Picture a classic software startup. Two people sit in some dark room, faces lit by their computer screens. From these humble beginnings, the world can change, we tell ourselves. And it has been true often enough to become a part of Silicon Valley's mythology.

Now picture a nuclear reactor. Hundreds of people build it. Dozens operate it. Whole walls are covered with gauges. If you could build one nowadays, it might cost you $5 or $10 billion, which is a lot of domain names and processor cycles at EC2. A lean little startup does not seem like the way to reinvent the nuclear reactor, or any of the rest of the massive, centralized energy system.

![](https://www.wired.com/images_blogs/gadgetlab/2011/04/Book-jacket_new-thumb-300x448-43866-200x300.jpg "Book cover for "Powering the Dream" by Alexis Madrigal")

This is a guest column by Alexis Madrigal, author of Powering the Dream: The History and Promise of Green Technology. Madrigal is a senior editor at The Atlantic and former staff writer at Wired.com, where he was a prolific contributor to Wired Science. Read an excerpt from Powering the Dream.Yet that may be exactly what happens in the next few years. That's because energy problems are, in some important ways, software problems. And the companies that get built to solve them might be as lean, capitalist and competitive as any Peter Thiel investment.

There have long been energy startups. California's first solar rush occurred in the early decades of the 20th century when people realized that if you left water under glass out in the sun, it could get really hot.

An entrepreneur named William Bailey improved on the original Climax design and opened up shop as the Day and Night Solar Hot Water Heaters. Business was good for years before the natural gas boom in the state took away the cost advantages of those early heaters.

Later, around World War II, a small, star-studded group including Vannevar Bush, FDR's science advisor, banded together to build a wind turbine 10 times larger than any before it.

"The wind turbine is notable as the physical result of a project conceived and carried through by free enterprisers," Bush wrote, "who were willing to accept the risks involved in exploring the frontiers of knowledge, in the hope of ultimate financial gain."

But throughout the 1900s, power plants kept getting bigger and bigger. For a long while, that scale led to electricity price drops, too, wiping out most small-timers.

The problem that had to be solved was more power, not less. More plants, not fewer. More coal, not less. For that problem, what you really needed, or more precisely, what people thought they needed, was more huge plants.

There wasn’t a lot of room for the startup in that world. And utilities – for some good reasons – were heavily regulated and averse to the kinds of risk presented by working with small companies. Not only that, some high-profile energy innovators from the 1990s, like Enron and wind-power company Kenetech, failed pretty spectacularly.

We face a very different set of problems now. Building power plants is expensive, it turns out, and in any case, we want to reduce the amount of energy we use, both because it makes us vulnerable to fuel-supply price fluctuations and because of climate change.

On the other hand, we have a whole new set of tools and ideas since we were last trying to make structural changes to our energy system in the late 1970s.

For one, we've got unbelievable and easily accessible computing power. We've also got the ultrafast and wide communications and organizing platform of the internet. And lastly, we've got an increasing amount of data about what’s going on in our electric grid, and we'll only be getting more as smart-grid investments continue.

So, you've got a newish set of problems and a newish set of tools. Despite the up and down scribbles in green-technology venture funding, oil prices and belief in climate change, there’s a huge and long-term opportunity to create a startup that uses data and the internet to change the way the energy system works.

What kind of startup? Let's look at few signals from what I think the future may look like.

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Back in the 1960s and 1970s, if you wanted information about solar power, you would quite literally write away to some supplier or government agency and request a brochure. Some time later, someone might get back to you.

Or, maybe you'd go visit an experimental solar home in New Mexico. Any way you slice it, the process was laborious and not custom-tailored to your house and climate and conditions.

Everything that can be reduced to data will be reduced to data.Now, take a couple of solar services startups: 1BOG and Sungevity.

One Block Off the Grid harnesses the power of online groups to negotiate group deals with solar suppliers. It also does the legwork for you in finding a good supplier and installer. And you can do most of the process right online. It reduces the barriers to entry for would-be solar purchasers.

Sungevity does a similar thing. Using satellite photos, it helps you size and purchase solar panels for your home.

Both companies are doing things that would have amazed the mom-and-pop solar guys of the 1970s.

A host of other energy startups like Efficiency 2.0 are trying to use data about your energy usage to help you save money by cutting your energy usage. Similar companies like Enernoc are hard at work cutting the energy intensity of the industrial and commercial space.

These guys are just the beginning of a much, much bigger movement in the energy industry. For decades, when we needed peak power, we had to place the dirtiest, worst power plants online.

In the future, we'll simply use well-designed systems to shave down that load. And by "well-designed system," what I really mean is "well-designed code that can identify how to cut energy usage."

Everything that can be reduced to data will be reduced to data over the next couple decades.

That's what Wired’s been telling us in one way or another since Louis Rosetto was running the place.

The lean-energy startups that will lead the way in green technology will take advantage of that. They'll invent the intelligence of the "smart grid" and make it painless (and maybe even enjoyable) for people to use less energy.

No one's saying it's going to be easy, but last I checked, Silicon Valley likes hard problems.