Corporate partnerships, instead of venture capital, might be a preferable means to drive innovation in carbon capture and storage technology, according to developers of the zero-emission Allam Cycle power system. “Before the dot-com era, VC firms actually were in the business of providing domain expertise,” Bill Brown, CEO of NET Power, said Thursday during a webinar hosted by the Center for Climate and Energy Solutions. “As the size of investments got smaller in the VC world, and as the number of investments increased, the traditional role of VC of providing sort of hands on domain expertise waned. That’s what we see from corporate partnerships.”
In March, NET Power, along with Exelon Generation, CB&I, 8 Rivers Capital, and Toshiba, launched an Allam Cycle natural gas power system demonstration project in La Porte, Texas. The new system uses CO2 as a fluid to drive a combustion turbine, in turn eliminating all atmospheric emissions from the plant. The process produces pipeline-quality CO2 that can be sequestered or used in various industrial processes, including enhanced oil recovery.
Teaming up with corporations to further the technology provided NET Power with several benefits. First, its partners’ extensive experience enabled them to put their technology on the right track immediately out of the gate, Brown said.
When it started developing the Allam Cycle idea, NET Power first looked to coal but quickly determined natural gas would be a better route. “It was Exelon’s input when we were first having our conversations with Exelon and with other potential partners that helped us figure out what the market should be. Normally, too many startup firms don’t have market definition as a critical part of their first stage,” Brown said.
Coal, Brown said, is not a good market in the U.S. right now as natural gas is quickly eclipsing it as the fossil fuel of choice for energy generation. “We learned that the market for coal was not there, at least in the United States, that the interest was in natural gas, that the interest was in enhanced oil recovery.”
The team NET Power worked with was also well established, another benefit. “If you don’t hire the right team and don’t pull it together at making that team congeal, you have massive execution risks. With Exelon, they’ve already built the team and in fact they rotate the different teams in on an as-needed basis,” Brown said.
However, working within a corporate partnership does have its drawbacks, he acknowledged: “We recognize that there would be a possibility with corporations to think us as just an extension of the corporation, and so we have to work really hard to create the right balance of involvement and independence, and that took people from 8 Rivers and Exelon and CB&I and Toshiba to figure out how to dance together.”