Renewable Energy’s Mountain of Death
What makes renewable energy different from many other technology-based industries, however, is not just the valley of death which is common to many technology-based industries, but more the “mountain of death,” or specifically the amount of capital and time required to take promising but nascent energy technologies to widespread deployment. The energy industry tends to be an asset-based industry, and those assets are usually expensive. Early stage private capital tends to shun capital intensive businesses, and unlike information technology, for example, the energy industry does not generally provide some highly desirable “must-have” new capability, but simply supplants an existing commodity, be it the flow of electrons, or a transportation fluid, or whatever.
Unfortunately, even in good economic conditions, there is limited funding available for pilot and demonstration phases for scaling renewable energy technology. Add to this the lack of resources required to create and implement commercialization roadmaps and it becomes clear why half-hearted attempts at developing this industry have stalled.
Given the uncertainty, costs and times frames involved in overcoming the mountain of death, there needs to be a very strong enabler in order to stimulate renewable energy commercialization on a large scale. Absent regulation, market signals (like pricing carbon), or specific incentives, there are simply no compelling economic reasons in the short term for the incumbent industry leaders to switch from existing feedstocks to renewable sources. As mentioned above, in other technology-based industries, early-stage capital funds innovative disrupters, but there is simply not enough equity financing available to stimulate the early stage energy companies in such a capital intensive industry, and start-ups simply do not have the balance sheet strength typically required for project finance and other sources of financing.
The renewable energy industry is different from other technology-based industries. Granted, it is slowed by the valley of death, but widespread deployment is truly hampered by the mountain. If we are committed to the potential of renewable energy as a solution to many of our climate, economic and national security concerns, we need to recognize the need for strong federal and state support for commercializing renewable energy technologies or we run the risk of looking back on this period and wondering why (to paraphrase Rahm Emanuel) we wasted a crisis.
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