Pacific Views

Bill Gates' Bad Bets

Bill Gates is a smart guy, but he sure can be wrong sometimes. Today I've seen two examples where he comes up short.

The first example was from Newsweek about the results of philanthropic "school reform" programs put in place by several billionaires (including Bill Gates) who decided they understood the problems with public education better than everyone else and so could dictate how to "fix" the broken education system. Seems that that their little experiments haven't panned out as well as they would have liked.

The confidence that marked Gates’s landmark speech to the governors’ association in 2005 has given way to humility. The billionaires have not retreated. But they have retooled, and learned a valuable lesson about their limitations.

“It’s so hard in this country to spread good practice. When we started funding, we hoped it would spread more readily,” acknowledges Vicki Phillips, the director of K–12 education at the Bill & Melinda Gates Foundation. “What we learned is that the only things that spread well in school are kids’ viruses.”

Gates has abandoned his $2 billion high-school campaign focused largely on shrinking the overall size of schools in favor of a massive new effort to encourage effective teaching.

As Bob Somerby points out Bill Gates has been disingenuous in his statements on public education and this in itself makes one wonder if he really understands the problem.

If that wasn't enough, Gates has now weighed into how to transform our energy economy. He affirms that we need to move to a post-carbon energy future, but he's convinced nuclear energy is the way out of our petro-carbon addiction.

In a conversation with Wired Editor-in-Chief Chris Anderson today at the magazine’s third annual Business Conference, Gates said that one of the best aspects of nuclear power at the moment is its lack of innovation thus far, which leaves it ripe for disruption in the coming years....Gates predicts that by 2030 we’ll have hundreds of new fourth-generation nuclear power plants on line.

Sure we will. Gates asserts that solar will never be cheap enough for humanity while nuclear power will magically become profitable. On what planet? Nuclear power is the only non-carbon based energy resource that has become more expensive rather than less despite the billions of dollars of subsidies for decades. As Joe Romm asked recently: Does nuclear power have a negative learning curve? 'Forgetting by doing'?.

Before 2007, price estimates of $4000/kw for new U.S. nukes were common, but by October 2007 Moody’s Investors Service report, “New Nuclear Generation in the United States,” concluded, “Moody’s believes the all-in cost of a nuclear generating facility could come in at between $5,000 – $6,000/kw.” That same month, Florida Power and Light, “a leader in nuclear power generation,” presented its detailed cost estimate for new nukes to the Florida Public Service Commission. It concluded that two units totaling 2,200 megawatts would cost from $5,500 to $8,100 per kilowatt — $12 billion to $18 billion total! In 2008, Progress Energy informed state regulators that the twin 1,100-megawatt plants it intended to build in Florida would cost $14 billion, which “triples estimates the utility offered little more than a year ago.” That would be more than $6,400 a kilowatt. (And that didn’t even count the 200-mile $3 billion transmission system utility needs, which would bring the price up to a staggering $7,700 a kilowatt).

It will take some tremendous technological disruption to make nuclear cheap enough for the poor or middle class. There is a reason the nuclear renaissance isn't going anywhere despite Bill Gates's optimism.

And then there's this:

Gates called rooftop solar cells for homes “cute” — something that rich people can do, but that ultimately won’t solve our energy crisis.

To dismiss solar as "cute" tells you everything you need to know about how Bill Gates thinks of this problem (and perhaps the world). Does Bill Gates really think the "big", centralized, high risk solution will be better? Somehow, I can't seem him making the same argument about personal computing. (Can you imagine wanting to manage your own nuclear power plant and having to deal with the waste?) A distributed, decentralized, genuinely clean energy system would be a much more efficient, resilient and ultimately cheaper way to get energy.

Here's what Bill Gates should be reading so he could be investing in things that really do have the potential of helping us make the changes we need.

Innovative Strategy #1: Do Customer Level Projects First. If the computer age had proceeded with the same mindset as the U.S. utility industry, IBM would have just continued building bigger and more expensive central computers. There would have been no PC’s, and no Internet.

I remember in the early days everyone was asking — “why would I ever want a computer at home?” Today that question seems ludricrous — but only because the power of innovation was unleashed across hundreds of millions of distributed computers.

Before electric rates are raised to fund hundreds of billions or even trillions of dollars in new centralized power plants, utilities must first “firm up” the demand for centrally-generated power so it is reliably known. It would be a business disaster of monumental proportions to spend all this money on central power plants and then have consumers “walk away”.

Consumers must first be given every chance to reduce their use, and to generate their own power, to reduce demands on the central power grid.

It will be too bad if Bill Gates invests his billions in nothing when we have such a need for investments in solutions and technology that matter and really could make a difference.

Posted by Mary at May 4, 2011 12:00 AM | Energy | Technorati links |