Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
Last Sunday’s segment on CBS-TV’s 60 Minutes, “The Cleantech Crash,” asked the question, “Is cleantech dead?” It seems to have been convenient for 60 Minutes to reinforce their chosen narrative by suggesting that cleantech is, if not yet quite dead, then on its deathbed. Moreover, according to 60 Minutes, the Obama Administration’s efforts to tip the scales away from fossil fuels in favor of clean energy technologies have been ham-handed, ineffective and pursued at a brutal cost to American taxpayers.
The actual truth is quite a bit different, indeed almost diametrically opposite.
A real industry has developed
Since President Obama took office in 2008, the cost of solar panels in the United States has dropped by 75 percent and big wind turbines have increased their net capacity factor from 20-30 percent to 50 percent for new turbines with the effect being that, in more than 20 states, rooftop solar is now or is about to be the lowest cost source of retail energy and big wind farms are the lowest cost source of wholesale energy. Indeed, who would have thought back in 2008, that in October 2013 more than 99 percent of the new generation capacity placed in service in the United States would be zero carbon renewable power?
New IT-driven technologies are being deployed en masse with the effect being that energy efficiency and conservation will become fully automated. Without lifting a finger, American homeowners are now able to avoid air conditioning or heating rooms with no one in them. Soon, lights will all turn off when rooms are not in use and appliances will pick the most cost effective time, from a cost of energy perspective, to turn themselves on and off.
The sale of plug-in vehicles, with their extraordinarily low operating costs, more than doubled in 2013 compared to the previous year and of the several attractive new models in the market, the Tesla Model S may be the most critically acclaimed new car of all time – and not by tree-hugging environmentalists but by auto enthusiasts and consumer product watchdogs.
Cleantech is a business — and one with a potential payback
And all of these cleantech trends are of immense benefit to the American consumer in terms of their economics and lifestyle enhancement – before you even begin to consider their attendant environmental benefit.
60 Minutes, going over ground already well-trod by other media outlets with overt political agendas, makes much of the failure of Solyndra and other clean tech companies supported by Obama’s Department of Energy. Failure in business is normal. Failure by companies striving to succeed in industries on the cusp of a revolution – like clean energy is today – is not only normal, it’s healthy! The road to the transformation of American society followed by the personal computer industry and the communications (i.e. cell phone) industry is literally littered with the remains of hundreds of unsuccessful startups and once-big players. Business, in a capitalist society, is Darwinistic.
The difference in the case of the emerging clean energy technology revolution – unlike PCs and cell phones – is that in this instance a lot of federal money was committed by the Obama Administration through a federal loan guaranty program and some of it was lost when the recipient went bankrupt – at the American taxpayers’ expense.
While the DOE obviously made some mistakes and the Government’s administration of the program has been at times maddening, independent reviews of the DOE’s loan portfolio have projected a likely repayment rate of 97 percent. Given that the loan guaranties were priced to assume that they had to cover something like a 10 percent failure rate, the government actually is likely to make a profit on the federal loan guaranty program as a whole. That is NOT a fact you would have heard if you had tuned in to the 60 Minutes segment.
Consumers are ready for green and clean tech
Another less tangible but nonetheless critical fact was overlooked by 60 Minutes, and that is that the tide has turned in terms of consumer perception. Thanks no doubt to the Tesla S and other breakthrough products and services arising out of the cleantech industry, market surveys show that the traditional consumer stigma attached to “green” products (too expensive, inferior quality, performance constrained) are rapidly disappearing and that cleantech, so recently politicized, is being embraced by consumers in blue states and red states alike.
Can the Obama Administration claim full responsibility for the budding success of the cleantech revolution or the change in consumer perception? No, not by a long shot. But the cleantech impetus was catalyzed by the Obama Administration and occurred on their watch and the government did provide critical financial support at a pivotal time to certain companies and select projects that will change the world. Like cell phones and PC, cleantech is fundamentally a private sector-driven revolution, aided and abetted by the federal government and – given what is at stake both in terms of climate change and national energy self-sufficiency – that is not a bad thing.
We at NRG are just one company driving dozens of successful cleantech projects forward. But the future of energy – and our modern civilization that depends on it – will not be driven solely by us or by any other one company, or even by any one country. It will be driven by the energy consumers of the world through their individual energy choices that increasingly are going to cleantech solutions. Led by the consumer, we will solve climate change, the fundamental societal challenge of our time.
We also will provide access to affordable and reliable clean electricity to people in developing countries around the world so that they can enjoy the benefit of modern civilization without destroying the global ecosystem upon which rich and poor alike depend. But since this great preponderance of the world’s population will be energized in a manner very different – locally, sustainably and without an extensive system of wires and poles – from the way it was done in the US and other developed countries a century ago, we need a constant influx of new ideas rising out of new companies from outside the status quo-loving energy industry.
As we already have seen, not all of these new companies will succeed – indeed, many likely will fail – but the consumer will benefit from the innovation, the freedom of choice and the self-empowerment that they will be offered and, as a result, the consumer will realize the enormous benefit of something our generation never experienced – energy self-determination.
David Crane is the President and CEO of NRG Energy Inc.