Bill Gates: Energy Solutions Need to Be Big, Not Cute

To solve the world’s energy problems and combat a rise in global warming, the solutions need to be dramatic and powerful. And definitely not cute. That’s the blunt assessment of Microsoft (s MSFT) co-founder Bill Gates, who dismissed smaller scale technologies like residential solar installations as being “cute” but ineffective.

Speaking at the Wired Business Conference in New York, Gates sounded a now familiar call for innovation in clean energy production. But he said the challenge of meeting the world’s growing energy needs while reducing the rise of carbon emissions won’t be handled by smaller deployments of technology. For example, he said solar panels attached to homes and connected to smart grids is no match for the real impact of large remote solar installations.

“If you’re going for cuteness, the stuff on homes is where to go but if you’re interested in solving energy problems, it’s those big ones in the desert,” that matter, said Gates, who is tackling humanitarian causes with the Bill and Melinda Gates Foundation. Gates’ sentiments echo those of greentech investor Vinod Khosla, who often times has said if an energy technology can’t scale to sell to India and China it won’t make a difference. Gates is a limited partner investor in Khosla’s greentech fund Khosla Ventures.

Gates downplayed the significance of energy efficiency efforts to make a difference on a global scale. He said while cutting back on power use can provide a good economic benefit, he said it can’t keep pace with the growing energy demands of emerging nations. To make a difference, he said a 90 percent drop in CO2 is needed to be impactful.

“We should do the efficiency stuff. It’s a great thing. It has economic benefit. But we shouldn’t think of that as making much of a dent in the environmental challenge,” he said.

Gates’ envisions bigger energy solutions like nuclear, which he has a big interest in as an investor in TerraPower, a next generation nuclear reactor design start-up. Even with the recent disaster in Japan with the Fukushima plant, Gates said nuclear is still one of the most promising answers because it’s so clean and efficient compared to other energy options. While there are concerns about safety with nuclear plants, he said next generation reactor designs are capable of being much more safe and automated and don’t leave the same kind of nuclear waste. In fact, it’s a reliance on aging designs like the Fukushima plant that open the door for more innovation in nuclear power, said Gates.

“There’s hardly been any innovation in nuclear; the room to do things differently is pretty dramatic,” Gates said.

Gates said there’s still big opportunities for the U.S. to innovate in nuclear energy and battery technology. But it takes thinking on a large scale, similar to how China is throwing massive resources and engineers at large projects. Creating innovation also requires a smarter use of money by the government, with a shift from funding clean tech deployments to the bigger need of accelerating research and development. Gates said losing the clean energy innovation race is part of a larger problem in rich countries, which drop the ball on leadership at times in pursuit of distractions like ethanol that don’t reduce CO2 emissions instead of large-scale solutions.

“It’s great to have rich countries.  We can think about long-term problem but we get sloppy because we’re rich,” Gates said.