Category Archives: coal

I am having a blast covering clean tech from a research and consulting perspective. What is it that makes clean tech such a stimulating area?

The panel discussions at the excellent Financial Times conference on the U.S. energy business yesterday prompted me to reflect on this question. (You can see my conference tweets here.)

Yes, the opportunities are huge. And yes, the core problems the sector is tackling, including climate change and energy availability, are critically important. Beyond that, though, there’s this: the hurdles facing this set of industries are high. If you like hard challenges, clean tech has a lot to offer. Consider these challenges, all of which surfaced in discussion at the conference.

Scientific and technical. Researchers are working to break new ground in areas ranging from basic materials science in photovoltaics and batteries to engineering and systems design in smart grid. No new scientific breakthroughs were announced at the conference but there was buzz about the successful IPO of battery maker A123 Systems. It was observed that this IPO was not a mere liquidity event for the investors. It was a critical capital infusion necessary to enable the business to scale up while continuing to perfect its technology.

Political. This area is way more political than IT or even financial services, two areas where I’ve spent a good chunk of my career. From BP America chairman Lamar McKay arguing for the “equitable” distribution of costs of moving to a low-carbon economy to PSE&G president Ralph LaRossa complaining of his utility’s struggle to get a permit to run a transmission line on an existing right of way, so much of the commercial and environmental promise of clean tech depends on clearing political hurdles.
Financial. The financial needs of the clean tech sector present a variety of challenges. A few examples:

• Most consumers and businesses are not prepared to make capital investments to obtain electric power. So new financing mechanisms have had to be invented to make it easier for businesses and consumers to buy solar power, rather than solar panels.
• Given the importance that coal is expected to continue to have for a long time, carbon capture and storage (CCS) is an experimental technology that is drawing  a lot of interest. But, as Alan Salzman of VantagePoint Venture Partners observed at the conference, it does not fit the model of venture capital investing.At least it’s been tough for start ups in this area to attract much VC.
• Energy is a giant business, and most energy generation technologies need to be able to scale up to enormous volumes to be practical. Salzman’s panel was in agreement that while VC investments might be able to help get some of these companies to $100 million in revenue, they will need some kind of bridge financing to get them to the billion-dollar level that can establish their long-term viability.

Behavioral and Attitudinal. Some clean tech plays depend on changes in consumer behavior:  electric vehicles, for instance, obviously require a change in how consumers fill up their cars. Home energy management, a promise of the smart grid,will require a change in consumer attitudes too. According to a consumer survey conducted earlier this year by Pike Research, some 30% of consumers felt that “demand response” programs smack of “Big Brother.” (Demand response programs allow utilities, with the consent of consumers, to turn off or turn down certain power loads at consumer homes.) LaRossa of PSE&G said his customers were not ready for it.

Clean tech is a highly interdisciplinary field, and not only because the definition is broad. It’s also because its future depends on tackling challenges across science, finance, politics and consumer behavior. What more fun could you ask for?

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