Government Policy

February 24th, 2011

Using Government Policy to Spur Clean Energy Innovation

BOSTON -

When people (and companies) talk about the benefits of clean energy, they usually hammer home three key points:

  • Energy: yup, we continue to need it
  • Environment: a more sustainable option, from extraction to generation
  • Economic: secure supply, stable prices, new jobs

The President was no exception in his #SOTU, a few weeks back. In his familiar alliterative style, he said the investment in clean energy could “strengthen our security, protect our planet, and create countless new jobs.” If nothing else, it was a great piece of “earned media” for the industry. As a (very much, self proclaimed) “innovation economist,” I was more interested in the set-up: “The first step in winning the future is encouraging American innovation.” (Note: GLDer Walter Frick takes a well-said different perspective)

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February 1st, 2011

Show Me the Market

BOSTON -

Lots of the response to the energy-related portion of the president’s State of the Union address has understandably focused on a few specific goals: 80% of electricity from “clean” sources by 2035; end subsidies to oil companies; 1 million electric vehicles on the road by 2015.

But I’d argue the most important line of the speech was not the mention of any of these specific goals.  It was this:

Clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling.

Commit that one to memory.

Energy innovation is a critical component of a national energy strategy.  On that much we all agree.  But as I’ve written before, innovation hinges on more than increased R&D.  The point of that post was this:

Ours is both a technological challenge and a deployment  challenge.

Creating demand for clean energy – whether through a price on carbon, a clean electricity standard, or some other mechanism – is critical not just for today’s emissions reductions, but for tomorrow’s.

As the IPCC puts it:

The set of available technology defines what might be deployed, and the use of technology affords learning that can guide R&D programmes or directly improve technology through learning-by-doing.

Deployment speeds innovation. Any serious clean energy strategy needs to take that basic fact into account.  Obama made clear that he understands that, but it bears repeating.  We have the innovation resources to excel in clean energy.  Now we need to build a market.

Photo Courtesy: knittymarie

December 29th, 2010

4 Lessons about Solar and Development you can Learn from your Couch

BOSTON -

Ever wonder about electricity use? Well, if you are reading Green Light Distrikt, I’ll bet you have! Last winter, I was saving up for my monthly heat and electric bills and started doing some math. With my late-night FIFA-playing roommate, we were using about 120 kWh of electricity per month. So, that’s like 60 kWh for each of us, or 2 kWh per day.1 Is that good?

Energy consultants, policy makers, and journalists like to make sure that they are all using the same assumptions when making the big decisions that impact our future. To be on the cutting edge of the new energy economy and stay ahead of the curve, one must apparently not stray from historic trends of energy use and pricing. This not only ensures that innovation is kept within acceptable bounds, but also helps each of us evade blame for picking the wrong assumption. It is kind of like being in a pack of antelopes when the tiger comes.

So, as part of a DIY experiment, my roommate and I installed a small solar photovoltaic system in our living room. Well, Green Light Distrikt consultants advised that we install the panel outside on our porch, but the battery and LED lights were in the living room. And, our solar system came from Barefoot Power which we were testing for EarthSpark International’s Clean Energy Store in Haiti. This sweet off-the-grid system produced everything it needed from a 15 watt panel. Is that big?

No! It is much smaller than the 230 odd watt panels you sometimes see on peoples’ houses, often installed thirty at a time. But people around here install thirty 230 watt panels because they need every last drop of the green juice they produce. Helk, the average Massachusetts ratepayer uses 618 kWh per month (please see U.S. Energy Information Agency 2008 electricity consumption data.2 Great resource for consultants!). My roommate and I should therefore be using twice that, so 1236 kWh per month. That would theoretically justify more panels. But for now, we are only using 10% of that and we just have one panel, producing only 15 watts.

Our laptop-sized panel started doing its work: charging our battery in the sunny hours. When night descended upon Somerville, we crossed our fingers and threw the switch. Like the National Lampoon’s Christmas Special of 1989, there was light! And we lit our living room for hours, night after night, for the whole year. It was awesome. That baby produces about 18 kWh per year, which is about the amount of electricity the average Massachusetts residential rate payer uses per day.

Did this Barefoot Power solar home system really belong in our living room? No, it was destined for warmer climates, where people didn’t have NSTAR pumping virtually unlimited electrons into our walls. This system was destined for a rural village called Les Anglais in Haiti, where electricity was rare but donkeys were plentiful. Why? Well, take a look at the graph below. It shows electricity consumption graphed against the Human Development Index. Two things to take from this:

  1. Yes, we are gluttonous, but Norway is even worse (for once)!
  2. Wow, going from 0 kWh to 200 kWh per year increases quality of life enormously.

At the conclusion of my first Green Light Distrikt blog entry, I would like to restate my case for a few basic philosophies:

  1. Technology is a key part of our new energy economy
  2. Don’t let yesterday’s assumptions hold us back (especially in consulting and business)
  3. Technology is great, but it is a fallacy to even pretend that yesterday’s behavior makes sense for tomorrow
  4. A lot of electricity doesn’t really make us better off in the U.S., but a little bit of electricity does make a big difference in other places, like Haiti
1 Note, my apartment residential electricity bill is not entirely reflective of my electricity consumption. There is coin-op laundry in the basement and I do spend a lot of time at work.
2 www.eia.gov

November 18th, 2010

Walking Transaction Costs

BOSTON -

At the New England Clean Energy Council we recently held one of our Finance Series panels on deal structure for clean energy projects, featuring speakers from Goodwin Procter, BlueWave Capital and Pricewaterhouse Coopers.

Goodwin’s R.J. Lyman, got a laugh with the line “I’m a walking transaction cost” in reference to the significant cost of hiring lawyers and accountants to assist with project finance.  But it’s more than a laugh line.

My last post discussed a recent think tank white paper on energy innovation that started with the simple premise:

America will make little sustained progress in transforming the U.S. energy economy… until alternatives to conventional fossil fuels become cheaper.

As I discussed in my post, the paper offers several thoughtful recommendations toward this end and there is substantial agreement that increased R&D will be a crucial component in lowering the cost of clean energy over the long term.

But R.J.’s comment makes an important point.  Driving down the cost of clean energy requires more than technological innovation.  The “walking transaction costs” associated with unfamiliar projects can be significant.  Consider a first-of-its-kind project like Cape Wind.

As important as technological innovation is to lowering energy costs, it’s a mistake to neglect the later stages of the innovation lifecycle.  As project financing agreements become more standardized and transaction costs decrease, clean energy becomes a more financially appealing alternative to fossil fuels.  That’s one of many reasons why continued deployment of existing clean energy technologies is essential.

November 16th, 2010

“The Business Community is in Agreement, We Need a Price on Carbon” (VIDEO)

BOSTON -

Last month, Green Light Distrikt Boston held our third Cleantech Kingpins speakers series, where we gather local experts to answer a single question facing our industry. The first speaker, Mitch Tyson came up and gave a blunt, fiery and amazing speech – see the full  video at the bottom of the post – that solidly, unequivocally stated that the business community is in complete agreement with each other, we need a price on carbon.

While some in the public see a price on carbon as some sort of tax, our business leaders see it as an opportunity to unleash huge amounts of innovation, job creation, and exports that can fuel our country. It’s all about how you frame the issue.

Mitch Tyson is the former CEO and current Chairmen of Advanced Electron Beams and Co-Founder of the New England Clean Energy Council, is a member of the Progressive Business Leaders Network, and heads the energy council of the Mass High Tech. Mitch is a clear cleantech leaders, both in the region and the country.

All the presenter were asked to answer two questions

  1. Why is the US not investing enough in cleantech?
  2. What are 3 specific things we need to do to reverse this trend?

Everyone loved the speech and Mitch has some amazing answer to the two questions posed to him that are summarized below.

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