carbon emissions – and the power plant that produces – look like? What if carbon was no longer a liability, but an asset?

Sound a little crazy? Not for clean-tech investment firm Prize Capital or energy co-op Tri-State Generation and Transmission Association.

Clean tech and carbon

Founded by serial entrepreneur Lee Stein, Prize Capital’s investment model was initially geared around prize competitions through a partnership with the X-Prize Foundation.

“These X-Prize competitions are fantastic tools for attracting new sources of innovation and generating breakthroughs in very in very complex areas.” says Matt Peak, Vice President, for Prize Capital.

Not only does the model attract new sources of innovation, it is driven by passionate people hungry to make an impact and starving for early stage capital to make it happen. Perfect for Prize Capital: lean, mean and ready to change the world. So in 2008, Peak was charged with finding the first application of the Prize Capital investment model.

Algae eats carbon – the story begins

“We looked at Algae,” says Peak, “because biofuels were still really talked about at the time, there were initiatives talking about how to scale-up biofuel production in the United States and really algae was the way to do it.”

But, as Peak explains, the landscape algae quickly changed for algae. The Big Boys – Shell, Exxon-Mobile, Chevron – essentially shooed aside the small-time innovators and venture capitalists with their own claim of “an answer” for algae biofuel production. Suddenly algae research seemed less appropriate for the Prize Capital model. But why think of algae just as an end product of transportation fuel? Finding innovators right for Prize Capital required some innovation of its own.

“We looked at the role, the function, that algae could play in an operating system,” says Peak. “Mainly that it absorbs double the weight of carbon for every ton of biomass.”
It was at an algae convention that discussions began with soon-to-be colleagues of Denver-based Tri-State that Peak suspected that Prize Capital had their first project. Biofuel-focused algae research broadened to all aspects of carbon utilization, thinking of carbon emissions as a commodity instead just a waste stream – an asset instead of a liability.

“Why don’t we look at not just biological, algae oriented, but basically open it up to any source of innovation, any source of technology that can capture and then utilize carbon dioxide to produce something. Whether it’s fuel or whether it’s other goods, services, materials, etc.”

Tinkerers in their labs: the carbon utilization landscape

With this epiphany came realization that it still all might be so much hot air. Was the idea of commercial-scale carbon utilization viable? Peak and his team began exploring the research landscape to find out “who is doing what in the space of carbon recycling.”

In 2011 Prize Capital published an industry overview of what Peak calls the “emerging carbon capture and recycling industry.” The report profiles 136 emerging technologies and players within the industry, from corporations to universities and research labs pursuing carbon capture and recycling concepts.

Based on this research Peak realized the field was ripe for what Prize Capital had to offer.

“There’re innovators there,” says Peak. “They’re very nascent, they’re very early stage, they’re in a laboratory, they’re not in the real world, they’re far from being scaled up – but they are there.”

So far so good. When Tri-State agreed there was potential, but suggested that research focusing on carbon recycling needed “somebody to match up for carbon capture.” Recycling the carbon is one thing, but the carbon must be captured and current carbon capture technologies are inefficient and cost-intensive. Typically a power plant needs to scale up 20 to 30 percent simply to power the carbon capture process. Any new carbon recycling technology and commodification process requires a more efficient, cost effective means of capture.

The folks working in the carbon recycling labs needed to hook up with the folks working the carbon capture labs.

Carbon capture innovation

Peak’s team went back out, looking specifically for the most innovative approaches in carbon capture currently being pioneered and tested in labs. From that 90 emerging innovators were identified working on capture; as with the original survey, these are folks were working quietly in their labs, far from the harsh realities of scaled-up, power-hungry world.

By this time, Prize Capital, working closely with Tri-State, was satisfied they’d done their due diligence, ready now to support these emerging innovators. But potential is unrealized until it can be tested and proven – no longer in the lab but under real world conditions. Helping these emerging innovators through a process of “radical advancement” from their current fledgling stages of development, cultivating the best ideas could reach commercial potential was the commitment. So once again it was back to the drawing board for Prize Capital and Tri-State – “mapping things out, white-boarding, sketching things out” – to determine the next step to realize that commitment.

A real world shop

These emergent innovators needed a real world place to setup shop and “plug in their technologies to a real world operating facility and work hand-in-hand with guys that might be their eventual customers,” says Peak. Ideas that look good in the lab may not withstand the crucible of real-world testing and scrutiny.

Getting a “real world experience” requires access to, well, the real world. In the case of of carbon capture and recycling that means access to a commercial scale power plant. Utilities aren’t in the business of providing test facilities for fledgling inventors, engineers and designers typically capitalized for under $1 million; they’re in business to make sure the lights turn on whenever a customer throws the switch – and nobody wants to pay too much for it either.
There are one or two carbon capture test centers in the world, but there exists no end-to-end carbon capture and recycling test center. The construction of the Escalante Integrated EnergyTest Center will mark the first of its kind.
Says Peak:

“…Tri-State, to their credit, didn’t hesitate and said ‘hey, we’ll open up our Escalante power station to these innovators. We’ll allocate land adjacent to the facility, basically building out receptacles.”

“Think of it as a housing development,” explains Peak, “where somebody comes in and prepares the land, provides resources for what would come next in terms of CO2 from flu gas flowing into plots, electricity provided, water provided, waste disposal, common areas to meet, privacy fences so that nobody’s looking at or getting ideas as to your proprietary technology.”

The test center will “modular” facility with plots of land available where innovators can come and literally plug their ideas into the messy, somewhat unpredictable world we all inhabit and prove to the world that they’re on to something – or not. But either way it’s something that simply isn’t possible to do in the lab.

Win-win

Despite the risks and challenges Tri-State might face in building an energy test center, there is mutual benefit as well. Working with these innovators, Tri-State gets first-hand access to the best emerging technologies, sees their potential, characteristics and requirements for commercial-scale use. Again, something not possible in a lab.

In fact, the whole concept appealed to Tri-State so much they are looking beyond just carbon capture and recycling for future testing projects – why not open up the entire power plant to new sources of innovation? The whole conventional power production chain is “ripe for innovation.” Why not provide people working on new methods of working with coal, enhance a steam cycle, mitigate other sources pollution – all the way to improving duct fan sealings – the same access for testing and development.

More ideas flowed, and one more trip back to the drawing board was needed; this time to look into the history and practicality of creating a fully integrated test center supporting supporting emergent carbon technologies from end-to-end. The result was a report entitled An Integrated Energy Test Center: Leveraging Experience to Create a Unique Test Center for Diverse Clean Energy Technologies that Augment Conventional Energy Production.

It’s a mouthful, but the proprietary report reviews the current availability of energy test centers throughout the world and clarifies the need for an integrated carbon test facility focused on clean energy applications to conventional energy production.

It’s a go

The Integrated Energy Test Center “is all a Go,” says Peak. What’s left before construction can begin is a matter of logistics and finalizing their roster of strategic partners ready to work with emerging technologies and help find real solutions.

As much as a physical facility, the process we’ve journeyed through here is, as Peak puts it, “a framework for innovation creating a process whereby regulation, which is at a standstill, almost becomes irrelevant. Because the innovation process kicks off, value is created for all those that are involved and there’s a rush to adopt these technologies. In our vision, that is the outcome.”

Change the world, win a prize (or is it the other way around?)

The prize model isn’t necessarily new. One can go back several centuries when the British Parliament convened the Board of Longitude in 1714, offering a £20,000 prize for anyone that could figure out a way to accurately measure longitude. John Harrison, a little-known clockmaker, eventually devised a chronometer capable of measuring longitude at sea and radically advancing global navigation. But back then Harrison worked largely by himself, at odds with the “big players”of the day (astronomers) and with limited access to test his ideas.

Peak and his team, along with the support from Tri-State, takes the notion of motivating innovations through monetary reward a bit further.

“If you look at it,” says Peak, “the approach we are taking turns the notion of CO2 on its head. It changes carbon dioxide from a liability into an asset. As we know, liabilities are shunned, people don’t want to deal with liabilities, they don’t embrace liabilities. Whereas assets are hoarded. So if we’re able to do that it’s almost as if we could feasibly create a situation in the future where people rush to mitigate carbon dioxide emissions.”

Now wouldn’t that be something innovative and new?

It could be the stuff of legend.

http://www.triplepundit.com/2013/06/story-carbon-new-model-clean-tech-investment/

Prize Capital Report Profiles 90 Unconventional Carbon Capture Technologies

Tue, 31 Jan 2012 12:32:34 -0800

Prize Capital, LLC today released a supplement to its groundbreaking Carbon Capture and Recycling (CCR) Industry Overview report that profiles emerging technologies that capture carbon dioxide (CO2) from industrial facilities. This captured CO2 can subsequently be used by CCR technologies as a feedstock in the production of valuable products such as fuel, building materials, animal feed, specialty chemicals, and plastics, among others, providing end-to-end solutions for industry members.

This new Emerging Carbon Capture Technologies report focuses its examination on “post-combustion” carbon capture technologies, given that this existing power generation infrastructure is where CCR technologies are most applicable. The report is an aggregation of information, data, and developments in the field of carbon capture, with a particular eye towards the targets of recent government funding, given that the government has been by far the industry’s largest funding source.

Carbon capture technologies support efficient carbon recycling

“In our first report, we examined the carbon mitigation option in CCR,” said Matt Peak, Prize Capital’s director of clean technologies and the report’s author. “Yet many CCR technologies and approaches aren’t able to utilize raw flue gas and instead require a relatively pure stream of CO2. In cases such as these, breaking through the challenges associated with conventional carbon capture is essential.”

As the report outlines, current carbon capture technologies have focused on amines and chilled ammonia. These approaches were developed decades ago for use in other industries, such as synthetic ammonia production, H2 production, and limestone calcination, where they have served these industries well given the relatively low volumes of carbon captured and high price points. Yet now that the power industry is examining carbon capture approaches and experimenting with scaling up these existing technologies to meet their volumetric needs and price-points, the industry is realizing that these traditional technologies are falling short. Furthermore, the current requisite hundreds of millions of dollars of investment required to capture and separate CO2 must be radically reduced for carbon capture from power plants to be viable.

Seven technology categories receive significant federal funding

In order to spur advancements, governments around the world have provided billions of dollars in funding to support the development of carbon capture breakthroughs. In the United States, the Department of Energy (DOE) has been actively funding technological development of advanced technologies for a decade, and has dramatically increased its level of financial support in recent years, largely through its National Energy Technology Laboratory (NETL) and Advanced Research Projects Agency-Energy (ARPA-E).
The new report profiles breakthrough technologies that have been targeted by these agencies in the areas of solvents, enzyme-based systems, physical sorbents, precipitated calcium carbonate, ionic liquids, gas separation membranes, and metal organic frameworks (MOFs).

Electric utilities seek end-to-end solution

Tri-State Generation and Transmission Association, a consumer-owned, not-for-profit wholesale power supplier serving 44 electric cooperatives in four western states, sponsored the report to help identify the range of carbon capture technology opportunities that could work with the emerging CCR technologies and in turn assist the power supplier to cost effectively manage carbon emissions.
“We seek an end-to-end solution,” said Ken Anderson, Tri-State’s chief executive officer. “A solution that can plug in to power plants and convert carbon that is currently emitted or thrown away into a product that creates value, and can help ensure cost-effective solutions to keep electric power affordable and reliable.”

As the new report outlines, arriving at an end-to-end solution will require cross-pollination between the CCR and carbon capture industries and a significant level of experimentation to determine which combination of CCR and carbon capture technologies perform best. Given that there are 136 (and counting) emerging CCR entities and 90 emerging carbon capture entities presented in this new report alone, simply providing a platform to allow these various entities to experiment with each other leaves the door open for nearly 13,000 possible end-to-end solutions.

The report concludes that the key to realizing the reality and potential of end-to-end solutions is constructing the platform that allows for and encourages just such experimentations, promoting collaborative competition resulting in the diversification of innovation.

The report is available as a supplement to Prize Capital’s Carbon Capture and Recycling (CCR) Industry Overview report, which is available via the Prize Capital website: http://www.prizecapital.net

About Prize Capital, LLC Prize Capital, LLC was established by entrepreneur and environmentalist Lee Stein to provide capital to environmental start-ups worldwide while reducing risk for investors. Its proprietary methodology diversifies risk and widens market access, enabling Prize Capital to deliver capital to innovators from early-stage companies not served within current financial markets. Prize Capital’s parallel investment funds mitigate risk through a unique option equity strategy and create additional leverage through the prize mechanism. For additional information, visit www.prizecapital.net

###

CONTACTS – Prize Capital, LLC
Matt Peak, Director of Clean Technologies Mobile: +1 (213) 327-8935 Email: matt@prizecapital.net

Prize Capital Chairman Lee Stein Speaks at TEDMED

Tue, 17 Jan 2012 10:03:08 -0800

Stein talks about how his son's 150-foot fall led to a unique and urgent interdisciplinary medical collaboration, leading to accelerated breakthroughs in medical imaging.

Prize Capital Report Identifies Emerging “Carbon Capture and Recycling” Industry; Profiles 136 Different Entities

Tue, 13 Sep 2011 15:48:52 -0700

Prize Capital, LLC today released a comprehensive Carbon Capture and Recycling (CCR) Industry Overview report detailing an emerging industry whose technologies are using carbon dioxide (CO2) as a feedstock in the production of valuable products such as fuel, building materials, animal feed, specialty chemicals, and plastics, among others.

The report takes an initial look at this industry and the innovators within it. It examines the rationale for CCR, current CCR approaches, the forces shaping such approaches, and focuses the majority of its content on providing snapshots of the innovators leading the creation of this new industry, including their respective stages of development as they march towards commercialization.

“While carbon capture and sequestration (CCS) is the most frequently discussed approach to carbon mitigation, we’ve discovered another potential option and complement in CCR,” said Matt Peak, Prize Capital’s director of clean technologies and the report’s author. “With the right catalyst, this nascent industry could be spurred to not just reduce carbon emissions, but also to enhance operators’ bottom lines.”

As outlined in the report, the industry’s technologies fall into three categories: Biological, chemical and catalytic, and mineralization. The report identifies, profiles, and provides contact information for 136 different entities working on various CCR approaches: 37 biological, 63 chemical and catalytic, 23 mineralization, 1 blended approach, and 12 uncategorized entities.

In addition to 136 CCR entities, the report recognizes the attention that the biological category has received in recent years by not only profiling the 37 biological entities that are either applying or have applied their technologies to the utilization of power plant flue gas, but also providing names, descriptions, and contact information of an additional 260 biological companies, universities, and laboratories in an appendix that have the potential to utilize flue gas but aren’t known to explicitly do so at this time.

Tri-State Generation and Transmission Association, a consumer-owned, not-for-profit wholesale power supplier serving 44 electric cooperatives in four western states, provided funding for the report to help identify the range of CCR technology opportunities that could assist the power supplier to cost effectively manage carbon emissions.

“The innovation in the CCR space will be revolutionary for our industry,” said Ken Anderson, Tri-State’s chief executive officer. “Turning carbon liabilities into assets is a significant shift in thinking that could help ensure cost-effective solutions to keep electric power affordable and reliable.”

Altogether, the CCR entities vary in size from unfunded concept to over $50 million in funding received. They’re being developed within private companies as well as at universities and laboratories around the world. They have received government and private funding totaling approximately $1 billion. Some are offering full spectrum solutions from capture to reuse, while others focus only on reuse and need viable capture solutions to realize their potentials.

As the report outlines, the challenges associated with commercializing and deploying CCR technologies include: being able to recycle carbon year round, in various climactic conditions; thermodynamic and thermochemical logistics and efficiencies; scalability; proximity to necessary resources; as well as others.

With the emerging array of technologies and producers, as well as the current slate of technological challenges, the report states that investors and other interested parties, as well as the CCR industry itself, would benefit from models that promote diversity of innovation as well as financial diversity, rather than placing “bets” on single technologies and producers.

The report concludes that in the near-term, this new industry represents a paradigm change that could avert the need to resolve complex issues associated with CCS and prompt renewed action on carbon mitigation. Such action is essential as a carbon-constrained world emerges.

The report is available for $10,000 via the Prize Capital website: http://www.prizecapital.net

About Prize Capital, LLC Prize Capital, LLC was established by entrepreneur and environmentalist Lee Stein to provide capital to environmental start-ups worldwide while reducing risk for investors. Its proprietary methodology diversifies risk and widens market access, enabling Prize Capital to deliver capital to innovators from early-stage companies not served within current financial markets. Prize Capital’s parallel investment funds mitigate risk through a unique option equity strategy and create additional leverage through the prize mechanism. For additional information, visit www.prizecapital.net

###

CONTACTS – Prize Capital, LLC
Matt Peak, Director of Clean Technologies Mobile: +1 (213) 327-8935 Email: matt@prizecapital.net

Foreign Policy’s Steve Levine on Prize Capital and the Carbon Capture and Recycling Prize

Wed, 15 Sep 2010 13:59:44 -0700

Posted By Steve LeVine, Foreign Policy Magazine

Prizes are a much-ballyhooed notion for how to produce big technological breakthroughs. Most recently, the federal government last week launched Challenge.gov, a website posing cash challenges from government agencies.

Tomorrow, the X Prize Foundation (above) will announce the winners of a $10 million contest for a 100-mile-per-gallon car. With all the hoopla and celebrity surrounding the idea, it couldn't have been long before venture capitalists sought a way in on the action. So it is that today a fellow named Matt Peak dropped by the office to discuss a new venture fund seeking to do just that. It's interesting for our purposes because the first prize Peak is talking about offering is $10 million for recycling the carbon emissions of coal-fired power plants.

Peak works for Prize Capital, a San Diego-based firm run by an entrepreneur named Lee Stein, whose idea is to leverage the motivations and requirements of the world's inventor class: Big Cash. In a nutshell, a $10 million prize sounds sweet, and garages have been oh-so-poetic ever since Hewlett and Packard (I wrote The Oil and the Glory next door to their garage, by the way, on Addison Avenue in Palo Alto). But these days how does one realistically finance an expensive experiment, such as recycling coal emissions? Prize Capital plans to offer up investment money to competitors in prize competitions in exchange for a passive share (meaning no voting rights) in any resulting business enterprise. (Here is an embarrassingly fawning profile of Stein from the Daily Transcript.)

As of now, the idea is in its embryonic stage. The firm is partnering with the X Prize Foundation to run the carbon-recycling competition -- in an email exchange, X Prize chairman Peter Diamandis told me that he's working with Stein on "selected projects" -- with a target launch date in 2012. Stein has raised the $10 million prize money (Peak asked me not to reveal the name of the sponsor). Now comes the tricky part: figuring out the contest rules. This is where the rubber hits the road -- competitors will vie for a prize only if the rules are compellingly intriguing, and the aim seems ultimately reachable.

In this case, the most publicized idea for reducing coal-fired pollution is to sequester it underground. Last week, Energy Secretary Steven Chu went to West Virginia to talk about such potential technology in a public forum with Sen. Jay Rockefeller. But this is politics. Big Coal is mighty powerful in Washington, and so we get these mollifying events while forces elsewhere attempt to develop clean-energy technology that actually has a fighting chance to work.

One notion, which the algae crowd has bandied about for some time, is not to bury the carbon -- which raises a host of skepticism and fearsome questions -- but transform it into something else that can be reused. For instance, the algae folks suggest capturing carbon emissions in algae, then burning the algae again, followed by another round of algae capture.

http://oilandglory.foreignpolicy.com/posts/2010/09/15/eyes_on_the_prize

Read more on the Carbon Capture and Recycling Prize here.

Prize Capital Chairman Lee Stein Profiled in San Diego’s The Daily Transcript

Fri, 9 Jul 2010 08:42:47 -0700

Close-up: Lee Stein
Serial entrepreneur changes focus toward environment

By REBECCA GO , The Daily Transcript

When the solution is obvious to Lee Stein, he acts. He doesn't just sit there; he does something about it, and he does it in a big way.

For example, when Stein and his wife of 34 years, June, tired of train horns blaring insistently past his Del Mar home office, signaling their approach to a railroad crossing, Stein started looking for an alternative. He researched federal railroad law, involved the city manager, the North County Transit Board and the Del Mar City Council, and formed a Quiet Zone Committee.

Before a year was up, the group had tested the viability of installing a quieter, stationary wayside horn that could be signaled remotely by an approaching train and was working on securing an exact cost estimate by mid-July.

Stein "is the fellow that's the spark plug," Quiet Zone Committee chair Hershell Price said. "He's a born leader."
Compared to some of Stein's other projects, however, the wayside horn -- although certainly of consequence to Del Mar's ocean-view residents -- seems to be small potatoes. Now in his mid-50s, Stein has moved through his career with a decisiveness and foresight that some would call almost prescient.

Educated as an accountant at Syracuse University and an attorney at Villanova University, Stein began his career as a Beverly Hills accountant to the stars, with a client list that included Journey, Men at Work, Gene Hackman, Matthew Broderick and Rod Stewart.

He then worked in real estate finance and development, investing in Seaport Village and developing the Ramada Main hotel at Disneyland -- and then selling his real estate interests before the market bottomed in 1990 to "retire" at 37. In 1993, within two days of being introduced to an Internet modem -- in a chance airport meeting with Internet pioneer Einar Stefferud -- Stein co-founded Internet commerce company First Virtual Holdings, which offered PayPal-like services before PayPal even existed. He eventually took First Virtual public and later sold the patents to eBay.

The Rancho Santa Fe resident shrugs it off, for the most part.

"I can see around corners," said the mild-mannered Stein, who seems to prefer multi-tasking to sleeping and says he tracks 172 blogs. "I've always had the ability to see things early. I don't know how to describe it better than that."
Today, Stein's focus is on environmentalism -- for its economic opportunities as well as its commitment to preserving the planet.

His latest creation, Prize Capital, aims to attract capital to fund green prize competitions. Contestants will develop technology that will solve the planet's problems and vie for a prize of $10 million in cash.

The contests are modeled on those run by the X Prize Foundation, which will facilitate some of Prize Capital's contests as well. X Prize Foundation is the nonprofit behind the Ansari X Prize that sent a three-passenger vehicle 100 kilometers into space twice within two weeks.

The first of Prize Capital's contests will focus on capturing carbon and recycling it -- "solving the coal problem," as Stein puts it, by turning carbon emissions "into an asset instead of a liability." Prize Capital will act as an incubator, providing office space, research labs and access to a stream of flue gas for experiments and research.

Flue gas is gas that is produced through the combustion of fuel. Prize Capital plans to partner with a Midwest power plant for the flue gas, Stein said.

The competition relieves both capital market and regulatory burdens, Stein said. Most investors are not prepared to fund ideas that are early stage and unproven, and Prize Capital will provide incentive as well as capital for research and development.

Also, regulators would probably be reluctant to approve an individual's request to use or create a flue gas source for experimentation. A large group and a prize competition are much harder to deny.

"Prizes have to get it done when there are other impediments," Stein said. "The great thing about the prize is that there are four or five different things that won't necessarily win the market share or win the prize, but the prize gives them publicity."

Stein has spent the last four years developing a risk mitigation strategy involving options and honing in on the contest theme of carbon capture and recycling. He recently secured a sponsor as well as funding, but declined to provide details as the agreement is still being finalized.
Stein expects to announce the specifics, including the contest rules, in December.

For Stein, his work in the environmental space is obvious, even logical. There are business opportunities and job creation opportunities in optimizing a reliable but inefficient energy system, Stein points out.

Beyond that, however, companies, individuals and governments need to start implementing industry "best practices" and take into account what Stein and others are calling "natural capital." An Earth depleted of its resources is not good for humanity, let alone business.

Stein, who tends to speak in stories and anecdotes, uses fishing as an example: Going fishing and selling the fish creates economic growth. Fishing to maximize growth kills off the natural capital and halts growth entirely in the long term.

"I think anthropologists will find that our definition of GDP (gross domestic product) was improper," said Stein, who terms the present time a "resource depletion age." "We have dead zones (of ocean) around the planet. Why do we tolerate one square foot of dead space? I don't understand."
Outside of the prize competitions, Prize Capital is also working to promote sustainable business -- such as ecotourism -- on the Osa Peninsula in Costa Rica, a country whose president has committed to making it a petroleum-free zone. Stein is often part of delegations supporting various environmental initiatives and speaks at events around the world.

Stein's foray into green projects began earlier in the decade, when he became active in trying to bridge the gap between business professionals and environmentalists. He co-founded the Southern California chapter of Environmental Entrepreneurs, or E2, and played a role in helping state Sen. Fran Pavley pass a "clean cars bill" that would aim to reduce greenhouse gas emissions from passenger vehicles.
"You have a lot of people who do not talk to each other. I like to get them around the table and help them find a solution," Stein said. "The easiest way to find consensus is to get people talking to each other."

Those who know Stein well or who have worked with him say he has an uncanny ability to make connections between seemingly disparate ideas and bring talented people together to work toward a common end.

"When I think of Lee, the word that always comes to mind is 'Rolodex,'" said Bob Epstein, who sat on the board of First Virtual in the mid-1990s and is the co-founder of E2 and a green bank in San Francisco. "He's the master of maintaining relationships and knowing when to use them."
Stein agrees that he's not afraid to "cross-pollinate" between different groups of people. His early experience solving a myriad of problems for rock stars helped him become a "general contractor of special services," Stein quipped.
He admitted his approach has only gotten better with time. He is far more process-oriented; he has a handbook for his administrative assistant. He likes to "build concentric circles" when solving a problem: Stein starts with a core group and then reaches out to include more and more people to achieve the best solution.

The event that changed Stein's life, however, was when he learned at 37 that he had an inoperable cerebral aneurysm, in which an artery in the brain swells due to weakening in the vessel walls. Stein had an 85 percent chance of dying or having a stroke at any moment. The aneurysm inexplicably healed, but the situation forced Stein to re-evaluate how he spent his time.

"It was the ultimate concept of living in the moment," Stein said. "I wouldn't wish it on anybody, but it was life-defining."
So, where will Stein spend his time next? He sees wireless health as an exciting opportunity, but says he prefers to be "monogamous" in his projects. Whatever the case, Stein is sure that his insatiable curiosity will lead him to new ideas, information and people, and his need to improve upon the status quo will see him offering up another solution once again.

http://www.sddt.com/Finance/article.cfm?SourceCode=20100709tbe#

http://m.sddt.com/article.cfm?SourceCode=20100709tbe

Lee Stein to Participate in Prestigious Panel Discussion of Clean/Green Industry

Wed, 3 Mar 2010 16:07:01 -0800

Prize Capital Chairman and CEO Lee Stein will participate on a panel of experts on Friday March 26, 2010 at The University Club in San Diego to discuss the importance of the clean/green industry.

Joining Stein on the panel will be Irene Stillings, CEO Center for Sustainable Energy, and Lisa Bicker, CEO, Clean Tech San Diego. The moderator for this event is Stephen Mayfield, Associate Dean, Kellogg School of Science & Technology.

More information can be found at: http://www.clubcorp.com/club/scripts/calendar/view_club_calendaritem.asp?CID=771867&GRP=10&NS=PCH&MFCODE=UCAST&src=w

Prize Capital Speaking at and Sponsoring the 3rd Annual Algae Biomass Summit

Mon, 5 Oct 2009 21:08:27 -0700

Prize Capital will be speaking about the Algae Fuel Prize and the opportunities it presents at the 2009 Algae Biomass Summit, on October 7 at 5:30 PM at the Marriott San Diego Hotel in San Diego, California. Prize Capital is also sponsoring the opening night reception, which immediately follows its presentation, and serving as an overall Silver Sponsor of this three-day event.

The Algae Biomass Summit is the official conference of the Algal Biomass Organization (ABO) and the algal industry's premier global conference. The ABO is expecting to draw more than 800 attendees for this event, which lasts between October 7-9, exploring the development of algae-based solutions to global energy, environmental, and economic issues.

For more information and to register to attend this event, click here.

Prize Capital Presents at the California Energy Commission’s Workshop on Renewable Fuels

Tue, 15 Sep 2009 10:00:05 -0700

At the invitation of the California Energy Commission (CEC), Prize Capital’s Matt Peak presented on algae-based renewable fuels at the CEC’s Staff Workshop for the 2010-11 Investment Plan. Peak sat on a panel with Steve Mayfield, professor at the University of California San Diego and founder of Sapphire Energy, and Matthew Frome of Solazyme.

The Prize Capital presentation discussed the status of algae technology, and what is required to establish in-state algae fuel facilities.

Specifically, Peak outlined why Prize Capital is focusing on California-based algae fuel companies, specifically through its development of the Prize Capital Algae Fuel Prize. The presentation conveyed Prize Capital’s interest in investing in companies that are poised to produce (rather than simply research) algae-based renewable fuels while maintaining the highest of environmental standards (in a landscape where such standards don’t yet exist), and how the Prize Capital Algae Fuel Prize provides a mechanism to source such companies.

The uniqueness of the Prize Capital venture finance model – as it would be applied in the Algae Fuel Prize – was also discussed as a pioneering way to leverage prizes and direct more investment in algae producers who set up production facilities in California to chase the prize. The Algae Fuel Prize presents a very powerful and winning package for the state, for competitors, and for investors.

The purpose of the Investment Plan Workshop was to obtain specific information and data on market, technology and policy issues related to the production, distribution and sales of biofuels in California. The outcome will assist CEC staff in the preparation of the 2010-2011 AB 118 Investment Plan for the Alternative and Renewable Fuel and Vehicle Technology Program.

More information on the Algae Fuel Prize can be found here.

Watch a WebEx recording of Prize Capital’s testimony at the California Energy Commission’s Staff Workshop for the 2010-11 Investment Plan by clicking here.

Eyes on the Prize

Sat, 1 Aug 2009 10:26:00 -0700

By David Strom
David Strom’s Web Informant

The news last month that two groups of computational researchers have qualified for the $1 million Netflix Prize got me thinking about how other prizes have had a very influential role in technology development. For those of you that missed this nugget, several dozen different computer scientists and mathematicians have tried over the past year to improve upon the algorithms that Netflix uses to recommend new videos to its subscribers. The teams that could get better than a 10% improvement (defined very precisely by Netflix) would qualify to win the prize purse.

This is only the latest in a series of prize-motivated developments. For the past three years, a group of southern California investors have been working on a venture called Prize Capital. The effort grew out of the work of the Ansari X PRIZE Foundation that awarded a $10 million prize in 2004 for the first private spaceflight.

Prize Capital combines old-fashioned greed with socially conscious investing on a grand scale. Their concept is thrilling, with a simple idea at its core. An investment firm creates a fund that will be used to invest in the total field of competitors in a single niche market. The complexity comes about in its execution, which may be why no one has ever tried to do it on the scale that they envision before now. The first prize effort is underway to develop better biofuels.

Unlike traditional venture funds that invest in multiple companies or sector funds that serve particular markets, the prize capital model starts with this “matrix fund”. The genius behind the idea is that this fund drives an entire ecosystem for directing high-return innovations. The largest and most noticeable element is a very public science contest that all of the funded companies take part in, going after a ten million dollar prize purse and racing to be the first to establish a particular invention, task, or medical cure.

The Prize Capital notion is revolutionary and differs from existing venture or sector funds on several different dimensions. First, the combination of the matrix funding model with the prize competition is a brilliant deal-discovery mechanism. The allure of the challenge and the chance to be in the spotlight, not to mention the actual cash prize itself, can help to locate and identify potential technology solutions in a particular market niche. Because the prize is a public one, the bright light of worldwide publicity associated with the contest can help bring about all sorts of benefits to the competing companies, including attracting additional investors and management talent.

Second, “the matrix model permits investors to bet on every horse in the race,” says Lee Stein, one of the founders of Prize Capital and an early leader in the Internet payments industry in the mid-1990s. “A lot of times VCs don’t make investments because they have a short list of companies in a particular niche but can only invest in one. The matrix model enables them to play the full field and spread their risk.”

Traditional venture capital funding is not structured to take positions in direct competitors, while the matrix concept relishes this situation. Prize Capital leverages its relationship with the prize management industry to take positions with everyone in a given field. As long as the competition is attractive enough to cause everyone in a given field to enter a particular competition, the result is a new opportunity for investors to become involved with cutting edge technology. Spreading the investments across the matrix can create additional leverage and reduce the risk of the investors.

A third difference is that Prize Capital will own a royalty stream on the intellectual property generated by the teams in the competition. Even if a given company fails to win the prize, the fund has the ability to succeed.

Fourth, the prize mechanics are important part of the deal, and here is where the groundbreaking work on the Ansari X PRIZE has paid off. These mechanics have to be carefully scripted and innovation targets clearly defined. The competition also requires that the ultimate science must be repeatable and independently verifiable. This was done on the Ansari X PRIZE and is an essential element of any planned future competitions.

The prize is only awarded when a positive report comes back saying everything works. This process is more stringent than that is typically required by peer-reviewed academic journals, the current prestige venue for scientific results. Prize Capital thus could be in an interesting position of being able to set a very high bar here for how basic research is conducted in the future.

While the traditional VC trades capital for equity positions in their portfolio companies, Prize Capital can use other kinds of benefits, including the additional influence from the publicity and activities of the competitors as they work hard to meet the particular goals to win the prize, to secure stakes in the innovation on favorable terms.

Most science competitions have been funded through philanthropic means. Prize Capitalism leverages the large jumps in technology innovation and uses it to fuel an entire ecosystem of investments to take advantage of these innovations.

Look at what happened with the original X PRIZE. That initial $10 million prize purse was leveraged into over $100 million into work being done to develop two spaceports in the New Mexico and Arabian deserts. This isn’t just a lot of dot-com sock puppets or social networking startups depending on ad click-throughs. This is hard-core real estate development, new job creation and engineers building real assets on the ground.

The Prize Capital model has something for everybody. It could bring a ray of hope for many people that are looking at ways to dramatically increase basic research and kick start medical cures. It can co-opt the heavy publicity surrounding the whole prize itself and the take advantage of the spirit of invention and innovation that so often goes hand-in-hand with the best American capitalists. It has universal appeal across nations and cultures too, and can play as well with the new generation of Asian proto-capitalists and with the old crew along Sand Hill Road too. And it has some Hollywood glitz on the order of “American Idol” and yet still appeals to button-down Wall Street bottom-line sensibilities. It is an intriguing mix of investors, capitalists, non-profit charities and philanthropists working hand-in-hand, all in the name of advancing science and fostering innovation. I wish them well and hope to see the fruits of their labors soon. In the meantime, keep your eyes on other prizes.

http://strom.wordpress.com/2009/08/01/prizecapital/

Prize Capital Sponsors, Presents at Imperial Valley Renewable Energy Summit

Wed, 6 May 2009 15:02:35 -0700

Demonstrating its support for efforts to catalyze growth of the Southern California algae-to-fuel industry, Prize Capital is sponsoring the Imperial Valley Renewable Energy Summit. Prize Capital also presented an overview of its Algae Fuel Prize competition to local stakeholders during an afternoon plenary session.

With its sun-drenched and dry climate, many perceive California’s Imperial Valley to be the next great renewable energy frontier - ideal for solar, geothermal, and algae energy development, among others.

This three-day summit focused on these and related issues by facilitating networking, information exchanges between stakeholders, and regional tours. Prize Capital’s efforts centered on the first day, which highlighted and discussed the region’s algae-to-fuel production efforts.

The first half of the day consisted of tours of local algae production facilities. These facilities included Carbon Capture Corporation, SunEco Energy, and Earthrise.

The second half of the day consisted of presentations by experts and stakeholders on algae fuel development efforts. Prize Capital presented on the status and details of its Algae Fuel Prize.

More information on the 2009 Imperial Valley Renewable Energy Summit can be found at: http://www.ivedc.com/?pid=1001.

Prize Capital Moves Closer to Creating $10 Million Algae Fuel Prize

Tue, 28 Apr 2009 16:13:00 -0700

Bruce V. Bigelow
Xconomy

Fourteen years after Peter Diamandis proposed the idea of creating the X Prize to spur development of low-cost spaceflight, San Diego-based Prize Capital said today it has entered the final phase of creating a $10 million prize to encourage advances in algae biofuels technologies.

As part of the final planning process, Prize Capital founder and chairman Lee Stein convened a workshop of 26 leaders to draw up rules and other criteria for what Stein calls the $10 million Algae Fuel Prize. The group met for much of the day at UC San Diego’s Scripps Institution of Oceanography, and Stein told me during a break he had invited venture investors, scientists, environmentalists, and business and government leaders from across the country. But he was not willing to say how long final planning will take before the competition will be unveiled.

“I don’t know how much more work will be needed,” Stein said. “You can’t change the rules after you start.”

In announcing the algae fuel prize, Stein cited the historic success of prize competitions, including Charles Lindbergh’s first flight across the Atlantic Ocean and the $10 million Ansari X Prize. The X Prize was claimed in 2004 by acclaimed aerospace designer Burt Rutan, whose project was supported by Microsoft co-founder Paul Allen.

Stein acknowledges that significant government and venture funding already is flowing to develop commercial fuels from algae. But he said creating a prize competition provides an added incentive by stimulating additional research and by attracting worldwide public attention to specific aspects of a problem. For Stein, that means calling attention to the energy needs of the developing world, which represents the fastest-growing source of carbon dioxide emissions. He said there are billions of people in developing countries “who are living on a $1 a day—and if they get a second dollar, it goes to buy fuel.” Stein hopes that fuels derived from algae, which absorbs carbon dioxide before it is harvested for fuel production, can become a cheaper and cleaner alternative to burning wood, coal, and dung in developing countries.

Prize Capital’s announcement is the culmination of work that began more than a year ago, Stein said, when initial planning began at the Washington Renewable Energy Conference. “We started by deciding we would do something that focused on energy and the environment,” Stein told me. Over time, he expanded the number of people involved in the process and gradually settled on developing a biofuels prize based on algae.

Prize Capital’s planning for the competition must be both meticulous and comprehensive because the Algae Fuel Prize also represents the first application of Prize Capital’s alternative venture funding model. Under this model, Prize Capital provides working capital to select teams that enter a competition as a way of providing financial leverage so teams of all sizes have sufficient resources to actually develop innovative technology.

In the algae competition, Prize Capital proposes to:

—Create a prize focused in an area that has been fully vetted, so that the competition can both accelerate innovation and create investment opportunities.

—Form a master limited partnership to fund teams.

—Reach agreements with teams that accept funding that include terms for subsequent investment rounds as competitors succeed in advancing their technologies.

—Allow teams to opt out of the investment rights.

Investors will own a percentage of equity in all direct competitors supported by Prize Capital. The firm says its investment model mitigates risk and enables investors to share in the success of multiple companies beyond the competition by spurring the development of commercial applications from multiple teams, and not just the winner.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call 858-202-0492

http://www.xconomy.com/san-diego/2009/04/28/prize-capital-moves-closer-to-creating-10-million-algae-fuel-prize/