In clean energy, U.S. needs more steel in ground
Researching technology breakthroughs is worthwhile, but people in renewable energy say the U.S. needs to speed up installation of products to lower costs and stay competitive globally.
WASHINGTON--More than scientific breakthroughs, the U.S. needs to deploy existing green technologies faster to keep pace with China and other nations, people in the renewable energy industry said this week.
At the Renewable Energy Technology (RETECH) 2010 conference here, the subject of national competitiveness in the burgeoning clean-energy industry was a frequent topic. The concern is that the U.S. is lagging because of wavering policies, complex permitting, and a skittish financial community.
"We're still pretty good at invention or discovery but in terms of deployment, we're losing ground. In fact, you could say we suck," said Mike Davis, the assistant director for energy and environment at the Pacific Northwest National Laboratories, during a session on national lab research. "Our ability to throw sand in the gears in terms of development in this country is just phenomenal. We've perfected it."
There are legitimate reasons to thoroughly review new energy projects, but entrenched business interests are adept at delaying new technology deployment, he said. For example, in a project where Pacific Northwest National Labs worked with Boise Cascade to store air pollution underground, researchers spent one year engineering the technology and five years seeking permits to do tests, Davis said.
Across the U.S., thousands of megawatts' worth of renewable electricity projects are proposed, but there are growing conflicts over land use, including in southwest desert areas suitable for large-scale solar and the offshore wind project in Massachusetts.
On the finance side, many banks shy away from funding first-of-a-kind projects, such as making ethanol from wood chips, because of the potential technology risk, a situation that stunts the growth of new energy companies.
Germany and Spain have become the two largest markets for solar because its energy policies ensure that project developers can get a premium price for renewable power, an approach many U.S. investors and entrepreneurs say is more simple and predictable than the U.S. system.
China, meanwhile, in the past two years has accelerated its energy production dramatically, becoming a powerhouse in solar panel and wind turbine production. This week, the American Wind Energy Association published a report showing that China installed more wind capacity than the U.S. last year for the first time. Through an aggressive government spending program, China is projected to outspend other countries by investing $7.3 billion this year to upgrade its electricity grid with smart meters and other equipment.
"Things are happening in China at a speed that is making our heads spin," said Virginia Sonntag-O'Brien, executive secretary of policy group REN-21, said during a session on Thursday, according to the RETECH conference organizers.
Entrepreneurs' perspective
Picking up the pace of clean-energy project development means that the prices for electricity or fuel from renewable sources will go down faster, green-tech entrepreneurs said. For technology suppliers, stronger demand translates into higher manufacturing volume and more cost-competitive products in a global market.
"While continual innovation in technology can move the needle in terms of costs and acceptance, really it's deployments that drive you down the cost curve. This is what happened in wind, in solar PV (photovoltaics), and we're entering that phase with our solar thermal technology," said Robert Rogan, senior vice president at eSolar, which makes utility-scale solar systems. "You have to build to scale to recognize the full potential. You can't just look at research."
As a company, Pasadena, Calif.-based eSolar is moving from technology development to commercialization, something that many green-tech start-ups are eager to do. The three-year-old company recently announced a giant, 10-year deal to build 2,000 megawatts' worth of solar power in China, following another 1,000-megawatt contract in India.
eSolar also has contracts for 500 megawatts in the U.S. It hopes that a federal plan to streamline permitting on federal land will help get its U.S. project in place in the next year or two, but it still needs to contend with state regulators, Rogan said.
Global race
Specifics aside, people working in clean energy generally argue for consistent policies, which historically has not been the case in the U.S. Having a multiyear policy makes it easier to finance projects, such as biofuel plants or solar farms, since the return is more predictable.
The most recent example of shifting U.S. policy is when the credit for biodiesel production lapsed at the end of last year, which one venture capital investor on Thursday called a "travesty." Not sustaining the subsidy could slow ongoing work in promising algae-based fuels, he said.
In the case of renewable power, the current renewable energy subsidy--a program set up last summer to provide cash grants in lieu of tax credits--is set to expire at the end of 2011. A short-term policy, which may not be renewed, is not "a good fit for a start-up," which needs to attract outside investors to build and install products, said Michael Whalen, the chief financial officer at SolarReserve, another newly formed California solar company.
Like eSolar, SolarReserve is seeking business in the U.S. and abroad. It has two contracts for its molten salt solar storage system, a technology adapted by rocket maker Rocketdyne, in the U.S. and one in Spain. It's in discussions for projects in desert areas in North Africa, Australia, and elsewhere in southern Europe, where the more straightforward subsidies have created large markets for solar, Whalen said.
"We have a real patchwork quilt of policy initiatives that are not particularly coordinated, and each addresses a different part of the puzzle in different fashion," he said.
Regardless of which country can establish the best environment to spur innovation in green technologies, it's clear that the race is global, which is in sharp contrast to the IT revolution, said Stephan Dolezalek, the head of the clean-tech practice at VantagePoint Ventures.
"If renewable is the second coming of the (IT revolution), people are saying, 'I'll be damned if I'll let it happen in Silicon Valley. There's no reason we can't grow these in industries as quickly in Beijing, in India, in the Middle East,'" he said.