Storage technologies staged a debutante at last week’s Electricity Storage Association Annual Meeting, emerging from the lab to the grid as a mature solution for multiple applications. While numerous projects now report technical and market successes, suitors from utilizes and financiers remained tepid, perhaps still wrapping their heads on how these boxy yet out-of-the-box solutions will fit into today’s electricity markets.
The wallflowers may not sit still for long, however, as the steady beat of new markets draw near. The RTO deadline for FERC Order 755 Compliance Filings was April 30th, and the filed tariff revisions detail not just how, but when each regional electricity market will reward fast and accurate frequency regulation resources. PJM and NYISO prefer the utility equivalent of elopement, with expected implementation dates a scant five months away. In contrast, ISONE will have enough time to dot every chocolate i and cross every strawberry t with real Vermont dairy frosting by its scheduled January 2014 go-live date. CAISO and the Midwest ISO round out the filings, with implementation scheduled for early 2013.
Some predict that the pay-for-performance dowry could be lucrative. After all, study after study finds that speed, accuracy and controllability—all strengths of storage—help create reliable grids. Pay-for-performance, in FERC’s view, “remedies undue discrimination” and will also serve to encourage the use of (and consequently, investment in) energy storage.
With more than 500 attendees, last week was the largest gathering in ESA history, but that debutante (as most are) was just the opening act. The main event begins when storage can provide and be rewarded for superior performance. The dates are set and shown in the graph below. Does your grid have a date to the Order 755 ball?
In advance of this week’s EVS26 conference in Los Angeles, a group of eight U.S. and German automakers announced an initiative to standardize fast-charging for electric vehicles (EVs) by collectively supporting the adoption of a single-port DC charger. Common standards and protocols are essential for accelerating the mass-adoption of EVs globally, and fast charging enables the EV market by minimizing the change in behavior required for drivers to embrace electrification.
But while this announcement is welcome news for battery manufacturers, standardization of a charger is only part of the equation—the limiting factor today for fast charge is lithium ion battery technology, not the ability of the charger to deliver high power.
EV batteries are typically made to meet energy requirements, rather than power, because energy determines EV driving range. Batteries optimized for energy density, such as metal-oxide based lithium ion technology, have not been capable of long life when charged quickly. While some vehicles currently claim to offer 30-minute fast charge capability using these technologies, owners are urged to only use this capability sparingly to minimize battery degradation and reduced life. In this case, installing a charger with fast-charge capabilities is not worth the added cost of because the EV battery simply cannot handle regular fast charging.
To make an analogy, the issues of cost and range of an internal combustion engine (ICE) vehicle are not determined by how quickly you can pump gasoline into the tank, but rather, how much gas the tank can hold. Gasoline and batteries are energy carriers; gasoline pumps and chargers are how that energy is delivered to the vehicle. The key, therefore, for an EV is how efficiently and cost-effectively that energy can be stored and used within the battery, regardless of how quickly the charger is technically capable of delivering it..jpg)
Currently, there are a handful of lithium ion battery chemistries capable of unlimited fast-charging without significant capacity loss in the battery. The highest-performing lithium iron phosphate technologies, for example, deliver high power and charge rate, along with good energy density and cycle life, making them an ideal choice for this type of usage. Companies that offer these technologies have long considered fast charging to be the industry’s future, and now vehicles with these advanced chemistries like the Roewe E50 from Shanghai Automotive in China are starting to come to market.
Further, the ability to charge quickly also increases the efficiency and performance of other applications such as hybrid electric vehicles (HEVs) and the emerging micro-hybrid segment, where regenerative braking capability is a key factor in boosting vehicle efficiency. And beyond the transportation market, fast-charging lithium ion batteries can enable new applications that can take advantage of opportunistic charging to increase utilization and reduce downtime compared to incumbent lead acid batteries. Fast-charging is also ideal for applications in emerging markets where the lack of reliable grid power creates opportunities for batteries that can be quickly charged when power is available.
As with any discontinuous innovation that require users to change behavior, cooperation across the entire EV ecosystem will ensure faster adoption and interoperability. Standardizing DC fast charging for EVs is an important element to cross the chasm from early adopters to mainstream markets by ensuring that all vehicles can fuel up using the same “pump.” But unless the battery (the “tank”) is capable of accommodating fast-charging without any limitations, any perceived benefit from this standardization is significantly minimized. Fortunately, cutting-edge lithium ion battery technologies are emerging that make fast-charging a reality, and in the not-too-distant future, drivers should be able to fill up their battery with electricity almost as quickly as they fill up their gas tanks today.
Although electric vehicle sales fluctuate month-to-month as the industry ramps up, strategy consultancy Roland Berger is forecasting that the global automotive lithium ion battery market will grow to more than $9 billion by 2015.
In a recent update to a market study initially published in September 2011, Roland Berger does acknowledge electric vehicle volume reductions in Europe and America, but points to new and confirmed EV programs, especially in Asia, that support its $9 billion market estimation.
The study also predicts that the indstry will experience overcapacity, leading to increased market consolidation (certainly not a new concept and a similar expectation of a number of industry prognosticators). As a result, Roland Berger thinks five companies will control the majority of global market share in the 2015 time frame: AESC, LG Chem, Panasonic/Sanyo, A123 Systems and SB LiMotive.
Interestingly, the revised forecasts expects these companies to control about 70 percent of the market share (down from about 80 percent in the initial study). Roland Berger cites the emergence of battery manufacturing in China as the reason for the discrepancy, predicting that Chinese battery makers will have about an eight percent global market share by 2015, largely due to the State Council’s reaffirmed commitment to making China a world leader in electric mobility.
But given the lingering questions about global demand for passenger electric vehicles, how can one determine which of the numerous studies and forecasts of the automotive lithium ion battery market are most accurate/credible?
When analyzing which suppliers are likely to emerge as the industry leaders, it is important that studies dig deeper than simply publicly announced supply contracts. Over the next few years, the number of electric vehicle models (including full EVs, hybrids, plug-in hybrids and the emerging micro-hybrid category) being built globally is expected to increase, but not all programs have been announced. For instance, our analysis shows that in the 2010 model year, 27 automakers globally sold 50 different electrified models. Those figures should grow to about 36 automakers and more than 110 different models this year, and into 2013 and beyond, we expect these numbers to continue increasing.
Taking this into consideration, we believe the Roland Berger study uses one of the
best approaches to reach its conclusions. The methodology takes into account all of the vehicle models projected to use lithium ion batteries in 2015 based on sales estimates from a globally respected automotive forecaster. The likely battery supplier for each program was then derived from existing contracts, manufacturing capabilities, overall company financial strength and proprietary data obtained from both battery suppliers and automakers. The result is a projection that we believe more accurately reflects what the market will look like in 2015 and beyond as the global electric vehicle industry evolves and the lithium ion battery market
takes shape.
This week, leading grid energy storage experts will convene in Washington, DC for the Electricity Storage Association (ESA) 22nd Annual Meeting. The industry has been abuzz as of late, as several new policies and rule changes that recognize the benefits of grid scale energy storage have been introduced at the state, regional and federal level.
These and other policies have helped lay the foundation for what should be a key theme of the ESA Annual Meeting—energy storage technologies continue to move from the demonstration phase to commercialization. Some utilities and independent power producers (IPPs) are already realizing the benefits of grid energy storage, and many others are starting to develop projects as they better understand the high-value services and functions that storage can deliver.
The ESA Meeting should be an indication of just how much progress has been made. Of particular interest will be how much knowledge utilities, IPPs, other grid operators and even regulators have truly gained regarding the commercially viability and performance capabilities of various storage solutions, and in parallel, are technology providers developing solutions to accommodate the increasing demand across a growing number of applications?
There have been some attempts to benchmark and compare different energy storage technologies, even aggregating existing and planned projects globally in an attempt to illustrate how they stack up competitively. Through its 2032.2™ project, entitled “Guide for the Interoperability of Energy Storage Systems Integrated with the Electric Power Infrastructure,” the IEEE is making a concerted effort to develop standards designed to help facilitate the wide-scale and consistent implementation of energy storage. In addition, a working group was recently formed by the Department of Energy, Pacific Northwest National Labs and Sandia National Labs to develop a protocol to measure and report on the performance of energy storage systems.
As these standards and protocols continue to be developed, educating utilities and IPPs about storage remains an ongoing process. These entities are starting to shape their strategies for deploying storage solutions, so they must be armed with the necessary information to build viable plans that make economic sense. Knowing how to articulate the specific problems they are trying to address with storage and understanding the most important factors to consider when evaluating different technology options are valuable in helping customers roll out storage projects.
At the same time, the ESA Meeting should indicate whether technology is keeping pace to meet specific system requirements, whether vendors are becoming more knowledgeable about grid infrastructure and how storage can operate therein. As noted, the fundamental ability to store energy on the grid and introduce a time element to the supply and demand of electricity has been proven. But as utilities and IPPs become smarter about what the technology can deliver, they want more than basic storage capabilities.
Utilities typically want complete, grid-ready solutions that seamlessly integrate with their existing infrastructure, not disparate pieces that must be cobbled together. Systems expertise—including the ability to deliver robust controls software that can be optimized to meet specific application requirements—is critical to the long-term viability of storage as a valuable asset going forward.
For example, can the system respond quickly enough when a revenue-generating opportunity (such as providing frequency regulation) presents itself? This is especially important for systems designed to perform multiple applications, and the ESA Meeting should reveal which vendors are further along in developing their systems and controls capabilities.
A growing number of state, regional, and federal policies now recognize the benefits of grid scale energy storage. Most recently, the California Independent System Operator Corporation (CAISO), which operates the California’s wholesale transmission grid, unanimously approved market changes to reward frequency regulation resources for fast performance.
CAISO now joins PJM as the first two regional electricity markets in the U.S. to propose new rules in compliance with FERC Order 755, which mandates pay-for-performance compensation for resources providing frequency regulation. Passed in October 2011, FERC Order 755 requires regional markets to reward resources that provide frequency regulation more quickly, creating a potentially significant opportunity for battery energy storage solutions. 
Frequency regulation, necessary to control the momentary changes in frequency on the power grid, has historically been provided by gas turbines or coal generation plants. However, these lumbering giants are imperfect solutions, often taking as much as 10 minutes to respond to a regulation control signal. They also exhibit increased wear-and-tear and reduced efficiency, which translates directly into higher operating costs and increased emissions.
Traditional generators are the locomotives of the energy world—great for steady power output, but not so great for stop-and-go traffic. Advanced energy storage, on the other hand, act more like hybrid or electric cars, which excel at rapid acceleration and deceleration. Storage systems are capable of responding significantly faster than traditional generation assets, and without the losses from ramping up or down. FERC Order 755 establishes a financial value for these performance benefits, and regional market operators are starting to shape their regulations to adopt the pay-for-performance compensation model.
While CAISO’s new rules are similar to those put in place by PJM, there are a few key differences:
- The CAISO model evaluates the ramp rate of an individual resource to determine the appropriate compensation level (PJM simply divides all resources into either a “fast” or a “slow” group and does not differentiate within them to determine compensation). This creates incentive for utilities and independent power producers to deploy the fastest, highest-performing energy storage solutions to maximize revenue for frequency regulation services.
- The CAISO rules reduce the accuracy component of the performance score for any absolute value deviation from the control signal (PJM uses a correlation statistic). The CAISO method is likely to create a greater performance penalty for slower, under-performing frequency regulation units.
- The CAISO selection algorithm identifies the lowest-cost combination of resources that meets the requirement (PJM scales fast resource bids to make them comparable to slow resources, and then clears low-cost resources until the requirement is met).
Generally speaking, the new CAISO rules will incentivize and clear more high-performing resources than before, and it is a welcome enhancement to the California market that should improve the potential revenue streams for an energy storage project. California has already shown significant support for energy storage, and the new CAISO pay-for-performance rules should further the adoption of these technologies.
To learn more about FERC Order 755, the progress of rulemaking within the regional markets and the Order’s implications for advanced energy storage, we encourage you to attend the Infocast Webinar titled “FERC Order 755 Promotes Energy Storage,” being held on Tuesday, April 10, 2012 at 11 a.m. EDT. For more details and to register, visit: http://www.b2bwebinars.net/industries-mobile/storage-project-finance/item/ferc-order-755-promotes-energy-storage.
In our continuing efforts to remain as transparent as possible with respect to our recently announced Livonia prismatic cell field campaign, we plan to use The Pulse to provide progress updates. This includes both status updates on the campaign itself as well as longer-term initiatives we plan to implement to improve operational quality.
The replacement effort is currently moving forward on schedule. As we communicated last week, we have isolated the root cause of the defective cells to a single automated welding machine in our Livonia facility. We have recalibrated this machine and are confident that we have pinpointed the source of the defect and have corrected it. We have also started shipping replacement battery packs to customers.
In addition, we bolstered our operations team with two new hires at our Livonia, Mich. facility. Each brings substantial global management and operational leadership to A123, and they will work directly with Chief Operating Officer Ed Kopkowski as part of our ongoing efforts to improve quality and reduce costs.
Our new team members include:
Ray Alcodray, Chief Information Officer, who will lead and manage the creation, delivery and support of all internal and external business facing systems. Alcodray was previously with Dana Corporation, where he most recently served as the Global IT Director, Manufacturing, Quality and Light Vehicle Systems. Prior to that, he worked for SPX Corporation where he was responsible for delivering a new product channel of IT Support Services. Alcodray earned a degree in manufacturing from the University of Michigan and holds a degree in Computer Engineering and Controls from Michigan Technological University.
Don Kaiser, Global Vice President of Quality, who will be responsible for all quality related systems and processes, as well as operational excellence programs and sharing the best practices across the organization. Kaiser joins A123 from Lean Alliance where he most recently served as CEO for North American Operations. Prior to that, he spent eight years with Hayes Lemmerz International as Global Vice President of Quality and Operational Excellence. Kaiser holds an engineering degree from Purdue University.
From the heat rays the Martians deployed to level London in War of the World to the photon torpedoes used by the U.S.S. Enterprise to battle Klingons and other intergalactic enemies in Star Trek, the concept of weapons that shoot laser beams instead of missiles has been a staple of science fiction for decades.
But as the U.S. Department of Defense (DoD) continues to research and develop advanced weapons systems, directed energy weapons (DEWs) are moving closer to a reality on the battlefield.
The fundamental characteristic of a DEW is that it transfers energy instead of a projectile—or uses electrical energy to propel the projectile—toward a desired target, producing a number of potential lethal or non-lethal effects. 
While not quite as far-fetched as the Star Wars blaster or the proton pack the Ghostbusters use to thwart paranormal trouble-makers, DEWs are considered more advantageousthan traditional weaponry for non-lethal engagements, executing more precise attacks in confined areas and defending against increasingly complex enemy attacks. A few of the DEWs that the defense industry is looking into include:
- Airborne Tactical Lasers, which mount a chemical oxygen iodine laser (COIL) onto an aircraft that is designed primarily for missile defense.
- Active Denial Systems, which use a gyrotron to generate a focused millimeter-wave radio frequency beam that is designed as non-lethal weapons to support a number of crowd control, checkpoint security and port protection.
- Electromagnetic Railguns, which are long-range, high-energy guns that uses electricity instead of gun powder to launch projectiles.
- Electromagnetic Reactive Armor, which generates an electrical field around a military vehicle that is designed to repel rocket-propelled grenades and similar weapons.
While these systems are capable of re-shaping modern warfare, DEWs face several technology hurdles that must be categorically overcome to be viable for military use. One of the biggest challenges is the significant amount of electric energy required to power DEWs that are large enough to have a meaningful impact. This presents an opportunity for next-generation energy storage systems, and in recent years, developments in lithium ion battery technology have shown potential to overcome these technical hurdles. The most advanced battery systems deliver the light-weight, high-performance capabilities necessary to support DEWs in the field.
Next week’s Directed Energy Systems Symposium (put on by the Directed Energy Professional Society) in Gaithersburg, Md. will likely focus, at least in part, on the challenges of moving DEWs from the labs to the battle field, including solving the energy storage dilemma.
With a little more education and exposure to new technologies at conferences and workshops like this, the DoD and defense contractors should quickly begin to realize that by integrating advanced lithium ion energy storage technology and sophisticated battery management systems into DEW applications, they can take a significant step toward realizing the full potential of this next-generation weaponry.
A123 stakeholders,
A123 Systems is committed to designing, developing and manufacturing quality batteries and energy storage systems that deliver high performance and value for our customers.
Recently, a small number of battery packs in the field experienced a malfunction, and when we inspected these packs to determine the cause, we discovered the existence of this defect. Upon further investigation, we determined that the root cause to be the incorrect calibration of one of four automated tab welding machines in the prismatic cell manufacturing process at our Livonia facility. This caused a misalignment of a certain component in some prismatic cells.
This defect was undetected by our standard visual and electrical inspection yielding cells which initially met specification. When the prismatic cells with the undetected defect were subsequently compressed as part of the standard module assembly process, a mechanical interference was created between the misplaced component and the foil pouch which contains the cell. In certain cases, this interference can breach the foil pouch electrical insulation, causing an electrical short which can cause premature failure of the battery module or pack, including a decrease in performance and reduced battery life.
We have isolated the root cause of the defective cells to this single automated welding machine, and have recalibrated it to conform with the other three automated welding machines at the Livonia facility. Cells made using these other three machines are not defective, giving us confidence that we have pinpointed the source of the defect and corrected it.
As a result of engineering analysis and testing, we believe the defect does not create a safety issue. A123 has not received or discovered any reports of injury or property damage related to this situation. We maintain that our core Nanophosphate® chemistry and our systems are safe, and this situation is ultimately a packaging issue for which we have identified the root cause and are taking corrective action.
In response to this situation, A123 has voluntarily launched a field campaign to replace all battery modules and packs that may contain defective cells.
While we cannot discuss the specific customers that are part of this campaign, there are five transportation customer production programs that have received products from A123 that potentially have defective cells. We are working with these customers to develop a schedule to get them replacement packs and modules to quickly remedy the situation. We have begun building replacement systems and expect to begin shipping them this week.
It is important to reiterate that this defect has been discovered only in some prismatic cells manufactured at our Livonia, Michigan facility. Customers using modules and packs built on prismatic cells produced at another A123 facility are not impacted by this defect.
Further, the cylindrical cells we make at our facilities in China that are used by BMW and a number of other transportation customers, as well as for the majority of our grid energy storage systems and commercial applications, are not impacted. These cells, along with the modules and packs built using them, continue to deliver their expected performance capabilities and this campaign will not disrupt any customer programs using cylindrical cells.
In parallel with this campaign, as we have discussed previously, we continue to implement actions that we believe will improve operations and minimize the possibility of quality issues going forward. This includes hiring a Chief Operating Officer, Ed Kopkowski, who has more than 25 years of global management and operational leadership in improving quality and reducing costs.
As for the financial impact of this campaign, we anticipate that the cost of replacing the affected customer modules and packs will be approximately $55 million and we expect it will be funded over the next several quarters. We have sufficient liquidity to fund this campaign, but expect this situation will require us to adjust our fund-raising strategy. We plan to provide an updated outlook during our next quarterly earnings call.
A123 has made hundreds of thousands of high-quality prismatic cells at another facility, so while the initial rapid ramp up of our Michigan operations to satisfy customer demand has resulted in near-term operational challenges, we are confident in our ability to overcome these issues. While we make no excuses and accept full responsibility for this situation, we believe that we have taken corrective actions to address this problem and improve our operations to move forward and continue delivering high-quality products to our customers.
We are working around the clock, from the senior management team down through the rest of the organization, to focus on executing the necessary actions as quickly and thoroughly as possible to resolve this situation. Going forward, we will remain as transparent as possible to provide updates as we progress through this field campaign. We have set up a page on our Web site where we will provide updates as we can make them available.
In closing, I want to add that we are disappointed and frustrated by this unexpected situation and empathize with customers, partners, investors, employees and other key A123 stakeholders who may be disheartened, but we are also focused and remain unwavering in our commitment to growing the company.
We continue to believe we have an innovative technology that is helping to solve some of the most pressing issues our time by enabling next-generation solutions, and we will devote our full resources to fixing this situation, putting it behind us and move forward toward what we believe will be a bright future for A123.
Thank you for your continued support of A123 Systems.
David Vieau
CEO, A123 Systems
The Global Wind Energy Council recently released its annual market statistics and the results are impressive—last year, more than 41,000MW (41GW) of wind power were deployed globally, bringing the total worldwide installed capacity to more than 238GW at the end of 2011.
Not surprisingly, China led all countries, deploying 18GW in 2011 to bring its total install base up to a world-leading 63GW. China is unlikely to relinquish the top stop any time soon, as the government has show commitment to continue increasing wind power generation in China, and the National Energy Bureau expects China to have about 90GW of capacity installed by 2015.
While these goals are ambitious, China’s power grid infrastructure is facing challenges integrating renewable generation capacity at this scale—according to the China Power Union, about 72 percent of the country's total wind power capacity is connected to the grid.
One of the reasons for the gap between installed versus connected wind generation is the absence of adequate ramp management technology. The variability of wind power causes fluctuations in the amount of energy flowing onto the grid, which can be controlled though ramp management. However, without this functionality, these fluctuations can decrease the stability of the grid, and grid operators in China are not allowing large amounts of wind resources to connect and put reliability at risk.
Another major challenge is the limited effective options for adding low voltage ride through (LVRT) capabilities when needed, which would enable wind turbines needing this support to continue operating when a significant drop in voltage occurs. However, because most turbines in China built to date are not equipped with inherent LVRT functionality, entire wind farms are at risk of simply disconnecting from the power grid when exposed to deep voltage excursions and they can be slow to reconnect when voltage recovers.
These issues must be resolved to achieve the government’s lofty wind energy goal, which has created a significant opportunity for advanced energy storage technology China.
Energy storage systems can deliver ramp management capabilities by regulating the flow of renewable power coming onto the grid. Large-scale lithium ion battery systems, for example, can store power and deliver it into the grid, tapping excess reserves when the wind dies down and recharging when it picks back up. This controls the rate at which wind power is distributed to the power grid, and U.S. utilities like Southern California Edison are moving forward with large projects to demonstrate the viability of battery energy storage as a ramp management solution, and in a limited number of markets this is a requirement today for interconnection of large wind projects.
Similarly, appropriate power electronics when deployed with energy storage technologies can also provide the LVRT capabilities necessary to support wind turbines achieving compliance with LVRT criteria, and do not disconnect from the grid when voltage drops temporarily. These dips typically last for only a second or two, so the most robust battery systems are equipped with “smart inverters” that react instantaneously to changes in grid voltage, delivering power to compensate for the change until the voltage increases again. This is designed to keep wind turbines operational and avoid the significant reductions in power generation that can occur without proper LVRT capabilities in place—China’s State Electricity Regulatory Commission (SERC) has identified several incidents when wind farms disconnected from the grid, prompting SERC to note that the absence of LVRT capability is likely to cause further disconnections in the future if the grid continues to experience power dips.
The challenges of wind power in China have not gone unnoticed by the government. Regulators have capped the allowed new wind capacity at 15-20GW per year so upgrades to the grid can be made to accommodate additional renewable energy integration. Further, the country’s National Energy Administration (NEA) approved a series of technical standards designed to better regulate the development wind power resources. These standards call for wind power suppliers to add LVRT capabilities and other functionality to enable the greater interconnection of wind farms to China’s grid.
As these new standards are debated companies like Dongfang Electric Corporation (DEC), the third largest manufacturer of wind turbines in China and the country’s largest exporter of power equipment, are already looking into energy storage. With China’s potential of reaching 230GW of installed wind power capacity by 2020, DEC and other companies deploying advanced battery energy storage are one step closer to finding a solution to China’s wind dilemma.
If your perception of cleantech was solely based on recent negative press, you might think the entire industry was doomed as a result of a few investments that didn’t pan out.
But if you attended the New England Clean Energy Council's (NECEC's) inaugural Clean Energy Day last week, you might have a different view.
Held at the Massachusetts State House, the event highlighted the breadth of technology innovation taking place in the state, which has spurred increased investment in the cleantech industry in Massachusetts. More than 100 companies joined policymakers to discuss government’s important role in supporting cleantech, both through investment and legislation.
From more established organizations like EnerNOC and Cape Wind to promising startups like 24M Technologies, Myriant and Digital Lumens, Massachusetts has established itself as a cleantech hub. There are an estimated 64,000 Bay State residents working in the clean energy economy, and Massachusetts ranks fifth in Ernst & Young’s recent index of the most “attractive” states for renewable energy.
The amount of activity taking place is encouraging and reflects the state’s legacy in innovation and entrepreneurism. But a key focus of the NECEC Clean Energy Day was to emphasize the importance of government contribution to sustain growth, especially if it is in the nation’s best interest to have American companies lead the development of clean energy technologies.
As an example of a company that went from small startup to global enterprise, A123 knows that an important function of government is to support technologies, products, services and/or behavior that ultimately benefit society, particularly when market-based systems do not provide sufficient incentive or structures. When there is a tragedy of the commons or when the private sector has insufficient means to accomplish the goal, it is a reasonable component for government to assist in the effort if it is in the best interest of taxpayers.
Without this support, the U.S. would likely slip behind in the development of core technologies, especially as government in other nations are establishing policies and investing in their cleantech industries. Subsequently, as global demand for clean energy technologies continues to grow, America would end up purchasing value-added products and services from other countries, filling their coffers while emptying our own.
As the NECEC’s Clean Energy Day highlighted, clean energy is one area that will continue to be worthy of support. Encouragingly, the venture capital industry seems to agree, as VC investments in cleantech increased 30 percent from $5.1 billion in 2010 to $6.6 billion in 2011, according to the Clean Energy Trends 2012 report issued by Clean Edge.
The government most certainly has an important role in promoting the growth of the domestic cleantech industry, and if policymakers follow the VC lead, the success of the Massachusetts cleantech industry should extend to the rest of U.S.