The End of Stimulus
Dollars - Impact on Clean
Tech
September 2010
The American Recovery and Reinvestment
Act has funded breakthrough innovation and new growth industries that are
driving down the cost of clean energy and building the foundation for
competitive 21st century U.S. industries, according to a White
House report released
August 25th on the impacts of the U.S. stimulus bill.
The report, The Recovery
Act: Transforming the American Economy Through Innovation, is
notable for highlighting the multifaceted and relatively comprehensive clean
economy strategy now underway with stimulus investments, and for the
Administrations welcome focus on making clean energy cheap.
Yet while the White House report highlights the considerable clean energy
momentum established by the Recovery Act, it also inadvertently raises the
specter of an impending clean tech funding cliff which risks sending U.S. clean
energy industries into deep freeze as stimulus funds begin to expire over the
coming months.
To achieve the White Houses long-term objectives driving down the costs of
emerging clean energy technologies such as solar power and advanced batteries
and building globally competitive American clean energy industries will require
a long-term,
comprehensive clean economy strategy and sustained investments in
innovation, advanced manufacturing, and competitive market deployment.
The White House report correctly frames the overriding goal of clean energy
investment around making clean energy cheap in real, unsubsidized terms. For
solar energy, according to the report, the near-term goal is for solar electricity
to be competitive with retail electricity rates, with a long-term goal to
compete with central fossil fuel power plants. As the Breakthrough Institute
has consistently argued, taking clean energy alternatives to scale and building
globally competitive clean energy industries will ultimately depend on such
improvements in cost and performance.
Cost reductions and performance improvements in solar technology, advanced
batteries, and electric-drive vehicles will be driven by a confluence of
factors, according to the report, including direct public support for energy
innovation, manufacturing and deployment, and by strengthening the linkages
across all three areas.
The White House report notes that the Recovery Act is accelerating solar energy
innovation by providing funding for greater solar energy deployment,
manufacturing and scale-up, and catalyzing needed technological breakthroughs
to create novel and more efficient technologies. All told, these measures may
help reduce to cost of solar power by 50% in coming years, according to White
House estimates, while building domestic manufacturing capacity and investing
in next-generation solar breakthroughs that could form the basis of entire new
U.S. industries.
Similarly, stimulus investments have helped transform the United States from a
bit player in international advanced battery markets to a global competitor
with an estimated 20 percent of worldwide manufacturing capacity online by
2012, all while potentially driving down the cost of electric vehicle batteries
by up to 70%. The key to success, the White House says, has been investments
across the innovation chain from retooling current auto factories to new
manufacturing and commercial deployment to research and development of electric
drives and batteries.
It is notable, however, how distinct such a strategy is from the dominant cap and trade
debate that has consumed essentially the entire Congressional
calendar since passage of the Recovery Act in February 2009. The nearly
complete focus of the subsequent Congressional energy and climate debate on the
primacy of carbon pricing prevented meaningful debate on how to optimize and extend
the critical, comprehensive clean energy investments begun under to stimulus
and enact a long-term investment strategy to strengthen clean energy
competitiveness.
Indeed, while the stimulus was supposed to be a down payment on a new clean
energy economy, the
Congressional cap and trade bills would have
invested in clean energy technology and served the role as a long-term clean energy policy.
Meanwhile, our economic
competitors are not making the same mistakes we are, and are
continuing to publicly invest in their domestic energy innovation systems in a
bid to capture the increasing economic rewards inherent to the burgeoning clean
energy industry.
China is set
to unveil a massive $740 billion, 10-year package of direct investments
to secure their economic leadership in emerging clean energy industries. China already dominates the global market share for electric batters, wind turbines,
and solar panels, and is rapidly boosting its capacity to innovate and produce
next-generation clean energy technologies. Japan, South Korea, Germany, Spain,
Denmark and a host of other international competitors are also fast at work
building domestic clean energy industries with a multifaceted focus on
innovation, manufacturing, and markets.
Facing such intense global competition, and with Recovery Act funds poised to
expire soon, sending U.S. clean energy markets off a clean tech funding cliff,
the U.S. is in dire need of a long-term clean energy investment strategy to
regain economic and technological leadership in this new growth sector.
The substantial and successful impact of the public investments in the U.S.
stimulus bill point to a way forward, but unless rapidly followed by a
long-term, sustained investment strategy, the Obama Administrations clean
energy legacy will be one of leadership, facing a wall of opposition from legacy of fossil fuel forces battling to save their turf, while eroding U.S. clean
energy competitiveness.
Canada Marches Ahead to a Smart Grid Future
August 2010
In the near future, utilities and
consumers across Canada will access a Web portal to share information about
everything to do with energy -- from the state of system loads to power outages
to billing. Already, some individuals and businesses are helping to supply
their utility with renewable energies and generating a new stream of income for
themselves in the process. This is possible because provinces and power
generators across Canada are moving forward with smart electricity networks to
conserve power, supply new demand and address global warming.
To do that, a smart grid needs to be
interactive, intuitive and designed so information management is central to its
operations.
Ray Tomalty, principal of Smart Cities
Research Services and an adjunct professor in the School of Urban Planning at
McGill University, notes that, "A smart grid is an enabler of renewable
distributed generation, which means a large number of small generating
facilities [think residential rooftop photovoltaics, backyard mini wind
turbines] can be hooked up and coordinated to feed energy into the grid as
needed."
They also have, says Prof. Tomalty,
"storage capacity so that they can absorb generating capacity when it's
sunny or windy and store it for distribution later on during the peak
period."
Ontario in particular has gotten out in
front of the smart grid movement in Canada. It has had to. The Ontario
government has set an aggressive target to cut 6,300 megawatts of peak demand
by 2025. This is equal to taking one in five users off the electricity supply
grid. To do that, it is promoting a smart electricity network and will be
replacing 80% of its current generating systems over the next 20 years.
The goal is to create a power grid that
will allow homeowners and businesses to generate power on site and feed excess
power back into the grid using superconductive transmission lines and smart
switching and relay systems.
Local distribution companies (LDCs) are
getting organized around this and are preparing to bring forward their smart
grid plans to the Ontario Energy Board as part of their rate making.
Feeding power back into the grid is
simply not possible with conventional or dumb grids. Alan Fung, associate
professor, department of mechanical and industrial engineering, Ryerson
University, equates existing grids to the early days of computing, with
individuals sitting at dumb terminals hardwired to mainframe computers that
held all the power. "The existing electrical grids are like that. Most of
the electricity is generated in a big, huge coal-fired, nuclear or hydro power
plant. A smart grid will distribute the energy in any direction and facilitates
the entry of renewable energy sources into the grid."
In addition to enabling the greening of
the supply mix, smart grids give utilities more control over pricing and
improve reliability because of the two-way communication that allows the grid
to listen and learn from the demands of the consumers in order to adjust the
power flow in the most efficient manner. While much of the smart technology is
invisible to users, what they will see are the smart meters, the most
fundamental aspect of any smart grid. Smart meters are the first time a
communication infrastructure has existed between utilities and homes, giving
consumers the ability to see exactly when and how they use energy and how much
it's costing them so they can take control of how they use it, giving utilities
the ability to set prices accordingly.
"This opens up a whole bunch of
possibilities to use that same communication network," says Don Tench,
director of market assessment and compliance at the Independent Electricity
System Operator (IESO), which operates and regulates the wholesale electricity
market in Ontario.
"For example, until recently a
utility did not know the power was out at an individual establishment until
someone called. Now they know exactly when and where it's out because the meter
tells them."
Smart grids have also been called self-healing
grids. They can detach local networks from the regional network easily and
prevent cascading failures like the blackout of 2003. What's more, smart grids
provide a boost to the green economy by stimulating creation of renewable
energy thereby creating a new green job sector. This goes well beyond
generating clean power. There is a lot of commercial activity in this space as
well, including companies involved in the installation of the smart equipment,
the integration of that information to make it useful for decision-making,
service providers interested in helping the consumers manage their costs
effectively, and big and small companies involved in providing demand-response
solutions.
Perhaps the most important benefit of a
smart grid is its ability to reduce the energy consumption in the network and
the cost of running essential systems. In the United States, it's been
estimated a smart grid would save more than US$117-billion over 20 years.
US Smart Grid Efforts
Inch Toward Reality
Like a jigsaw puzzle with half its pieces
still missing, the picture of a smart grid -- a next-generation energy
distribution network -- is only just starting to take shape.
The U.S. Department of Energy awarded
$3.4 billion in stimulus grants toward upgrading the nation's energy grid, while
an additional $4.7 billion in private funds has been invested through the
program.
The process of implementation has been
scattered, with some states swinging into action, while others have wrestled
with challenges from state legislators and resistant utilities.
But one region that has taken an
aggressive and largely innovative approach has been Chattanooga, Tenn., led by
EPB, its municipal utility, which gets its power from the Tennessee Valley
Authority.
Chattanooga began formulating plans for
a smart grid network more than a decade ago and received a $111 million
Department of Energy matching grant from stimulus funds last year. By December,
it expects to roll out a 150-mbps fiber-optic grid, one of the fastest in the
country.
Along the way, EPB will have tackled
some of the most challenging questions associated with the technology: A smart
grid requires new rivers of data flowing between utilities and customers, so
what will carry the data, and how will it be channeled?
EPB has already installed 7,000 smart
meters and estimates it will soon begin deploying an additional 1,500 per week.
According to Danna Bailey, an EPB vice
president, the smart meters allow both the utility and the consumer to collect
unprecedented amounts of data. EPB currently can take 2 million data points per
year, but by fall 2012 that number will rise to 6 billion points
annually. "People will be able to monitor the electricity use of
their toasters if they want," says Bailey.
This holds tremendous opportunities for
local industry and manufacturing, says David Wade, chief operating officer of
EPB.
"Everyone talks about the
potential savings of smart grid and its impact on the environment, but perhaps
its most important factor is power quality and reliability," says Wade.
"As manufacturing processes become more automated, a fraction of a second
in power or the slightest change in voltage or frequency can have a pretty
significant effect."
This impacts industry, whether large or
small.
"We've seen many medium-sized
manufacturing plants, that maybe employ 50 to 100 people, and if a storm rolls
through on a Sunday when they're not in operation, they might not know a fuse
blew on the transformer bank until Monday," says Wade. "Not only
would they not know, we wouldn't know."
Over the long term, the real value of
smart grid for industrial customers will come through transparency of costs,
says Harry Forbes, senior analyst at ARC Advisory. Time-of-use rates --
meaning, the billing method based on charging power usage off the amount
required and at what time of day -- is only offered to commercial and
industrial customers. Forbes says that will inevitably be applied across the
board, creating a ripple effect for industry.
"So far, about 99% of the
discussion about smart grid has been about smart metering and on residential
customers," says Forbes. "We've seen people picking off the
low-hanging fruit from the industrial energy management efforts, but really,
further down the road, the real impact will come in trying to get them to
reschedule or re-sequence operations. And as far as I can tell, no one has
touched that yet. This is very much in its infancy."
For now, Chattanooga will mark the
largest metropolitan region in the U.S. with an advanced smart grid system. But
that won't last for long, as cities throughout Texas and California are rapidly
mobilizing.
Overhauling the nation's electricity
delivery system won't take place overnight, warns Paul De Martini, Southern
California Edison's vice president for advanced technology.
"We expect this to be 20-plus
years in the making," says De Martini. "It is not a destination. It
is a journey."
First Ever Clean Energy Ministerial Lays Foundation
for Global Cleantech Development
July 2010
Ministers from 24 governments
participated in the first-ever Clean Energy Ministerial, this July, launching
11 initiatives to accelerate the global transition to clean energy. The
initiatives will avoid the need to build more than 500 mid-sized fossil fuel power
plants in the next 20 years, promote the rapid deployment of electric vehicles,
support the growing global market for renewable energy and carbon capture
technologies, bring solar lanterns or other improved energy services to more
than 10 million people without access to grid electricity by 2015, and help
encourage women to pursue careers in clean energy.
Participating governments account for
more than 80 percent of global energy consumption and a similar percentage of
the market for clean energy technologies. The following governments
participated in the Clean Energy Ministerial: Australia, Belgium, Brazil,
Canada, China, Denmark, the European Commission, Finland, France, Germany,
India, Indonesia, Italy, Japan, Korea, Mexico, Norway, Russia, South Africa,
Spain, Sweden, the United Arab Emirates, the United Kingdom, and the United
States.
The initiatives launched build on the
Technology Action Plans released by the Major Economies Forum Global
Partnership in December 2009 and will help to achieve global climate and energy
policy goals. Governments listed below for each initiative reflect participants
as of July 20.
Global Energy Efficiency Challenge. Governments
launched five initiatives as part of a Global Energy Efficiency Challenge to
help cut energy waste around the world. These programs will help bring
super-efficient consumer appliances to growing global markets, target energy
savings in the buildings sector, improve the energy efficiency of industrial
processes, and encourage deployment of millions of electric vehicles. Once
fully implemented, these programs will eliminate the need for at least 500
mid-sized power plants by 2030.
1.
Appliances: The Super-efficient
Equipment and Appliance Deployment (SEAD) Initiative aims to transform the
global market for energy-using equipment and appliances, such as televisions
and lighting. SEAD will help governments overcome market barriers to capture a
significant portion of global appliance efficiency energy savings.
SEAD addresses both ends of the
efficiency spectrum: helping “pull” super-efficient devices into the market
through cooperation on measures like manufacturer incentives and research and
development investments and helping “push” inefficient devices off the market
by bolstering national policies like minimum efficiency standards. Specific
efforts include the development of “toolkits” for policymakers seeking to
enhance national appliance efficiency programs.
Governments participating in this
initiative include Australia, Canada, the European Commission, France, Germany,
India, Japan, Korea, Mexico, Russia, South Africa, Sweden, the United Kingdom,
and the United States.
2.
Buildings and Industry: The Global Superior
Energy Performance (GSEP) Partnership will help large buildings and industrial
facilities – which account for almost 60 percent of global energy use – measure
and reduce their energy consumption and greenhouse gas emissions over time,
incentivizing positive change with an internationally-recognized certification
program. GSEP participants will share tools, trainings and best practices for
tracking and accelerating energy performance improvements, both within their
sector and across industry sectors. As part of the program, eight companies
representing over $600 billion in annual sales and one university will pilot
the program.
GSEP partners will also advance
efficiency through public-private task groups targeting major energy-intensive
industries, such as the power generation sector, steel industry, and hotel
chains. These task groups will identify and promote the deployment of the
best-available efficiency technologies and best practices, standardize
protocols for measuring and monitoring energy use, and facilitate communication
among stakeholders. Additionally, participants in GSEP announced a task group
to promote the adoption of innovative cool roof technologies across sectors.
Governments participating in GSEP
include Canada, the European Commission, France, India, Japan, Korea, Mexico,
Russia, South Africa, Sweden, and the United States. Pilot participants include
3M Company, Cleveland Clinic, Dow Chemical Company, Grubb & Ellis Company,
Marriott International, Inc., Massachusetts Institute of Technology, Nissan,
Target Corporation, and Walmart Stores, Inc. Initial participants in the
sectoral task groups include JFE Steel Corporation and Tokyo Electric Power
Company.
3.
Smart Grid: The International
Smart Grid Action Network (ISGAN) will help accelerate the development and
deployment of smart electricity grids around the world through high-level
government dialogue, sharing best-practices, technical assistance, peer review
and project coordination, where appropriate.
Smart grid technologies will promote
the growth of renewable energy, help consumers and businesses to better measure
and manage their energy use, improve the reliability of the electrical system,
and speed the introduction of fuel-saving electric vehicles. ISGAN complements
the Global Smart Grid Federation, an ‘association of associations’ composed of
leading smart grid stakeholder organizations from around the world, which was
also announced at the Ministerial.
ISGAN will facilitate cooperation in
five key areas: smart grid policy, regulation and finance; standards policy;
pre-competitive technology research, development and demonstration; workforce
skills and knowledge; and engagement of smart grid users and consumers at all
levels. Updated on July 23, 2010 3
Governments participating in ISGAN
include Australia, Belgium, Canada, China, the European Commission, France,
India, Italy, Japan, Korea, Mexico, Norway, Russia, Sweden, the United Kingdom,
and the United States.
4.
Electric Vehicles: The Electric Vehicles
Initiative (EVI) will help countries deliver on their respective electric
vehicle deployment targets through sister-city partnerships, cooperation to
develop key technologies, and dialogue to identify and encourage best-practice
deployment strategies. The International Energy Administration estimates that
delivering on these targets will put participating countries on the path to
deploy at least 20 million electric vehicles by 2020, thereby reducing global
oil consumption by approximately one billion barrels over the next decade.
Participants agreed to launch pilot programs in coordination with industry,
academia and other stakeholders, and share best practices, data and lessons
learned to dramatically scale up electric vehicle sales.
Governments participating in the EVI
include China, France, Germany, Japan, South Africa, Spain, Sweden, and the
United States. Other initial partners include the International Energy Agency
(IEA).
5.
Capacity Building for Developing Country Policymakers: The Clean Energy Solutions Centers will help governments of
developing countries drive transformational low-carbon technologies by creating
a virtual network to identify and share best-practice policies, provide the
market with information on emerging policy trends, and identify opportunities
for policy coordination across countries. The Solutions Centers will serve as a
clearinghouse for policy information, supporting a network of at least 100
policy and technology experts with an initial focus on energy efficiency.
Clean Energy Supply
Governments participating in developing
Clean Energy Solutions Centers include Australia, France, India, Italy, Japan,
Mexico, South Africa, the United Arab Emirates, and the United States. Other
initial partners include the ClimateWorks Foundation and the International Energy
Agency (IEA). Participating governments will
launched four initiatives designed to accelerate the deployment of low-carbon
energy sources around the world:
1.
Carbon Capture, Use and Storage:
The Carbon Capture, Use, and Storage (CCUS) Action Group, a collaboration
between governments and businesses, will develop a Global Strategic
Implementation Plan to make recommendations at the next Clean Energy
Ministerial on how global CCUS deployment can be accelerated between now and
2020. The CCUS Action Group will work to overcome barriers to CCUS deployment
in five key areas: strategic direction, use and storage, financing, regulation,
and knowledge sharing, with the goal of accelerating and building on existing
global initiatives. It will leverage the broad body of work on CCUS by
international CCUS institutions.
Governments participating in the CCUS
Action Group include Australia, Canada, China, France, Germany, Japan, Korea,
Mexico, Norway, South Africa, the United Arab Emirates, the United Kingdom, and the United States. Initial
business and institutional partners include Aker Clean Carbon, the Carbon
Capture and Storage Association, the Center for American Progress, Global
Carbon Capture and Storage Institute, the International Energy Agency, Sasol,
ScottishPower, Shell, the World Coal Institute, and the World Resources
Institute.
2.
Solar and Wind: The Multilateral
Solar and Wind Working Group will support the growing global market for solar
and wind technologies through two initial projects – the Global Solar and Wind
Atlas and a Long-Term Strategy on Joint Capacity Building – that will further
lower the incremental costs of providing wind and solar energy to all regions
of the world, thereby reducing emissions, creating jobs and promoting energy
security. The Global Solar and Wind Atlas will ensure that analysts and
policymakers have comprehensive and accurate data when making investment
decisions. The project will combine and expand existing databases on wind and
solar potential and social and economic conditions into one open web portal
that will allow access to user-tailored data.
A Long-Term Strategy on Joint Capacity
Building will help train the global clean energy workforce of the future by
providing a range of international training opportunities along the whole value
chain of solar and wind technologies, from basic working skills to academic
education.
Governments participating in the
Multilateral Solar and Wind Working Group include Brazil, Denmark, France,
Germany, Japan, and Spain. Other countries that have shown interest in joining
the initiative include Australia, the European Commission, Korea, Mexico,
Norway, South Africa, the United Kingdom, and the United States. The main
activities and outputs of this working group were indentified during a workshop
held in Bonn, Germany in June 2010.
3.
Hydropower: The Sustainable
Development of Hydropower Initiative will seek to promote the sustainable
development of cost-effective hydropower in developing countries. The group’s
first action will be to inventory a river basin in an African country for
potential hydropower resources. Partners in the initiative will also work to
identify potential financial resources from multilateral organizations for
future sustainable hydropower development.
Governments participating in the
Sustainable Development of Hydropower Initiative include Brazil, France,
Mexico, and Norway.
4.
Bioenergy: The Multilateral
Bioenergy Working Group will accelerate the deployment of bioenergy
technologies though two initial projects: a Global Bioenergy Atlas and a
Long-Term Strategy on Joint Capacity Building.
Partners will create a Bioenergy Atlas
by expanding an existing database on bioenergy potentials, considering both the
potentials for biofuels production and the use of biomass for electricity
generation. The Atlas will identify initiatives that can promote the
development of new uses of biomass in sustainable and efficient ways in poor
communities, exploring the potential of local production with low-cost
technologies.
The creation of a Long-Term Strategy on
Joint Capacity Building will enhance global cooperation between the bioenergy
industry and relevant research institutions with the goal of identifying
international regional centers of excellence in bioenergy research and
development.
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Obama Administration Creates DOE Energy
Innovation Hubs
July 2010
The DOE expects the energy Innovation Hubs
will lay the groundwork for critical research that can be handed off to the
private sector for product commercialization.
The Department of Energy launched a new
blog last week, http://blog.energy.gov/blog/2010/07/20/welcome-energy-blog.
The Energy Blog will serve as a tool to enable Energy Innovation Hubs,
one of which will drive research to turn sunlight into fuels. This is not the first time the Obama
Administration has funded development of sunlight-based R&D energy projects.
Last October, ARPA-E, the advanced
projects research group at the Department of Energy, gave out $23.7 million in grants to startups and universities
experimenting in the relatively new field of direct solar fuels. The current
award will give out up to $122 million over the next five years to one Hub for
developing this one technology.
The Energy Innovation Hubs will be
modeled after the Manhattan Project, the AT&T Bell Laboratories and on the
three $25 million-per-year DOE Bioenergy Research Centers. The other two Hubs
will research energy efficiency in buildings systems and modeling and
simulation for nuclear reactors.
For the sunlight fuels, there are already various universities that are working on direct solar fuels, including the University of Minnesota, MIT, University of North Carolina at Chapel Hill and Penn State. BioCee and the University of Minnesota wants to take sunlight, carbon dioxide and two organisms (cyanobacteria for sunlight capture and shewanella for metabolic transformation) to produce a liquid hydrocarbon, while MIT-spinoff Sun Catayltix uses sunlight to spilt water to produce hydrogen.
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July 22, 2010
After a meeting of Senate Democrats,
party leaders on Thursday said they had abandoned hope of passing a
comprehensive energy bill this summer and would pursue a more limited measure
focused on responding to the gulf oil spill and tightening energy
efficiency standards.
Senator John Kerry
of Massachusetts, a champion of comprehensive climate change legislation,
called the new goal “admittedly narrow.”
At a news conference, the majority
leader, Harry Reid
of Nevada, blamed Republicans for refusing to cooperate. “We don’t have a
single Republican to work with us,” Mr. Reid said.
Democrats said they would continue
to pursue broader climate change legislation.
“This is not the only energy
legislation we are going to do,” Mr. Reid said. “This is what we can do now.”
Senate Democrats had already scaled
back their plans to pursue limits on greenhouse gas emissions, like those in a
bill approved by the House last year. Instead, Senate Democrats had said they
would seek a cap on carbon emissions only for power plants. But even that
proved overly ambitious.
“We know where we are,” Mr. Reid
said. “We don’t have the votes.”
While Mr. Reid criticized
Republicans, it is clear he did not have sufficient support in his own party
for a broad energy bill.
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June 2010
Corporate Heavies Urge Tripling U.S. Clean-Energy
Funding
A new council composed of General
Electric Co. CEO Jeff Immelt, Microsoft Corp. Chairman Bill Gates and other
corporate executives is urging the federal government to more than triple
investments in clean-energy technologies to boost the nation's economic
competitiveness and protect the environment.
The American Energy Innovation
Council, launched today in Washington, D.C., wants Congress and the Obama
administration to increase the minimum level of investments in clean energy
research, development and deployment (RD&D) from $5 billion to $16 billion
annually. About $1 billion of the total should support the U.S. Department of
Energy's Advanced Research Projects Agency-Energy, or ARPA-E, which Congress
authorized without an initial budget but the Obama administration funded with
$400 million from the federal stimulus package last year.
"We know from our business
experience that if you only give a fraction of what's required to be a success,
you will not be a success," said council member Chad Holliday, chairman of
Bank of America Corp. and former CEO of E.I. du Pont de Nemours & Co.
Joining Holliday, Gates and Immelt
on the seven-member council are former Lockheed Martin Corp. Chairman Norm
Augustine, Xerox Corp. Chairman and CEO Ursula Burns, Cummins Inc. Chairman and
CEO Tim Solso, and noted energy venture capitalist John Doerr, a partner with
Kleiner Perkins Caufield and Byers. The business heavyweights are slated to
meet with President Obama and congressional lawmakers later today, Holliday
said.
In addition to calling for more
clean-tech funding -- which should be spread across nuclear fission, solar,
wind and fossil fuels and other energy technologies -- the council wants
Congress to create an energy strategy board. The independent board would be
charged with developing and monitoring a national energy plan for Congress and
the White House, as well as overseeing what the executives call a new
"Energy Challenge Program" for large-scale demonstration projects.
The program should be structured as
a joint venture between the federal government and the energy industry, according
to a "business plan" the executives plan to hand policymakers today.
The program -- which should be co-funded by the public and private sectors at
an initial level of $20 billion over a decade -- should focus on the transition
from pre-commercial, large-scale energy systems to integrated, full-size system
tests.
Emerging technologies that would
benefit from commercial-scale testing, the report suggests, include grid
energy-storage devices, batteries, advanced nuclear reactors, deepwater
offshore wind farms and super-lightweight vehicles.
"The R&D piece, with the
government playing a strong role, is critical and urgent," Gates said.
The council also wants the federal
government to create energy innovation "centers of excellence," which
would foster multidisciplinary collaboration amongst scientists from
universities, federal laboratories and other public and private institutions.
The centers, which the council
contends will drive down the cost of deploying new energy technologies, will
require $150 million to $250 million annually, according to the report. The
funding should be part of the $16 billion annual appropriation for RD&D.
"These can be our new hubs of
invention," said Cummins CEO Solso, whose company makes diesel and natural
gas engines and electric power generation systems.
GE CEO Immelt said his industrial
conglomerate, which ranks among the world's largest makers of wind turbines,
plans to double its investment in clean-energy technologies to $10 billion
during the next decade. But Immelt and other council members underscored that
the federal government must ultimately put a price on emissions of carbon
dioxide to spur other companies to boost their clean-tech investments.
The council is not backing specific
climate and energy legislation in Congress, Immelt underscored, but Obama is
urging Senate lawmakers to pass a bill this year.
The House nearly a year ago passed
legislation, H.R. 2454
that would cap U.S. emissions of carbon dioxide and other heat-trapping gases
at 17 percent below 2005 levels by 2020 and 83 percent by 2050. The bill,
sponsored by Reps. Henry Waxman (D-Calif.) and Edward Markey (D-Mass.), would
also set a 20 percent renewable-energy and energy-efficiency standard by 2020.
"The world is not going to wait for the United States to lead," Immelt said. "This is about innovation; this is about competition; this is about energy security."
March 2010
Japan, South Korea and China are investing about $9 billion
this year in infrastructure and information technology to make electricity
networks more efficient, creating lucrative opportunities for niche technology
and equipment providers.
The "smart grid" system,
through computerized monitoring of electricity flowing through a power grid,
allows utilities to automatically manage electricity usage in a way that is
more reliable and flexible.
Asia's spending on smart grids is
expected to outpace the United States, with China alone seen investing $7.3
billion in the sector this year, according to Zpryme, a market research firm
based in Austin, Texas.
"China is pursuing smart grid as
aggressively or more aggressively than any other country in the world right
now," said Brad Gammons, vice-president of IBM's Global Energy &
Utilities Industry, told Reuters in an interview.
"They're very focused and have a
very strong commitment to move in that direction," he said.
IBM along with companies such as Cisco
and Microsoft are investing in the smart grid market in China.
The focus on smart grids will benefit
businesses in the whole power distribution system, from makers of pole
transformers to electricity meters and software providers to storage battery
manufacturers.
Osaki Electric Co, which makes electric
measuring devices in Japan, and South Korea's LS Industrial Systems, which owns
power transmission and distribution technologies, are examples of companies
that could get a boost from smart grid development.
"Osaki Electric have been
developing a smart meter which is a positive catalyst for the share price going
forward," said Japan invest analysts in a report.
Despite a two-third rise in its share
price in the past year, LS Industrial trades at 15 times estimated earnings,
much lower than Osaki at almost 50 times and the sector average of about 54
times, according to Thomson Reuters data.
Little-known Chinese companies
including Zhuzhou CSR Times Electric Co Ltd, which makes electric converters
and control systems, and maker of electric meters, Wasion Group are also
popular among analysts.
Both stocks have more than doubled in
the past year and trade at below sector average PEs, at 33 times and 15 times
estimated earnings, respectively.
GOVERNMENT SPENDING
Analysts said government spending will
go a long way to driving regional demand for smart grid equipment and
technology, helping create bigger businesses in the sector.
China alone could spend over $100
billion upgrading its power distribution over the next 10 years, said Yuanta
Securities analyst Min Li.
Japan and South Korea, which are a step
ahead of China in the building of intelligent power distribution networks, are
also ramping up smart grid investment. Both are ear-marking spending of more
than $800 million this year, according to a Zpryme report released in January.
South Korea aims to spend 27.5 trillion
won ($23.7 billion) by 2030 on smart grids to help meet its emissions reduction
target, and is building the world's largest smart grid test-bed in Jeju island,
in the south of the country.
As future distribution networks could
eventually go wireless, the upgrade of Asia's power distribution network also
could benefit mobile operators such as SK Telecom.
"Smart grid itself is a
combination of electricity equipment and IT infrastructure," said analyst
with Kim Min-ho at E*Trade Securities. "As it is highly possible that
metering will be made through wireless communication, there will be increasing
demand to borrow wireless networks."
Analysts see challenges ahead.
Incentives that would further bolster
private investment are lacking in Asian markets including South Korea, while
the United States and Europe are making separate moves to shape the standards
for smart grid deployment worldwide.
"If the United States or Europe
move first to set up global standards, Asian firms will have to spend a lot to
develop technologies and systems to meet those standards," said Kim
Ik-sang, analyst at Hi Investment & Securities.
"It is important for Asian
companies to work with their U.S. and European counterparts and participate
this early in the development of these standards," he said.
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CALIFORNIA VENTURE CAPITAL BULLISH ON CLEANTECH
SAN FRANCISCO, Jan 30, 2010 -
Fears the United States will lose a battle with China to create clean
technology for a climate-changing world don't fly with Silicon Valley venture
capitalists.
The
California financiers have an impressive track record, having funded small
companies that eventually turned into Google, Yahoo and scores of other giants
that shaped the internet revolution. After a sharp drop-off in the wake of the 2008-09
financial crisis, VCs expect to be more active this year and anticipate a much
stronger flow of clean tech acquisitions or public offerings.
Perhaps
not surprisingly, most also believe the United States remains overwhelmingly
the best place to launch a clean tech business and market new goods and
services -- and they are putting their money where their mouth is.
Those
are some of the takeaways of a recent survey of 41 clean tech investors by
Thomson Reuters.
