The high-rolling risk takers who brought you personal computing, the telecommunications revolution, the commercialization of the Internet, and, of course, Google now aim to do nothing less than save planet Earth—and make billions while doing it. If the venture capital industry is successful, it might be the ultimate act of "angel investing," and perhaps no one is more emblematic of this new wave of high-minded technology entrepreneurship than Vinod Khosla, who, after a failed soy milk start-up in his native India, went on to become one of the driving forces of Silicon Valley as cofounder of Sun Microsystems and later as a venture capitalist. Khosla views climate change as the gravest threat the world has ever faced, and he knows others see America's foreign oil dependence as an urgent crisis. But in his calculus, we've been pitching pebbles at these Goliath problems. "Building a biofuels plant here and a solar plant there is not enough," he says, "unless we can replace 50 percent and hopefully 100 percent of the fossil energy sources."

This grand goal is not remotely in sight, even with wind and solar energy and ethanol growing at a breakneck clip. These renewables now provide just 3.6 percent of the nation's energy, and the government predicts their share will grow to a grand total of 4.2 percent by 2030. By those calculations, it sure looks like a fossil fuel future for America.

But Khosla, through his own Khosla Ventures and often working alongside the legendary VC firm Kleiner Perkins Caufield & Byers, where he maintains an affiliation, is in the vanguard of entrepreneurs and financiers who believe their Silicon Valley success stories can be repeated in green energy. They are pouring money and ideas into a new generation of alternatives to fossil fuel—"technologies that scale," in their words. That is, options that can ramp up to serve a large share of the nation's energy needs because they'll cost less than coal or oil. One estimate is that venture capital funds nearly tripled their investment on green energy last year, putting $2.4 billion to work.

Of course, that may not seem like much dough given that some next-generation technologies are massive undertakings, like placing 3-mile-square fields of mirrors in the desert to focus the sun's rays or shooting high-pressure water into the hot rock 3 miles underground to create a man-made geothermal reservoir. And skeptics say that these approaches may not be cost competitive for years. The economic equation might change if Washington puts a limit on carbon dioxide emissions or institutes carbon taxes that make coal power and gasoline more expensive, though that's far from a sure thing. Dan Reicher, a former Clinton administration energy official who heads up a major investment effort on climate change underway at Google, says stronger federal policy, more availability of Wall Street financing, and technological innovation are all equally important in taking green energy to the next level. "If we're going to get to a sustainable energy future, we have to be working hard at all three," he says.

But Khosla believes government policy will move once entrepreneurs take the first step. "Change has to come from somewhere, and our business is about change," he says, recalling the early skepticism that the first microprocessor and telecommunications revolutionaries faced. "All the innovation came from little companies that had breakthrough technologies. The chances of any one experiment failing may be high, but the chances of all of the experiments failing is very, very low. You should have a thousand points of innovation, and for sure you'll get a breakthrough."

Just the sort of optimism that's helped make Silicon Valley the world's leading center of innovation. And just the sort of attitude that seems to be finally cracking the tough technological puzzles whose solutions will change the way we power the global economy and our lives.

Solar concentration

Solar energy may be poised to make the leap from the rooftop down to the floor of the desert—where some advocates say it needs to be if it's going to take its rightful place as a member of Big Energy. The nation's largest utility in customers served, investor-owned Pacific Gas & Electric, this fall announced a bold plan to install nearly five times the amount of solar power that is now operating across the United States and do it cheaper, bigger, and faster than has ever been tried before. Instead of using semiconducting material to convert light to energy—those familiar black photovoltaic panels—PG&E and its technology partners, like the Israeli firm Solel, will use nothing more complicated than mirrors, lots of them, to concentrate some of the highest-intensity sunlight in the world. The arrays will heat water to drive turbines just as in an old-fashioned power plant.

Although solar PV arrays have been crowning more and more American buildings—the 1.6-megawatt project opened this year at Google's headquarters in Mountain View, Calif., is the largest—they're expensive. Developments are underway to bring down the price by reducing the silicon from its usual wafer form to an ultrathin film deposited on glass. But at this point, PV cost estimates span from an uncompetitive 23 to 32 cents per kilowatt-hour, while residential electricity prices in this country range from 5.8 to 16.7 cents.

With current technology, "concentrating solar power" would cost about 40 percent less than PV—tantalizingly close to competitive in areas like California with high energy prices. Exactly how the mirrors will be configured could bring the cost down more. Rows of curved reflectors work well; since the 1980s, a dazzling "parabolic trough" display has provided reliable power to California, the only operating concentrating solar power project in the country. But Spanish firm Abengoa this summer aimed for greater efficiency by focusing circles of mirrors onto a central "power tower" near Seville for the first commercial European Union CSP plant. The company would like to do the same in the U.S. Southwest. One firm that has been working with PG&E is Ausra, which recently relocated from Sydney to Silicon Valley and received $40 million in backing from investors led by Khosla Ventures to promote its big idea. Ausra thinks it can drive CSP costs down with simpler, flat mirrors and turbines that run at a cooler temperature, like those in nuclear power plants. Ausra also aims to engineer into the system the ability to store thermal energy so it can provide power when the sun stops shining.

Engineering firm Black & Veatch of Overland Park, Kan., estimates that outside of environmentally sensitive areas, there's enough available flat "high solar resource" land—also known as desert—in California to provide six times the power that the Golden State uses today.

Deep geothermal

One of the most promising renewable-energy wellsprings is underground.

Geothermal is lower profile than a range of other alternative energy technologies, even though many homes—including President Bush's Crawford ranch—have heat pumps that tap into the Earth's steady, reliable warmth. But few realize that the United States is the world's biggest mass producer of geothermal power, with long-running plants in western hot springs and geyser areas that generate more electricity than all U.S. wind and solar energy combined. It was long thought that big-scale geothermal had reached its natural limit. Few locales are graced with steamy water reservoirs close enough to the surface (less than 2 miles under) to be easily tapped to run electric turbines on the ground above. And many hot spots happen to be beneath scenic treasures like Yellowstone National Park or on American Indian reservations.

But recent study shows deep-drilling and seismic-exploration techniques developed in the oil industry could be exploited to draw out the geothermal energy found 3 or more miles underground, locked in dry rock that's more than 300 degrees Fahrenheit. A developer could drill a well and use high-pressure water to open fractures in the rock. Then, injection wells would be drilled to circulate the water in the man-made reservoir and extract steam to the surface to run electric turbines. This year, a government-sponsored study led by Massachusetts Institute of Technology concluded that these "heat mining" methods could offer access to a staggering amount of energy. Just 2 percent of the U.S. geothermal resource base could yield nearly 2,000 times the power that the nation now consumes each year.

The limiting factor is the cost. The old-fashioned geothermal sites now operating in geyser areas aren't any more pricey than old coal plants, at about 3.5 cents per kilowatt-hour. MIT looked at a half-dozen potential enhanced geothermal sites across the country and came up with estimates ranging from a potentially competitive 10.3 cents per kilowatt-hour to a sky-high $1.05 per kilowatt-hour. However, if a few well-defined technical problems were tackled to boost what's known as the "fluid production rate," MIT said costs would plummet to 3.6 to 9.2 cents per kilowatt-hour.

"It brings an absolutely gigantic amount of power into the realm of economic feasibility," says Susan Petty, one of the study scientists, who now is running AltaRock Energy in Seattle, which plans to develop the first "enhanced geothermal" demonstration project in the United States in the next two years. With backing from venture capital firms Khosla Ventures and Kleiner Perkins, AltaRock's goal is to provide 10,000 megawatts within a decade. That's enough to power 10 million homes, and more than four times the power of all the old-style U.S. geothermal plants now operating.

Numerous companies, spurred in part by government subsidies, are also active in Australia and Europe, with one plant to begin commercial operation soon in Unterhaching, near Munich, Germany. Not everything has gone as planned. Earlier this year, a geothermal company's rock-fracturing operations 3 miles underground in northwest Switzerland touched off earth tremors with a 3.3 magnitude felt nearly 10 miles away. But the MIT study said that better techniques can control this and other problems. And since geothermal energy, unlike solar or wind, is constant, MIT said it could provide 10 percent of U.S. base-load energy needs if the nation would spend $1 billion on its development over the next 15 years—less than the cost of one coal plant.

High-pressure ethanol

In alternative transportation fuels, the holy grail quest is the search for the next ethanol. Sure, the business of fuel alcohol distilled from corn is booming, with production having tripled since 2002 and up 33 percent this year to 6.5 billion gallons. Historically, ethanol has been more expensive than gasoline, but crude oil prices are now so high that ethanol would be cheaper even without its 51-cent-per-gallon subsidy. Indeed, one reason pump prices have not skyrocketed along with the price of crude oil is that so much fuel is blended with 10 percent ethanol. Politicians would like to mandate that refiners use still more. But even if you don't agree that diverting corn to energy has strained the food industry or environment—and the ethanol industry most assuredly does not—there is a practical limit to squeezing fuel from the cob.

Hence, the pursuit of "cellulosic ethanol," the same fuel made by breaking down the tough starches found in hardier plant matter—from cornstalks to fast-growing switch grass to paper-mill waste. Ideally, the feedstock would be abundant and wouldn't require a lot of water, fertilizer, or tending. Cellulosic works in the laboratory but at great cost. So dozens of companies are trying to hit on the formula to make it economic, mainly through bioengineering of enzymes that would convert grass, husks, or wood to sugar that could be fermented into fuel. The government predicts the first cellulosic plant will cost five times more than a corn refinery and will come on line no sooner than 2010.

But Range Fuels, a Broomfield, Colo., firm founded by Khosla, aims to beat that projection by two years. One of six companies that received Department of Energy grants to accelerate the new technology, Range will be the first to break ground on a commercial plant on November 6 near Georgia forestland, where it plans to refine abundant timber-industry waste wood. Instead of relying on expensive enzymes, Range will use heat and pressure to turn wood chips to gas, then extract ethanol with a catalyst. It's a greened-up version of the proven Fischer-Tropsch process developed in 1920s Weimar Germany to make diesel fuel from coal. The company's not revealing the plant's cost, only that it will be less than the Energy Department projects and will be pumping fuel into the market by the end of 2008. With the help of extra subsidies for cellulosic ethanol that Congress enacted in its big 2005 energy bill, Range is confident it can be commercially successful selling to nearby refiners.

Range Chief Executive Mitch Mandich used to be a senior vice president for sales at Apple Computer and was chief executive at a Silicon Valley speech technology start-up that was bought out before he switched to alternative energy. "Rather than stay in tech, I thought I'd like to help make a difference in the world," he says. The inspiration came in December 2005 at Stanford University when former Vice President Al Gore gave the slide show that was later immortalized in the movie An Inconvenient Truth. Mandich and his friend Khosla, also in the audience, afterward talked about Gore's presentation and plea for the tech industry to get behind the push for a solution, and the idea for Range Fuels was born.

New efficiency

Congress is dithering over a proposal to force American cars to average 35 miles per gallon by 2020, a seemingly modest goal with smaller cars and more-efficient diesel engines helping the European Union near 44.2 MPGand Japan attain more than 45 MPG. But a race is on for the technology that could blow all those numbers away. "You see the difficulty Congress has in setting a new...standard, and we know the best way to help is to have some cars that get 100 miles per gallon and to make them gorgeous and affordable," says Larry Brilliant, executive director of Google's philanthropic arm, Google.org. That would mean more than 70 percent oil savings, since the current fuel-efficiency standard is just 27.5 MPG goal set in 1975 and reached by the late 1980s.