January 19th, 2011

In the Energy Wars, We All (Can) Win


There’s been a lot of freaking out lately about China and energy – although Europe is still far ahead of us here in North America. We can spend time freaking out or we can address the elephant in the room, how do we get OUR ducks in a row. We’ve made some serious progress in both technology development and deployment in the last 5 years, but there’s still a long way to go.

On September 30th, Green Light Distrikt held our 3rd Cleantech Kingpins speaker series. We asked a series of speakers with various backgrounds – private industry, non-profit, research, government, and media – to address the question: “Where are we and how do we increase US investment in cleantech?”

Steve Minnihan, a cleantech research associate at Lux Research had some very interesting information and conclusions based on his research on the solar, smart grid, and transportation space. (See Steve’s full 12 minute presentation and slides at the bottom of the post)

  1. China is absolutely leading the race in solar manufacturing capability.
  2. Manufacturing supply is growing much faster than demand, with rough estimates of 70 GW of supply with only 30GW of demand out to 2013.
  3. China has a huge number of tier 3 manufactures – low quality, less efficient modules – that will have trouble in the market as prices drop.
  4. Current installed solar capacity ranks 1. Europe 2. US 3. China. However, China has just started to incentivize solar so they will be gaining ground.
  5. US is hands down leading in smart meter development and deployment, compared to all other regions in the world.
  6. By 2015, China will have 5X more energy storage on the grid to meet the demand for wind and solar deployment.
  7. Electric vehicles will not lead up to the hype because the cost of the batteries is too expensive (Chris – Unless Better Place can solve this).
  8. Unless oil is at $200 per barrel, there will be no significant penetration of EVs, unless the battery costs are reduced by 45%.
  9. In China EVs will fare much worse where the auto industry is booming, growing year over year at at least 50% with all traditional fueled cars. China has, like the US, a substantial subsidies on gasoline.
  10. China has the lead on incremental transportation technologies, eBikes and micro-HEVs.
  11. Neither the US or China is leading in the battery race, that’s going to South Korea.

Steve’s conclusions about how to increase US adoption of cleantech investment.

  1. Determine the position of the US in the value chain and focus our efforts on our strengths. The US will not lead in the mining of raw materials or the manufacturing but in advanced R+D and technology development. There are vastly more start-ups and corporate investment being putting into next generation battery, solar, wind, smart grid technology in the US than in Asia.
  2. We need to integrate regulation that will drive market growth in solar, smart grid, and transportation.
  3. We need stability and long-term certainty for the incentives.

Our Clean Energy Industry Should Learn from IBM

There is one single sentence that really struck me in Steve’s presentation, and I’ll paraphrase here. He said that we’re both developing different parts of the same puzzle. While China happens to be focusing on manufacturing and producing raw materials, i.e. the supply side (energy production) of the equation, we’re building smart meters and focusing on the demand side (energy consumption) the equation. The truth is that both countries will need both to be successful in creating clean energy. What could be really damaging to the success of the US cleantech industry is if we (the US) try to copy China’s strategy and forget to focus and leverage our own strengths and position.

IBM instantly came to mind. A company that used to manufacutre computer hard drives and monitors (think China) then begin to make software, and now has sold off their manufacturing units and completely focuses on software development and IT consulting (think the US). Do you see where I’m going with this? Why have they done this? Because it is MORE profitable. Do you still need both parts of the equation? Of course, you need computers to run software and software to implement systems that are developed by IBM consultants. Is IBM worried that they’re no longer manufacturing computers? Heck no, because they’re a much more profitable and competitive company with a defensible position being an IT company.

In the US, we need to adopt the same strategy. We should not be freaking out nor trying to focus on increasing our manufacturing capacity (unless it’s advanced manufacturing) but we should realize that it is not our core competency and focus on what is; the tasks that are more value added and require a more developed workforce.

Steve Minnihan from Lux Research Speaking at Cleantech Kingpins

No related posts.

Related posts brought to you by Yet Another Related Posts Plugin.

Chris Williams

About Chris Williams

Chris Williams is the editor of Green Light Distrikt and Chief Marketing Officer at HeatSpring . He has experience in business development, prototyping and new venture research with a focus on geothermal heat pumps, solar thermal and solar photovoltaic technologies. Chris is an IGSHPA accredited geothermal installer and NABCEP certified solar installer. Chris is focused on solving customer facing issues in the creation and adoption of clean energy technologies and products. Chris has installed over 300kW of solar and tens of geothermal systems. He's invented the PV Pal , developed many trainings at HeatSpring, publishes the NABCEP Study Guide , the Hitchhikers Guide to Cleantech and has done due diligence research for Urgent VC . Feel free to connect with him @topherwiliams , on Linkedin , or through email about new ventures, collaborating, writing, research or whatever is on your mind.