Silicon Valley has always operated at the crossroads of change.
From ranching to orchards, orchards to factories, factories to
board rooms, board rooms to the next wave of technology and
innovation that responds to local, national and global challenges
and opportunities. Silicon Valley also exists in the
crossroads of circumstances unique to this region as well as
those common to any high tech region in the world.
Fostering Innovation and Businesses that can
Change the World
"Clean Tech" is an emerging sector of service or technology
businesses that economize the use of natural resources, employ
less hazardous methods or materials, or offer solutions to problems
such as water treatment, waste management or energy
supply challenges.
Silicon Valley has a proud legacy of being the birthplace of
many businesses and ideas that have changed the world. It is
possible that the next wave of innovation and opportunity will
transform Silicon Valley into an incubator for "Clean Tech,"
especially the clean energy aspect of clean tech.
Venture Capital Investing
Venture capital investment is one metric used to describe the
development of new technology clusters.
United States-based venture capital (VC) investments in energy
technologies increased from $716 million in 2004 to $917
million in 2005. As a percent of total VC investments, energy
tech increased from 3.3 percent in 2004 to 4.2 percent in
2005. Global wind and solar markets reached $11.8 billion
and $11.2 billion in 2005 - up 47% and 55%, respectively,
from a year earlier. The market for biofuels reached $15.7 billion
globally in 2005, up more than 15% from the previous
year. According to Clean Edge research, biofuels (global manufacturing
and wholesale pricing of ethanol and biodiesel) will
grow from $15.7 billion in 2005 to $52.5 billion by 2015.
Clean-energy sources, particularly wind power and biofuels,
are now often price-competitive with their conventional rivals, and in some cases, they're cheaper. This is the result of
prices for oil and natural gas increasing and clean-energy costs
falling due to market growth, economies of scale, and technology
advances.
California Venture Capital in Clean tech
California attracted $484 million in "Clean tech" venture capital
in 2005. California also dominated in the number of deals
for the two year period 2004 -2005, capturing 30% of the 367
deals.
California has repeatedly taken the lead in adopting environmentally-
conscious, business friendly policy. The PIER
(Public Interest Energy Research) program, the CalPERs and
CalSTERs clean tech initiatives, California's Renewable
Portfolio Standard, and various
State incentives for solar and wind energy have all made
California an attractive place for clean tech businesses.
While California leads, the Boston area is catching up quickly,
and the percentage of increase in investment is rising faster
in the Northeast, Midwest and Southwest.
There is also growing recognition by policy-makers at the
national and state level that clean tech can be a valuable asset
in creating jobs, improving environmental performance, and
promoting national resource independence. California and
Silicon Valley in particular have the potential to capitalize on
market and investment trends. To ensure Silicon Valley
remains pre-eminent in the innovation arena, local and regional
governments should continue to encourage the incubation
of small start-ups, and support policies that encourage businesses
to locate and remain in Silicon Valley.
Global Investments
In 2005, clean tech captured 8.5% of the $6.02 billion in venture
capital that was invested in North America. There were
67 clean tech deals in North America and another 36 deals in
Europe during the first quarter of 2006. Among the deals: 19
of the companies were from the UK, 3 from Denmark, 2 each
from Germany and France, and one each from Sweden,
Finland, Switzerland and Israel. While North America leads,
and California is the leader in North America, there are strong
challenges from other regions and abroad.
Silicon Valley's unique challenges: What could be
on our horizon?
Like any place, Silicon Valley has a mixture of blessings and
challenges. While we count our blessings, we must be mindful
of the challenges and strive to address these as proactively
as possible.
Water Reliability
Silicon Valley is fortunate in having multiple sources of water.
Depending on the year, local supplies make up about half of
our water. In the southern part of Silicon Valley, Delta water
makes up most of the other half. Water from the San Francisco
Hetch Hetchy system is the largest source, often the exclusive
source, in the northern/peninsula portion of Silicon Valley.
Like an investor with a diverse portfolio of stocks, our multiple
sources of water and the cooperative linkages that now
exist between water systems, ensure that the region's supply is
secure. However, each source has some significant challenges.
The Delta
The Sacramento/San Joaquin River Delta provides much of
Silicon Valley's and two thirds of the state's population with
drinking and irrigation water. The Delta is also a rich ecosystem
and provides the state with fisheries, agricultural and
recreational resources. However, the Delta system is under
stress and there are some serious threats to be addressed.
Levees
There are more than 1100 miles of levees in the Delta. Levees
are a critical part of the Delta's structure and ensure that residential
and agricultural lands are protected from flooding, and
that salt water from the San Francisco Bay is not drawn into
the Delta where it can contaminate drinking and irrigation
water. However, there are several stresses on delta levees all
adding up at once. According to Dr. Jeffrey Mount, of UC
Davis, the Delta 'looses ground' due to soil decomposition,
subsidence and erosion at a rate of 23,000 cubic meters of
additional space below sea level every day. Some parts of the
Delta are approaching 20 feet below sea level. As this volume
of below sea level space increases, more and more pressure is
put on the levees. Because it is not possible to stop these
changes, California will eventually face some difficult and
costly choices about how to manage the delta and the levees
that protect people, infrastructure, property and water supply
resources.
According to the Department of Water Resources, both the
federal Central Valley Project and the State Water Project,
built to deliver water to millions of Californians, are dependent
on fragile Delta levees to protect water supply and water
quality.
State highways, railroad lines, water supply pipelines that
serve much of the San Francisco Bay area, energy transmission
lines, and petroleum pipelines now cross the Delta, and rely
on the continued stability of Delta levees. All together, more
than $47 billion in infrastructure is protected by central valley
levees.
In addition to the concerns regarding levees, the Delta is also
facing fishery ecosystem deterioration and declining water
quality. While the detailed analysis as to the causes of these
challenges is still underway, some known pressures on the
Delta include; increased urban and agricultural run-off,
impacts of invasive species, fresh water diversions/lower flowthrough
volumes, and changes in seasonal flow patterns as rain
replaces snow in the Sierras and spring thaws come earlier and
faster due to global warming.
The Department of Water Resources has recently begun a
study of the long term risks and possible mitigations or adaptation
strategies for the Delta. With better information about
the long term risks facing this vital resource, Silicon Valley
and the state will be able to better prepare for the future.
The Hetch Hetchy System
Almost 100 years ago, the City and County of San Francisco
implemented an unprecedented water supply project that conveyed
water over 200 miles from the Sierras to the City of San
Francisco by gravity power alone. The project flooded a pristine
valley in a national park, but also provided a secure supply
of very high quality water and electricity to San Francisco
and many other communities in the Bay Area.
The San Francisco Public Utilities Commission (SFPUC)
launched a $4.3 billion Water System Improvement Program
to repair, replace, and seismically upgrade the aging system.
More than 75 projects are to be completed by the end of 2015.
Some of these projects include:
- New and rehabilitated pipelines from the Sierra Nevada to
the Bay Area, adding redundancy for rerouting water in
emergencies
- A new or repaired Calaveras Dam in southern Alameda
County, to meet seismic safety needs (a proposal to increase
capacity has been shelved)
- A new Irvington Tunnel, as a backup to carry water
through the East Bay hills
- Installing valves and strengthening pipelines where they
cross the Hayward Fault
- Upgrades and capacity increases at the Sunol Valley Water
Treatment Plant
- Improvements to regional system facilities within San
Francisco:
- new or improved reservoirs
- an upgrade at the
Lake Merced pump station
- new transmission pipelines
Proposal to dismantle the dam and restore the
Hetch Hetchy Valley
In the past few years, various environmental activist organizations
in California have been pressing for studies and consideration
of a proposal to dismantle the O'Shaunessey dam, drain
the Hetch Hetchy reservoir and restore the valley to its preinundation
condition. Recently the Department of Water
Resources completed its evaluation of all previous studies related
to this proposal and provided a gap analysis of necessary
additional information and a cost estimate for such a project.
While the DWR determined that the proposal was hypothetically
feasible, there are many significant impediments,
including; removal of the dam, replacing the water and energy
with equally high quality and reliable supplies, water
rights, protection of Native American sacred sites, and not
least, a $10 billion dollar price tag.
The proposal to restore the beauty of the valley that was sacrificed
to provide San Francisco and the Bay Area with water
will continue to have an emotional appeal, even though the
cost is astronomical. It remains to be seen if this proposal will
receive continued consideration, given the magnitude of the
cost, and the many other pressing priorities for those
resources.
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