Bill Opalka | Apr 07, 2011

 

 

China is often seen as the eventual leader in all the cleantech  space with the United States relegated to second place, or worse. But investors in the arena said we can reclaim leadership, and they did so by reframing the discussion.

The implication in many of these discussions is that the Chinese and others are vaulting ahead in the development of new technologies, especially in the clean energy space.

Cleantech investors and segment analysts recently told the U.S. Senate Energy & Natural Resources Committee the gap is in policy support, not a loss of expertise.

As President Obama and other decried a so-called “innovation gap” the investors took a different approach. Innovation in the United States is real and ongoing; the adoption of those innovations is the problem.

“Clean energy may well be the largest opportunity of the coming century,” said Will Coleman, a partner at Mohr Davidow Ventures. “But more importantly, taking a lead on the next generation of energy technologies is absolutely critical to our continued competitiveness as a nation.”

Coleman said companies often start in the U.S. and then move overseas, while now more companies start overseas and stay there. “Our economy is still more than two times larger than China’s with one quarter the population. I absolutely believe that the U.S. private sector can out‐innovate and out‐invest the Chinese Government,” he said.

Coleman got to the heart of the problem, which goes way beyond the “who makes the cheapest solar panel” problem often cited.

“The U.S. does not have an innovation problem, but rather, we have an ‘innovation adoption’ problem,” he said. “Most energy markets are either a) heavily regulated or b) dominated by incumbents. In either case, markets are extremely hard to enter for a new player.

“And in the case of electricity markets we actually have both. The patchwork of state and federal regulations is incredibly challenging to navigate for any company – let alone a fledgling startup.”

Coleman advocates continued support for  research at the universities and national laboratories, and support for the Advanced Research Projects Agency for Energy. “ARPA‐E was designed to spur exactly the type of early commercial research and development that our innovators and venture investors look for,” he added.

Kelly Sims Gallagher, the director of the Tufts University Energy, Climate, and Innovation Program, cited the policy barriers common to adoption of innovation.

“U.S. strategies, policies, and investments for clean energy innovation are significantly different from the efforts of many of our major competitors in clean energy technologies, and I believe we could do better,” she said.

Some common barriers are:

• New technologies are unfamiliar and seemingly risky,
• They are often initially more expensive,
• They usually do not have equivalent government support, and,
• The incumbents will try to prevent them from entering.

Neil Auerbach, managing partner of Hudson Clean Energy Partners, said the U.S. currently accounts for 21 percent of the clean energy market, but China, which now accounts for 17 percent, is expected to account for 24 percent of the global clean energy market by 2020.

He acknowledged the tough budgetary road ahead and the constraints on public spending.

“I believe that the United States cannot afford to cede technology leadership in one of the world’s fastest growing sectors that addresses so many core national interests any more than it can afford to spend the taxpayers’ money far faster than it collects,” he said.

“Without a national commitment to becoming a global manufacturing leader, and consuming those products at home to reinforce scaling of the market, the United States will not be able to retain its technology edge,” he concluded.

That’s a view that runs counter to some of the prevailing wisdom that manufacturing must be conceded to the Far East.

Bill Opalka is editor of RenewablesBiz Daily

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