It's not the $150 billion that President-elect Obama pledged, but Stanford University, the school that helped give birth to Yahoo! and Sun Microsystems, among others, is putting $100 million into a new energy institute for cleantech research.

Stanford has been leading the academic study of alternative energy for six years through its Global Climate Change & Energy Project (GCEP). But its efforts have long been underfunded, GCEP president John Hennessy told VentureBeat.

No longer. And that's important for Foolish energy investors. Academic research often leads to commercial success. Akamai, a $2 billion business today, was created in response to a math challenge that Web creator Tim Berners-Lee presented to company co-founder Tom Leighton while both were still at MIT, for example.

At Stanford, entrepreneurship is practically a way of life, and the new center's funding priorities reflect that. In addition to new faculty and a larger pool of graduate students, the school plans seed grants for commercially viable energy conversion projects and a $2 million competition in the spring.

The cleantech sweepstakes
Expect the entries to be wide-ranging. Director Sally Benson said that the GCEP is exploring several possible breakthrough areas. A sampling:

  • Nanoscience that could make solar cells 45% efficient, tripling the current standard. Anything approaching this would be a game-changer for suppliers like Yingli Green Energy (NYSE:YGE). Tiny tech investor Harris & Harris (NASDAQ:TINY), realizing the opportunity, last year bet on solar efficiency company SunFlake.
  • High-volume storage of wind-generated energy. While we have yet to see big breakthroughs in this area, no less than T. Boone Pickens urges serious investment in wind technology, and big players like Vestas Wind Systems have proven that wind power is commercially viable.
  • Biofuel from woody plants. I wasn't at Stanford's press conference, so I can't tell you if Benson chose her words carefully in linking "biofuel" and "woody plants," but after the Great Ethanol Meltdown of 2008, I'd have to think that she did. Interestingly, there are commercial initiatives already under way to create biofuel from alternative sources. Verenium (NASDAQ:VRNM) is a player here, thanks, in part, to a $90 million investment by oil giant BP (NYSE:BP). DuPont (NYSE:DD), too, is exploring cellulosic ethanol.

We don't know which cleantech innovations will ultimately take hold. But we do know that cleantech has serious backing. Google (NASDAQ:GOOG) CEO Eric Schmidt and John Doerr of  legendary Silicon Valley venture capital firm Kleiner Perkins Caulfied and Byers both spoke at a press event held in concert with Stanford's announcement.

Schmidt said that the $18 million his company has invested in cleantech paid for itself within 18 months. Doerr, meanwhile, predicted that cleantech would become a principal driver of the area's economy. "In a few years we might be calling it Solar Valley instead of Silicon Valley," he said.

He has a point. SunPower (NASDAQ:SPWRA) and start-up Miasole are two of several emerging solar companies in the valley.

Clean up on cleantech
Of course, solar isn't all Doerr is interested in. He also told attendees that he sees promise in efforts to convert waste into natural gas and fertilizer, VentureBeat reports. So not just food but trash into fuel? It'd sound way too Back to the Future if we weren't already talking about extracting oil from algae. But we are, and we will.

Stanford, with a $100 million bet, is hungering for a larger slice of the growing cleantech pie. I am, too. What about you? Would you invest in cleantech? If so, how? Solar? Wind? Biofuels? Use the comments box below to give us your take.

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Fool contributor Tim Beyers had stock and options positions in Google and stock positions in Akamai and Harris & Harris at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. Its disclosure policy doesn't understand people who like their eggs sunny-side up.