Fusion is Illusion - Abundant Energy is not

Why isn't there a Moore's Law in energy? Because we're asking the wrong questions. The solution is technologically driven disruption. If we provide enough fertile ground, the seeds will come.

“.. we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.” Dwight Eisenhower

Just replace “military” with energy, public health or education and you realize how accurate Eisenhower’s warning turned out to be. Rouge bureaucrats will not just overstep their boundaries and take power in the military. They’ll do it wherever we let them. It’s on us. In this essay I am describing the problem with the energy-jndustrial complex which is hindering the development of better sources of energy. The recent announcement of a supposed breakthrough in Nuclear Fusion at The Federal Lawrence Livermore National Laboratory is case in point. Nuclear Fusion as a concept for civil energy harvesting was born during the nuclear arms program in the 1950s. Since then Nuclear Fusion has been only a decade away from realizing the dream of abundant energy. That’s exactly how bureaucrats run science. They spread nuggets of hope when in reality barely anything is changing. Instead of breakthroughs and disruption bureaucrats and their cronies in the energy- industrial complex optimize for incrementalism and mission creep. That’s why we are still stuck with 19th century energy technology, which is drill a hole and hope for oil. Some advocate for regress to 12th century technology with wind and biomass and some dream of sunlight as the ultimate source of energy. The latter is worth pursuing but current technology is not even scratching the surface of what’s possible. Why are we stuck in this decivilization trap? Can’t we innovate and evolve as an energy harvesting species the same way we developed highly sophisticated information technology? Why isn’t there a Moore’s Law in energy? The answer is too much government and not enough private enterprise with risk capital and human ingenuity at work. Energy like anything worth pursuing is based on the principles of freedom, accountability and reward. You need skin in the game.

Improving the Human Condition = Energy

Everything starts with energy. And not just for humans. Energy has been the main factor in the evolution of life dating all the way back to the early days of our planet. In his excellent book “The Vital Question” Nick Lane argues that the evolution of early lifeforms such as bacteria was primarily driven by how they dealt with energy. Lane introduces energy as a determining factor for the development of life. Viewed through this lens the conquest of energy is what life evolved around. Energy is evolution. And what matters to early bacteria applies as much to complex economies. Energy determines economic growth, wealth and power. It’s not the sole explanatory factor of economic growth. Look at Russia, Saudi Arabia or even Norway. They sit on huge resources but their economies are negligible. It’s not the access to energy. It’s the way we harness it or to be more precise, the knowledge about how to harness energy from natural resources. The key to energy is not a drilling license in West Texas or a coal mine in Virginia. It’s expertise in areas of chemistry, physics and economics that allows us to harness energy sustainably for the longterm. Take Lithium. Thanks to advances in Lithium Ion battery technology Lithium is becoming a resource to harness energy. It’s knowledge not access. Knowledge is highly dependent on freedom. That’s why freedom and energy combined produce amazing results.

And here lies the crux. While energy is the most important driver of progress and freedom it can also become it’s biggest obstacle. Once the energy-industrial complex is in place it will work hard to prevent competition. That’s why new sources of energy feel like so hard to achieve. Almost like pipe dreams. Take the recent news from The Federal Lawrence Livermore National Laboratory in California where scientists supposedly achieved a breakthrough in Nuclear Fusion. Apparently, scientists where able to produce more energy out of a Fusion reactor than they put in. Nuclear Fusion is the attempt to replicate the sun on earth. Why use photons, wind, fossil fuels or hydro when you can tap the ultimate energy source which is Nuclear Fusion. Hydrogen atoms bump into each other and fuse to Helium atoms under enormous heat conditions. When fusing to Helium, Hydrogen atoms release energy, increase the heat and thus accelerate Fusion. This process fuels the sun and our whole universe. Every source of energy known to us is a derivative of Nuclear Fusion. Wind is caused by temperature and pressure differences around the world, so is hydro. Fossil fuels are remains of organic material which was created by photo synthesis and other types of metabolism. Every form of energy we know is ultimately related to Nuclear Fusion because it can be traced back to the sun.

Scientist have been trying to replicate Nuclear Fusion for decades. According to Arthur Turrell, a Physicist turned Economist, the problem with Fusion is how to contain the extremely hot plasma where the Nuclear Fusion actually takes place. In order to entice Hydrogen Atoms to combine to Helium you need enormous heat. When Edward Teller dreamt up the Thermonuclear bomb or H-bomb, he envisioned the ultimate killing machine. First, detonate a conventional atomic bomb by splitting Plutonium and then use that energy to entice Hydrogen atoms to combine to Helium. Hence the name H-Bomb. Teller, in my mind the scary reminder of how rouge scientists can go mad, wanted to harness the enormous energy of Fusion to engineer total destruction. His goal was not to contain Nuclear Fusion but to blast its energy out in the open. Civil energy harvesting requires the exact opposite. The key problem is, how to contain this massive release of energy. Think of a bathtub full of Hydrogen and now heat that soup up to 1500 degrees Celsius. The bathtub will melt and the Fusion reaction will dissipate in uncontrolled ways. Energy will be lost. One way to contain the Fusion soup is with magnets. But that’s a pretty hard puzzle to solve. Think of Fusion as a fast moving plasma with many degrees of freedom and extremely complex dynamics. Just how complex? Well, ask Deep Mind. They attacked the problem of controlling Nuclear Fusion Plasma with magnets steered by algorithms trained on Reinforcement Learning. According to a recent Nature paper this approach showed promising results.

All this is to say that Fusion is an extremely hard problem to solve. Hard problems are what humans are good at. The question is how, not if. We’ve solved some pretty challenging problems like fire, bridges, hygiene, computers etc. But when it comes to energy we’ve stumbled.  It took us thousands of years to switch from horse power to coal, then oil and gas. Fossil fuels have been powering the industrial revolution. Now we’re at a crossroads. We need better fuel sources to power the coming revolutions of artificial intelligence, interstellar travel and rapid population growth. Better fuel sources mean more for less. In other words disruption is needed. Unfortunately, energy got pigeonholed into the climate change discussion. Tree huggers want new sources of renewable energy and freedom lovers don’t want change. The latter fear that energy and climate change are being used by political forces to coerce society into unwanted behavior. The former want the right thing for the wrong reason. It’s not climate change we have to solve for. We need better sources of energy to fuel rapid economic development to improve the human condition on earth. Fossil fuels are not scalable. They’re too expensive and lack flexibility which causes political unrest. We must do better.

Nuclear Fission is a bad solution because it feeds the energy-industrial complex

Fusion is an option. Fission, too. Fission is the opposite of Fusion where you take a large atom, let’s say Uranium and split it. That’s what we call a nuclear reactor. Fission is a bad solution because it’s one of those technologies that doesn’t allow for errors and rapid iteration. It takes years to commission a reactor and if something goes wrong you can’t just iterate your way around the problem, you have to shut down the reactor. Nuclear Fission is a bad solution to a good problem. The good problem is “how can we harness more energy for less”. The solution has to be iterative. Something where entrepreneurs and risk capital get involved and bring about solutions. Just ask any nuclear power advocate how much it costs to insure a nuclear power plant. It’s amusing to see how these typically libertarian leaning free market advocates shrug and point to the government. “Well, obviously no private insurance would touch nuclear power. You need the government.” Bingo. That’s all you need to know. Nuclear Fission is not insurable, hence it’s not a commercially viable solution and therefore it’s a political solution. And in the market of politics Fission has lost. For good reason. Nuclear Fission is a government imposed technology that feeds the energy-industrial complex. Let’s assume a world where the US is 100% fueled by nuclear power. Now imagine what bureaucrats and their cronies in science and industry would do to us. They’d have absolute power over society, much worse than what the public health-industrial complex bureaucrats unleashed on us during Covid. Unelected officials would have discretionary power over millions of people. Just like that. No checks and balances, nothing. Think about it. Statements like this would be the norm: “This reactor is leaking, we need to lockdown the state.” Or, “we need emergency funding to accelerate this project in the name of national security.” Or “kids need to be taught nuclear physics early on and any literature on alternative sources is misguided propaganda”. “Research on alternative energy sources endangers our nuclear establishment and must be banned.” 

Fission only works if coerced from the top down like in China. Even worse, nuclear power is a Faustian bargain. It gives us the illusion of cheap energy when in fact it does the exact opposite. Just look at the data. Only rouge dictatorships such as China or Russia are building nuclear fleets at scale. The one Western country where nuclear power is ubiquitous, France, recently had to shut down most of its fleet. Japan has a large nuclear fleet and almost blew itself up in Fukushima. Tchernobyl is a scary reminder to all of Europe how bad things could get, even today. Western democracies are resisting nuclear power. That’s a good thing. 

To summarize. Nuclear power is bad because it feeds the energy-industrial complex. It’s too risky to insure and hence commercially not viable. Nuclear power only works with government intervention. Fission is the alter ego of climate change. They’re two sides of the same coin. Neither of them will get us on the path to abundant low cost energy. Eventually, government imposed solutions always end up incarcerating a majority to benefit the few on top. That’s why Western democracies overwhelmingly say no to Fission. We need better, more flexible energy solutions. We need energy that scales rapidly at decreasing cost and reduces societal and political burden. I am happy to debate this topic with Doomberg, a group of energy experts, who  vehemently advocate for nuclear power. They use the right arguments but come to the wrong conclusion. The damage of nuclear power is not environmental. Its wide spread use imposes high social, political and economic cost on society as the examples of Japan, France and Tchernobyl show.  

Fusion looks better on that front. Even just the involvement of Deep Mind shows that private enterprise can contribute with iterative, entrepreneurial solutions. So why am I still skeptical? Just look at the announcement from Livermore. Does anybody know what this Lab actually is? Who pays for it? Who runs it? The US is full of research labs like that. When I worked on quantum computing I got discouraged by the constant talk of grants, government sponsored research, collaborations with this Washington agency and that National Lab etc. Government grants might be how science works but it sure is not how innovation works.

Energy evolves around the Popperian Divide

Innovation is about iteration, making errors and correcting them fast and at low cost. That’s what disruption actually looks like. Iteration. Error correction. Repeat. In one of his recent talks Vijay Pande from Andreessen Horowitz talks about iteration in biotech. I second Pande’s obsession with iteration. Hard problems cannot be solved by bureaucrats funding large projects with uncertain outcomes. If we rely on this process we won’t get better energy. We’ll be stuck with fossil fuels, large government debt and coercive behavior by increasingly rouge bureaucrats. France is a good case study for how nuclear energy paralyses a country. Forget about the fact that France, despite having a large nuclear fleet, still has relatively high cost of electricity. The main problem in France is that innovation in energy is stifled by the immense energy-industrial complex. It’s appalling that France today, when it’s most needed, doesn’t have the capacity to power it’s nuclear fleet and help Europe replace some of the Russian natural gas. It’s even more appalling that adults such as Doomberg walk around (although anonymously) and preach to us about the benefits of nuclear and fossil power when both of these energy sources continue to let us down. Just recently,  nuclear failed in France and our dependence on fossil fuels slapped us in the face when Putin invaded the Ukraine. But propaganda such as Doomberg is just the peak of the iceberg. Its a reminder of how the energy-industrial complex works against the interest of society. As important as energy is, it can not be harnessed through Faustian bargains with nature, bureaucrats or thugs. It’s not physics, it’s politics.  

Abundant energy can happen. But it requires innovation. Innovation is the thing which evolves around the Popperian Divide. Think of human endeavors as two large tectonic plates divided by a massive fault line. One one side you have top down decision making by rulers and bureaucrats and on the other side you have voluntary cooperation between individuals pursing their goals driven by profit, status, vanity and other motivating factors. I call this fault line the “Popperian Divide”, as in Karl Popper, the Austrian Philosopher who wrote about science and knowledge creation. Popper focused on iteration, error making and error correction. In Popper’s world view there is no absolute truth or right way to do things. Everything is in flux and the process of making errors and replacing existing ideas with better ones is all we have. I believe that true innovation happens on the edge of the Popperian Divide, right around the fault line between the two tectonic plates. You can’t have too much individualism and you surely can’t have too much top down decision making. Think of innovation as a dynamic gymnast constantly jumping from one side of the fault line to the other. Some of the great entrepreneurs and innovators like Edison, Ford, Disney, Gates, Jobs, Bezos and Musk have all been dancing around the Popperian Divide. On the one hand they found a way to harness rapid iteration, error making and instill the necessary humility for error correction. On the other hand they impose an almost autocratic regime onto their employees which crates a strong, mission driven corporate culture.

Energy requires the same approach. True disruption in energy markets can happen. There is no reason why it shouldn’t. The laws of physics neither dictate that energy ought to remain static and rely on fossil fuels nor do they inspire a regress to 12th century technology. So why aren’t we progressing faster? Why isn’t there a Moore’s Law in energy?

Let’s start with some of the common answers to that question like”It’s thermodynamics and thermodynamics is hard” or “Bits are easy, atoms are hard”. I disagree. Go ask the engineers at ASML about the challenges of their latest lithography technology. Light is being projected through a mask on a photosensitive wafer. As a result we get microchips that power our computers. It’s atoms and photons and it’s anything but easy. If we can do photolithography at nanoscale with nanoprecision we can also innovate in energy. The problem is not physics, it’s humans. Whatever is possible under the laws of physics can be done. We just have to do the work.

Culture eats strategy and inertia eats culture

This brings me to my main argument about energy. It’s not the special nature of energy or physics or thermodynamics that hinders faster development of cheaper sources of energy. It’s the lack of entrepreneurial ingenuity and risk capital. Energy requires more iteration, more try and error, more risk, more upside, less obstacles and more talent. Ironically, energy is considered a cowboy industry with crazy wildcatters scattered on the planes of Texas trying to find oil. They love risk and know how to handle extreme volatility. But that’t not the kind of risk I am talking about. In order to disrupt energy we need a different type of risk, best described in books like “Zero to One”, “The Soul of a New Machine” or “Liftoff”. In essence these books describe a type of character with mild obsession about a specific problem they feel compelled to solve. On the surface these books tell the story of entrepreneurs tackling hard engineering problems. But they go much deeper than that. These types of entrepreneurs are driven by compulsion, more like Beethoven writing The Fifth than boring geeks scribbling formulas on white boards. Technological disruption happens when the lines between artistry, compulsion and engineering cross. Imagine Beethoven sitting on his table with a full paper basket of failed attempts to write the Fifth. It's a constant struggle, an often painful process of try and error which eventually yields an oeuvre. That’s exactly how technological disruption works. It starts in one person’s head with an idea. That’s when iteration begins and continues all the way to product development, launch and scaling. A startup, according to Peter Thiel, is the minimum amount of people necessary to execute on an idea. Jeff Bezos used the pizza test, or how many people you can feed with two pizzas, to decide the optimal size of teams. The key here is iteration, communication, criticism and error correction. Every startup much like Beethoven iterates around an idea. While the composer only uses his paper and pen when composing, engineers work on designs, prototypes, manufacturing and later on sales and marketing. Technological disruption has higher complexity and typically requires more people and decisions but in essence it follows the same process of iteration like Beethoven.

How do we get more disruption in energy? It’s the same question as how do we get more Beethovens. One thing is fore sure, we won’t get them by having a Ministry of Beethovens. Or a Ministry of Disruption. Unfortunately, as absurd as that sounds, that’s exactly what we have, a Ministry of Technological Disruption in energy. We just call it the Department of Energy. And the results are as absurd as if we had a department of Beethovens in Washington. Billions are spent on phantom projects, grants are distributed to numerous universities and thousands of talented individuals are wasting their time trying to impress the cabal of bureaucrats. And the result? Our economy still runs on the same technology invented in the mid 19th century. It takes one rouge dictator in Russia to declare war and American households suffer because their livelihood is so closely linked to fossil fuels. This is a serious problem. If we don’t get more disruption in energy soon we’ll have to deal with pitchforks. In other words, people won’t put up with energy inflation and we’ll get more radicalization in politics. Trump and Woke are just the appetizer.

“The Innovator’s Hurdle”

Why don’t more entrepreneurs tackle the energy problem? Why isn’t there a Silicon Valley for energy? The market is large. Don’t venture capital investors always talk about market size? So why not foster innovation in energy? There are many factors but one of the largest obstacles is the energy-industrial complex. In the remainder of this essay I tackle to problem of lack of innovation in energy through the lens of Clayton Christensen’s theory of disruption as outlined in his bestseller “The Innovator’s Dilemma”. My thesis is that disruption is accompanied by a counter part, something like the inverse of disruption. In other words, the forces that drive disruption and enable Zero to One type innovations such as Beethoven’s Fifth or the iphone are countered by an inverse force acting as obstacle to such innovations.

Clayton Christensen defines disruption as a theory of competitive response. It’s when someone comes up with new stuff and nobody cares. Auto executives were not concerned about the competitive threat of the Tesla Roadster because it was an electric sports car. Nobody was in the market for electric sports cars. Slowly buyers started to care. Then Tesla launched the Model S. Another car auto industry insiders shrugged off because there was no such car before. I was at an auto conference around 2011 when the then Volskwagen CEO said something like electric cars are not interesting because there is no demand. Vinod Khosla likes to tell the story of him pitching the idea of Internet Protocol based telecommunication to telco executives in the mid 1990s. You guessed what he got as an answer. “There is no demand”. How can there be demand when there is no product yet? Christensen is not out to bash executives. In fact, he protects their integrity. His main thesis is that incumbent executives don’t care about disruptive products because they don’t feel threatened. Managers at VW did what they were told to do in 2011 (and still do). They focus on profitable products such as SUVs and don’t spend time with fringe ideas such as autonomous electric cars. Christensen’s point is that executives are neither stupid nor lazy. They simply neglect fringe and focus on what matters to immediate sales, profits and promotions. Disruptive entrants are by definition attacking either the low end or markets that don’t exist yet. In the book Christensen describes the US scrap steel industry that started with low end rebar and then slowly worked its way up the value chain to displace incumbents such as US Steel. The beauty of disruption is that nobody cares when it starts. The lack of competitive response by incumbents is baked into the process. It’s a feature, not a bug. So, who are those disruptors? Peter Thiel in “Zero to One” outlines the type of character best suited for disruption. It’s people who are obsessed with stuff your average industry titan or analyst doesn’t even know about. It’s renegade stuff. According to Thiel, the job of a VC is to spot such talent and support them on their journey of disruption.

That brings me to the crucial point of this essay. The inverse of disruption. That’s when everybody cares about entrants. When elevator pitches by entrepreneurs sound obvious. The kind of stuff your grandma would understand. It’s when money flows in lockstep with common sense and peer consensus. One recent example is bitcoin mining in West Texas. You take stranded natural gas in the desert of West Texas and attach it to a bitcoin mining farm. That way you can harness otherwise unused energy and store it through bitcoin. It all makes sense. Anybody from farmers, petroleum executives, VCs and your cab driver in Houston understands the value proposition. Unfortunately, bitcoin mining is all but disruption. It’s a highly competitive cost of capital type industry. It’s not something you want to invest in unless you have a very unique set of circumstances such as free money and/or free energy. Bitcoin mining like everything else in energy is incremental. Incrementalism is the inverse of disruption.

Abundant energy can be done. The laws of physics don’t prohibit such a thing. But it cannot happen through incrementalism. Neither the Department of Energy nor the CEOs of oil companies will make it happen. The path towards abundant energy starts with entrepreneurs whose compulsion drives them to build something nobody in the energy industry takes seriously. It will happen through relentless iteration, error making, error correction and adaptation. It will start small, attack fringe markets and then slowly creep into the main stream. I don’t know the specific technical details of such an energy project. But I have a good sense for the process. Initially it will be something small. Let me tell a short fictional story to illustrate my point.

The Proton Gradient Accelerator

Nikos Tzerakis is a grad student at the University of Athens in Greece. He is about to defend his PhD in Physics on work he’s done together with Circe Panodis on the subject of Proton Osmosis. Circe is a Chemistry post grad at Athens. She got her Phd at MIT on chemical reactions to isolate protons in certain atoms such as Lithium and Nickel. Nikos read her papers and got interested because his doctoral thesis is about quantitative methods to model energy equilibria in special isotopes. Nikos is particularly interested in the field of quantum chemistry which is the study of chemical reactions based on first principles. In other words, Nikos tries to predict how elemental particles behave based on physics and mathematical modeling. During his third year of grad school Nikos stumbled over some weird results with Lithium and Nickel. For some reason Lithium and Nickel protons exhibited special behavior when exposed to certain materials. Nikos formulated this phenomenon in a recent presentation; “It’s literally like a dam that stores protons on one side and lets them through if slightly modified. The key is to find the right chemical composition of the membrane. My estimates show that you could potential achieve enormous energy potentials”. Of course, Nikos gets bombarded with skeptical questions around the First Law of Thermodynamics. If his estimates turn out to be right, so the experts, he must violate the First Law which says that “the total energy in a system remains constant”. “So, where does the energy come from?” asks one of his professors.  

Mark Schindler got is PhD in Physics from ETH Zurich and works on quantum computers for IBM. One of his colleagues recently mentioned Nikos’ speech. “Hey, this guy from Athens talked about proton osmosis, like a hydro dam that stores protons instead of water. He says the energy density of this thing is theoretically enormous. Problem is, in order to calculate the exact chemical composition of the dam you need enormous compute power. It’s hard but interesting.“ Mark doesn’t listen. He just broke up with his girlfriend and is distracted. Months later his colleague mentions Nikos again. This time Mark is listening. “What exactly is the problem with this proton osmosis layer?” he asks suddenly curious. His colleague pulls out a napkin and starts drawing. It looks like his colleague has been thinking about this problem more deeply. “Imagine a crystal layer of let’s say Silicon atoms. If we could find the exact quantum state of the layer we could generate a proton gradient that would produce enormous amounts of energy. Imagine you have a dam on the Amazon river. If you could seal off the dam so absolutely no water gets through and then open up slivers of the size of a human har. Now amplify the dimensions of the sliver to the size of the Golden Gate inlet. Imagine the power of the current. Something like that.” Mark listens, gets up, walks in circles and then explodes;” It’s like the protons and the Silicon are a number and we have to factorize it. Factorizing this number is the equivalent of finding the precise quantum states where the Lithium protons and the Silicon atoms produce the most amount of current. Man, this is like Shor’s Algorithm applied to energy.” Next day Mark calls Nikos in Athens.

It’s spring and they arrange a meeting in Zurich. Mark would have loved to fly to Greece but Nikos insisted. So here they are, sitting at Cafe Odeon on one of those rare April days when outdoor seating is possible and the sun shines beautifully. The conversation flows immediately. Both men seem to get more and more excited by the minute. Nikos doesn’t know much about quantum mechanics but he sure understands the implications of Mark’s argument. “If we can find the optimal combination of quantum states we could in principle produce a massive amount of energy.” But Nikos smirks, “how is this possible, what about the First Law?”“Don’t worry”, says Mark. “We’re not violating anything here. Think of my quantum computer borrowing energy and computation from parallel universes. Overall we aren’t creating any new energy. But in our particular universe we are. We’re just borrowing energy from other universes” Nikos let’s this sink in. “ I see, like the David Deutsch argument in “The Fabric of Reality” were he says that factorizing large numbers with quantum computers must be some way of borrowing compute power from other universes.” Mark nods.

A few months later both of them sit in a sparsely lit lab in Rüschlikon at the IBM research center. Mark fires the first experiments with their newly developed Proton Gradient Accelerator. The energy output is more than they put in. In other words, the thing is net positive. It is able to produce energy. But only at extremely small scales. Mark doesn’t care. He can use the Proton Gradient Accelerator (PGA) to power some of the quantum computing equipment. In fact the nano scale and small amounts of positive net energy are perfectly suited for the purpose of controlling some of the quantum computing equipment. Six months later the PGA powers all of IBM’s quantum labs including the energy intensive cooling of the super conducting materials required to generate quantum states.

Two years onwards Mark gets promoted to head of research at IBM and goes on to do other things. Nikos is now assistant professor at Heidelberg University in Germany. On a sunny afternoon in May he gets a call on his cell with a US number. He was just about to leave the office for a jog along the Neckar river. “Hi, this is Ajay Mendi, I am with Albertson Hendricks, do you have a minute?” A&H is the most prestigious venture capital firm in Silicon Valley. The Neckar can wait. “We have an investment in Zanetti Computing, a quantum computing hardware and software firm here in Berkley.” They are using your PGA. One of their interns tweaked the quantum controller and was able to increase the net energy output by orders of magnitude. It’s all still at nano scale and we can’t make it work for anything useful. But it worked in the lab. Would you be interested in looking at it?”

It wasn’t hard to convince Nikos to move to California. He always dreamt of hiking in the Sierras around lake Tahoe. And it was on one of those hikes when he suddenly realized what was going on with his PGA. “Oh my god”, he shouts to his colleague, Rian, a researcher at Zanetti Computing, where Nikos is now head of product. “The thing is quantum. Of course. It’s energy release is quantized. We are wasting our time with linear dynamic equations when all we have to do if try to find the corresponding quantum values. If we can find and match the frequencies..oh my god, we might be able to increase the net energy output by orders and orders of magnitude.“ 

Zanetti’s first proprietary PGA power plant was built just around the company’s campus in Emeryville, CA. Ajay wanted the project to stay under the radar. “There were too many unknowns”, he later told a journalist. Although his partners at A&H urged him to take the technology, build a company and go public, Ajay kept under the radar. He wanted more iteration. More proof of concept at larger scale.

At Zanetti Nikos was formally in charge of quantum controllers. But his real job was how to transform the energy from the PGA into electricity. “It’s kind of like a highly optimized photovoltaic cell”, he tells his wife, a Biochemist at Berkley. “ Just instead of photons we use protons. By calculating the optimal quantum states of protons and our newly developed Gallium Crystal we create a massive proton gradient. The protons bombard a specially designed silicon material which creates the desired electron flow. “ “But where does the energy come from?” asks his wife. “It’s like my former colleague Mark said, the energy comes from other parallel universes. Our PGA is the first machine that is able to harness energy and compute power from other parallel universes. It sounds esoteric. But then, any sufficiently advanced technology does seem somewhat esoteric. Doesn’t it?” Nikos smiles. His wife, an emotionally laden gorgeous Israeli gives him a kiss. 

Eventually Nikos was able to increase the net energy output of the PGA to such levels that Zanetti ended up with too much excess electricity. Ajay still wanted more proof of concept. So Zanetti built a massive solar installation with net metering to be able to offload the excess electricity to the grid without rising eyebrows.

But eyebrows were risen. When Jack Mahler, head of corporate customers at PG&E, looked at his accounts he realized that the firm suddenly made huge profits in the Oakland-Berkley area. Mahler called his account manager for Zanetti Computing. “What are they doing? They give us so much juice during peak hours, we are able to shut down two gas powered plants during summer cooling season. Where is this electricity coming from? That’s huge? Do they have some new type of solar panel?“ Mahler called Zanetti but was immediately diverted to Ajay. Nobody at Zanetti was supposed to deal with outside PGA questions. Ajay was the lead on this. It was only eight years after his call to Heidelberg to lure Nikos to California and Nikos had achieved amazing results. He created a PGA that was many times more powerful than gas fired power plants, solar plants and pretty much any other source of energy PG&E was familiar with.

Through relentless iteration Nikos had developed a power source that is many orders of magnitude more efficient than anything before. And with the help of Ajay and A&H Nikos also invested a lot in modeling and computerized controllers. He merged the fields of quantum chemistry with computer science. In other words, he brought Moore’s Law into the equation. That’s why he was able to scale and improve the PGA within a few years to such a level that the whole energy supply of PG&E changed.

Thanks to the monopoly status of PG&E the firm was able to keep the profits on its books. They kept the customer bills high despite receiving wast amounts of cheap electricity from Zenetti. Ajay knew about this and was conflicted. Eventually A&H convinced him to go public with the technology. Ajay formed a corporation called Proton with Nikos as CTO to develop PGAs for grid scale. Needless to say Proton was a huge success and rose to several trillion Dollars in market cap. Even though the technology patents are free for others to copy, Nikos and his team had built an innovation culture around the PGA that makes it hard for others to follow. Today Proton powers roughly 40% of the global electricity market which is hundreds of times larger than before Proton went public. The cost of electricity in California dropped from 20c per kwh to less than 0.0001c per kwh and counting.

Fusion is an answer to the wrong question

There is nothing wrong with scientists trying to figure out Nuclear Fusion. As an excersise of academic excellence this endeavor deserves merit as much as other large scale projects such as the Moon Landing, String Theory or Quantum Field Gravity. But it won’t give us abundant cheap energy. It will fund academic chairs, numerous grants and industry projects. The problem with Fusion and all these other projects is that they are answers to the wrong question.

Better energy like any other technological innovation doesn’t start with the question “How can government and big business develop new energy sources?” This is the equivalent of the Ministry of Beethoven. It’s absurd. What we need is better questions. For example, “What is the most likely scenario under which entrepreneurial ingenuity will yield innovations in energy.” It’s not even a question of capital. In fact, capital is not the constraining factor. It’s talent, creativity and entrepreneurial skills. Massive technological change doesn’t happen at once. It evolves. Elon Musk decided to launch the Tesla Roadster first to prove that an electric car can appeal to customers. His end game is to replace the whole internal combustion engine car pool with electric cars. Youtube started as a dating site, not a place for eduction, creative experimentation and sports highlights. And when Edwin Drake first struck oil in Pennsylvania in the mid 19th century he surely didn’t plan to develop the current petrochemical-industrial complex. Drake’s financiers were looking to replace whale oil as a source of fuel for light and heat.

Technological disruption always starts with intermediaries. In our story Nikos and Mark sit together in Zurich and suddenly realize that one has the solution to the other’s problem. After some tinkering they create a small prototype in the lab. Neither of them dream of providing the world with abundant energy. Niko’s initial implementation of Mark’s quantum state optimizer delivers the first version of a PGA. It’s still nascent and doesn’t do much to help the electric grid in Oakland. But it’s a start. An intermediary. It solves a first small problem which then again creates new, better problems that can be solved. Years later, through iteration, error making, error correction and adaption Nikos ends up building massive PGAs that actually power the electric grid and help reduce electricity cost by many orders of magnitude.

Entrepreneurs are people who seek out niches where technological intermediaries can survive. Once proven they attempt to penetrate more established markets. Venture Capital firms, in principle, support entrepreneurs in that endeavor. In my story Ajay sees the vision. It’s not Nikos nor Mark. Ajay let’s them build their first small PGA and waits patiently until the technology is ripe for scaling. So the right question is not “How can we get abundant energy?” but “How can we build an ecosystem where risk capital and talent find each other?” or “What are potential intermediary technologies that have the potential to evolve and become massive energy sources?”

It’s an interesting academic excersise to think through this problem. Is there a way to plan disruption? Is disruption deterministic? Or does it fall under some sort of Heisenberg Uncertainty Principle where measuring the probability of successful disruption is impossible. Are disruption and human needs orthogonal? Is it all just luck and serendipity or is there some deterministic planning we can do to increase the chances of successful disruption in energy? My gut tells me it’s the latter. Organization matters. Just look at Russia or North Korea and contrast them with Silicon Valley. Which form of economic organization has a better chance to disrupt markets and develop abundant energy?

Increase the likelihood of abundant energy?

If organization matters then how should we organize ourselves to increase the likelihood of abundant low cost energy? Some people propose to give scientists lots of money and leave them alone. Others opt for dictators who have the power to steer scientific development in the right direction. In the US, where the market of ideas is free and liquid, we have all sorts of proposals. One is the Department of Energy which acts like some sort of “Ministry of Innovation” to incentivize academia and business to come up with a wonder technology. Analysts like Doomberg make a living criticizing anything that moves the status quo. And the climate change crowd wants Malthusian solutions for everybody but themselves. None of these approaches will make society better in the long term. The only thing that does is entrepreneurial ingenuity coupled with the relentless pursuit of iteration, error correction and humility.

Government can help. But currently government is the problem. More precisely it’s the energy-industrial complex inhibiting entrepreneurial ingenuity and risk capital. It starts at the academic level. Government grants are distributed to universities with focus on specific research areas. Who decides what grants to give to whom? It’s fair to say that this process is complex and yields very little actual technological progress. Government is in bed with industry and industry uses government to enhance it’s own agenda. And this applies to both sides of the aisle. Republicans continuously beat the fossil fuel drum and Democrats want us to stop burning fossil fuels and invest in mega alternatives with little prospect of ever becoming real. Nuclear Fusion is just the most recent example. Both approaches yield very little return for consumers. Instead they are maximizing the return for insiders.

What consumers want is fundamentally new concepts and engineering practices with large impact on cost of energy. In other words, they want more for less. They want energy prices to drop so they can consume more of it and they want to live in an agreeable environment. There is a path to this type of energy future and it starts with disruption. Consumers want disruption. But that’s exactly what the energy-industrial complex fights to avoid. Disruption is the last thing anybody in Washington or in the C-Suites of energy companies want to optimize for.

Disruption happens on the fringes. It’s the thing that industry insiders don’t pay attention to until it’s too late. Nokia didn’t fear Apple because the iphone was supposedly not a threat. Volkswagen executives laughed at Elon Musk because the Roadster and the Model S where fringe offerings in a market Volkswagen didn’t serve (luxury electric vehicles). Even today auto executives still don’t understand the real disruption Tesla  is causing because they don’t feel threatened by software, which is the real dagger. Why should they fear software? Nobody goes to a car dealership and talks software with the sales people. Not yet. Disruption doesn’t just happen in Silicon Valley. The Whaling Industry didn’t see much use for crude oil and neglected it. Even monumental technologies such as the telephone or electricity were initially ignored by incumbents. As Clayton Christensen beautifully explains in “The Innovator’s Dilemma”, ignorance by incumbents is a feature not a bug when it comes to disruption. It’s the single most important determinant of disruption. And that’s exactly the opportunity. Call it the Free Energy equivalent of business dynamics. Disruption is the capacity of a system to change. If incumbents cared about disruption nothing would ever change since they would always crush it. But they don’t. That’s our chance.

Start with the Talent

How should we think about the energy-industrial complex? Is it a problem? Yes. They divert money from productive parts of the economy to mega projects such as Nuclear Fusion or excessive military campaigns to protect the fossil fuel complex. Even worse, they crowd out talent which is the key asset for disruption. Thousands of science and business graduates flock to the energy-industrial complex every year because financial rewards are high despite the lack of intellectual challenge and little purpose. Our attempt to solve  the energy problem must start here, at the talent level. Imagine Lisa, a recent graduate in Chemical Engineering from McGill University in Toronto. She has the choice of working in Wireline in the oil fracking industry in Midland, Texas, or get a masters degree in Quantum Chemistry and then join a startup working on novel models for energy transfer in elemental particles. What is her choice today? A highly paid job in the oil fracking industry or a risky future with lots of interesting intellectual challenges but little upfront money. Lisa likes life, she wants her own fancy apartment, a nice car and above all, she loves to travel. Her choice is Midland. It doesn’t have to be like that. In the short story above both Nikos and Mark have safe jobs. Nikos is employed by Heidelberg University and Mark rose up the ranks at IBM. Despite his safety, Nikos chose to take a risk in Silicon Valley. I want Lisa to do the same, get her her masters in Quantum Chemistry and then join a startup. The war for talent is a numbers game. Like basketball, chess, ballet or football, engineering talent comes in percentages. Some few percent of engineering graduates are exceptional. Those are the ones that end up working for Tesla, Space X, Amazon or Nvidia. The same type of characters worked for Thomas Edison (Nikola Tesla did), Henry Ford or Walt Disney. The more Lisas we divert from oil fracking to advanced science degrees, the higher the likelihood of abundant energy. 

Conclusion

Abundant low cost energy is possible since it’s not prohibited by the laws of physics. To get there we need technologically driven disruption. Our current energy strategy is dictated by the energy-industrial complex and politicized by both sides of the aisle. Neither renewables nor fossil fuels are viable longterm solutions to the energy problem. Mega projects such as Nuclear Fusion are prone to rent seeking by insiders of the energy-industrial complex. They optimize for personal wealth and status. Abundant low cost energy is orthogonal to their goals. Disruption is the solution. While disruption can’t be planned by design, it can be nurtured. We must create environments that increase the likelihood of disruptive breakthroughs. To start with, incentivize young talent to take on the challenge. If we provide enough fertile ground, the seeds will come.