This past Sunday, 60 Minutes, the magazine news show of CBS, ran a segment entitled, The Cleantech Crash. The segment left viewers with the message that US taxpayers have invested in a number of clean tech flops (including Solyndra), and that Chinese companies are scooping up the defunct US companies as vulture capitalists.
Case in point is this quote from the segment:
Pin Ni and his autoparts company Wanxiang have made six big investments in American Cleantech so far, including buying A123, another electric car battery startup that lost over 130 million tax dollars.
The segment was a mash-up of Silicon Valley entrepreneurs, like Vinod Khosla, and the energy sector. While Vinod Khosla is one of the great investors and entrepreneurs of our time, the real success in energy is not coming from new inventions. That is worth repeating. Real success in energy is not coming from new inventions.
Climate wealth is being created through the deployment of technologies that were invented in the 1970s. In solar power for example, it was business model and financial innovation that unlocked a multibillion dollar industry in the U.S. and around the globe. Solar services are now cost effective for roughly 20 percent of the electricity sold in the U.S. and globally. It’s not surprising that we have solar in California, but did you know it’s booming in Louisiana, North Carolina, Missouri, Texas and Minnesota, too?
The companies mentioned in the 60 Minutes segment that sputtered or failed in the U.S. like A123, Ener1, and Solyndra were manufacturing companies. These manufacturers made technology that competed with others in the market with proven technology at commodity prices. Solar services companies, like SunEdison and Solar City, buy solar panels and batteries from manufacturers worldwide based on price — like those in the U.S., India, and China.
Those of us in the energy business understand that there is no silver bullet to transform our energy sources. Over the past 10 years, cleantech VCs have focused on bringing new technologies to market. What many failed to realize is that in the energy space, new technologies take a minimum of 100,000 hours (12 years) to bring to market – too long for VC returns. Luckily all is not lost, and these technologies will still come to market at their natural pace.
My colleagues in the business of electric energy and transportation are not looking for the next miracle invention. Instead, we are interested in deploying proven technologies with sensible business models that save money, hedge against future price increases, and support critical infrastructure to protect against losses from future hurricanes like Sandy.
In less than ten years, our electricity sector evolved from “business as usual” energy fuel sources like coal. In fact, over the last four years, more than 50 percent of new energy has come from renewables like wind, solar, geothermal, and biomass. With 70,000 MWs of coal being retired by 2020, the electric utility industry will see radical change and those of us in the electricity industry see it coming.
Those of us steeped in the energy business would be happy to discuss the energy business with CBS and any other media source. We are already creating many new jobs in America and around the globe that address the need for more energy while staving off the impact of climate change.
There is a follow up story about the energy industry and its deployment of proven technologies. It is adding up to climate wealth.
Jigar Shah is author of Creating Climate Wealth: Unlocking the Impact Economy, 2013 Icosa Publishing. Shah unlocked the multi-billion dollar worldwide solar industry with a business model innovation (Power Purchase Agreement), not a new technology. This model created SunEdison, the largest solar services company worldwide. Jigar Shah has shown that business model innovation applied to the biggest challenge of our lifetime – climate change – will unlock a $10 trillion dollar new economy.
After SunEdison was sold in 2009, Jigar served through 2012 as the first CEO of the Carbon War Room —the global organization founded by Sir Richard Branson and Virgin Unite to help entrepreneurs address climate change. SunEdison and Carbon War Room proved that we could make positive change through business and financial model innovation in many industries. Today, as CEO of Jigar Shah Consulting, he works with global companies in a multitude of industries to deploy existing clean energy solutions fueled by new business models.