Wednesday, November 5, 2008

The Wild, Wild West

Last week, I attended the REFF (Renewable Energy Finance Forum) West in Seattle, WA. The event was very broad reaching and very detailed, covering every possible part of the renewable energy industry including technology, policy, venture capital, financing, etc. Several "big dog" speakers gave talks including Senator Maria Cantwell (D-WA), Mayor Greg Nickels (mayor of Seattle), and Chuck Norris (ok, he didn't speak, but if he did, can you say best conference ever). I learned too many things to possibly list (including that beer is not allowed on the elevator in the Space Needle), but will share a few items that I thought were interesting.

  1. The Western portion of the U.S. is light years ahead of the rest of the U.S. - The West has dealt with limited resources (e.g. water, electricity, silicon, etc.) for quite some time now. In addition, they have plentiful natural resources (and some very unnatural resources) that also contribute to a tendency towards conservation. It is no surprise that San Francisco, Portland, and Seattle are becoming major hubs in the green movement. Further, the tax incentive structures (http://www.dsireusa.org/) of the western states, on average) are much more conducive to the development of green technologies. I understand that other parts of the U.S. do not have the resources to make some renewable technologies viable, however, incentives for manufacturers and other parts of the value chain could go a long way in "de-rusting" some of the rust belt's economies. After all, if the U.S. is going to become the world leader, we have to all work together (my country tis of thee...sorry, got a little patriotic there, my bad).
  2. The credit crunch will have only a short-term impact on the move towards "greener pastures" - There may be some consumer movements away from the green movement in the short run. Lower gas prices and the limited liquidity for all involved will be the main causes (kind of like after a night of partying, you eat White Castles because they're cheap and available, but afterwards, you want something better for you than cheap burgers and jagerbombs). Even T. Boone Pickens (what does that T stand for, is it like the P, in P Diddy?) is feeling the crunch http://www.enn.com/business/article/38555. However, venture capital is currently pouring into this industry movement at a rate not seen since the early 90s tech boom (http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20081001005167&newsLang=en). All this money should feed innovation and as technologies are perfected, costs will fall and demand should continue to increase with the resulting prices. The real question is how will the price of oil affect the rate of innovation adoption? (Oh, I just blew your mind, didn't I?)
  3. The renewable energy industry is still riding on training wheels - Tax credits are the name of the game when it comes to renewable energies. Without these programs, many of the current projects underway in the U.S. would not be. Obviously, innovation and efficiency will decrease the need for other sources of cash. Further, once a regulated carbon market is established, these credits could be rolled back due to the alternative benefit source. However, tax credits are a double edged sword. They stimulate this new green economy and drive renewable energy prices down. At the same time, the industry could become dependent on them to be competitive (sort of like HGH, only without the giant foreheads).
  4. What's old is new to solve the energy crisis - There are a variety of amazing technologies under development. From algae to solar concentrators to various forms of biofuel, innovative individuals are hitting this crisis from a variety of angles. However, much of this "new" technology was invented in the mid to late 20th century. As early as the 1950s, scientists thought we may be causing global warming (http://www.pbs.org/wgbh/pages/frontline/heat/view/2.html, about the 43 second mark, cheesy science shows rule. I highly recommend you watch the entire Frontline episode, it is very informative, http://www.pbs.org/wgbh/pages/frontline/heat/view/). Then, in the 1970s, the OPEC energy crisis stimulated energy innovation, because, wouldn't you know it, no one likes expensive gas. For the sake of my mortgage payment, I hope we do not continue to procrastinate with renewable energies, although gas is $1.99, so...

I wanted to mention just a few other items.

  • During my flight, I listened to the book Freakonomics (reading is for people without Ipods). If you haven't listened to (or, if you have to, read) this book, I highly recommend it.
  • If you would like to see copies of any of the presentations, let me know, I'd be happy to share.
  • It was very obvious last night that one group of individuals in America was overjoyed that Obama was elected as President...and that was the renewable energy industry. From discussions with individuals from both sides of the aisle at the conference, it was obvious he was the clear choice for leading the U.S. into the green economy. Huge questions on whether he can deliver when facing such minor issues as two wars, a bad economy, a huge budget deficit, falling oil prices, etc. Yes we can...hopefully.
  • Finally, please be sure to click-on and read the comments sections after each of my blogs. I assure you their authors are much more insightful than me.

2 comments:

jquaglia said...

Sounds like a cool conference. I just posted this link on Twitter, so hope to get you "in the know." Want to come to Ignite Columbus next week?

I think all the presenters are full, but it could be a cool event.

http://majelly.ning.com/events/event/show?id=2311821:Event:2868

There should be a good amount of Cbus entrepreneur-types.

Joe DeLoss said...

Thanks for another great post Dan. The VC track is interesting but the BW article you linked to was all about the technologies getting money. Do you know of any VC firms offering up loans to people like yourself, looking to build a more solid investor demand for the credits? I can't imagine pioneering a new security market is cheap.

I'll go to ignite with you and JC.