Clean Energy: It's All About Scale

The American Council on Renewable Energy (ACORE) likes to say that we are in Phase II of renewable energy development. In this worldview, the past 30 years were about developing core clean-energy technologies, and the next couple of decades will be about focusing the nation's efforts on putting (as ACORE says on its web site) "these new technologies to use in our society, with benefits for energy supply, national security, economic growth, investment, jobs, a cleaner environment, reduced risk of climate change, and improved health."
I couldn't agree more. We are moving into the next stage of clean-energy technical, financial, and policy development. And I believe it will be all about scaling up.

Clean energy is moving so far beyond the "alternative" moniker that many regions and states are now targeting 20 percent or more of their energy from clean-energy sources within the next decade or two—representing more electricity generating capacity than natural gas in many regions. Even China is targeting significant amounts of renewable energy. China's Renewable Energy Law is targeting 120 GW of new renewable by 2015 (representing three times the amount of nuclear power currently on the drawing boards).

So, will clean energy technologies like solar, wind, and biofuels and its efficiency brethren like green buildings, light emitting diodes (LEDs), and the smart grid be the dominant form of global energy generation (and conservation) by 2020? Perhaps not. But will they represent the highest growth and innovation opportunity in the energy sector and double-digit chunks of our energy infrastructure? Absolutely!

I firmly believe that scaling up manufacturing and driving down costs is not a luxury for the clean-energy sector—but a necessity. Wind, after 30 years of significant gains is now cost competitive in most markets in the world with limited subsidies.

Solar, while still 2-3 times more expensive than most of its energy competitors on a pure cost basis, can compete economically at the retail level in many markets when modules and systems integration are packaged with government incentives and financing schemes. As installed solar system pricing reaches $3.50 per peak watt in the next five year s or so—we'll see solar competing in most utility markets without the need for significant subsidies.

As I look out over the next 5-10 years I'm confident that the most important development in the clean-energy sector will be the scaling of manufacturing, systems integration, and equally important, technology deployment. Millions of jobs and billions of dollars will be generated in the process if policymakers, investors, corporations, and innovators get this right.

It won't be easy. Many core technologies, like solar cells and wind turbines and LEDs, will become commodities—making the business proposition more difficult for players that don't innovate and capture a larger portion of the value chain. But it represents the natural "growing up" of the clean-energy sector. And, as we move into this next stage of clean-tech development, the economy will be sustainably transformed in the process.

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