Alternative Energy/Give an overall picture of the AE field

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Answer the questions:

Give an overall picture of the field.

*How was this field born and how is it evolving?

Energy History
  • The sun is the origin of most renewable energy (Sorenson 1991, 8)
    • Sunlight has historically been used for warmth and water heating
    • Biomass is plant matter that has stored energy from photosynthesis. It is burned for energy - heat, steam to run a turbine.
    • Sunlight warms the earth in some areas more than others, as atmosphere warms and warm air rises, cool air moves in to fill its place creating the wind which powers wind turbines.
    • Wind also creates a portion of the waves on the ocean transferring that power into harvestable energy.
  • Hydropower is a result of the force of gravity causing water to flow downhill. Moving water exerts its force of energy on objects it comes in contact with like the blades of a turbine.
  • Ocean tides, the energy for tidal energy technology, is a result of the tidal forces acting on the earth from the sun and moon. [1]
  • Renewable energy technologies harness the energy in the sunlight, wind, ocean, rivers, and plant matter, and turn it into electricity.
Technology History
Solar Energy
  • Solar technology for electricity can be divided into two major categories:
    1. Concentrating solar power (CSP) - mirrors or other reflective materials concentrate the sun's heat and energy on pipes or towers containing a heat exchange substance which transfer heat to water through a heat exchanger making steam to drive a turbine for electricity production - this technology is mature though it still costs more than conventional energy due to the high capital expenditures for new plants. (Luzzi & Lovegrove 2004, 1)
    2. Solar photovoltaic panels (PV) - sun hitting certain materials will be converted directly into direct current (DC) electricity; it must then be converted into alternating current (AC) electricity through an inverter - this technology is relatively immature, and expensive when compared to the cost of conventional electricity.
CSP History
  • Solar furnaces were developed in the eighteenth century, which led to temperatures high enough to create steam for running a turbine to an electrical generator. (Sorenson 1991, 8)
  • In the 1860’s small-scale solar thermal power generation systems were demonstrated in France and the United States. (Luzzi & Lovegrove 2004, 1)
  • In 2003, the largest examples of solar thermal power plants were the 80-megawatt electric (MWe) parabolic trough systems that have been operating in southern California since the late 1980s.
    • There are nine such power plants with variable sizes that have a combined nominal capacity of 354 MWe (megawatts electrical) and generate approximately 800,000 MWh (megawatt-hours) of electricity every year, sufficient to service a medium-sized city of approximately 200,000 people.
    • These power plants generate electricity on a competitive basis thanks to previous tax incentives, long-term amortization, green-power credits, some natural gas back-up, and expert operation and maintenance. (Luzzi & Lovegrove 2004, 1) The natural gas back-up is necessary for the times when the sun is not shining and electrical demand is high.
PV History
  • 1839 - The photovoltaic effect was discovered by Alexandre-Edmond Becquerel (Sorenson 1991, 9)
  • 1953 - Scientists at Bell Laboratories (a private lab that later became part of AT&T then Lucent) discovered the photovoltaic (PV) properties of silicon, and started R&D on the first silicon solar PV panel (Perlin 2004, 616)
  • 1955 - US government contracts Bell Labs to develop PV panels for the space program. First steps toward creating high efficiency panels. (Perlin 2004, 617)
  • 1969 - Elliot Berman, a chemist, receives venture capital funds from Exxon to develop a commercially affordable PV panel and through engineering with cheap materials, drops panel prices from $200/Watt to $20/Watt. (Perlin 2004, 617)
  • 1970's - Solar PV market expands to commercial use for remote location energy needs: electronics on oil rigs, train track signals, remote farms and solar telephones in Australia. (Perlin 2004, 617-619)
  • Solar PV technologies have developed in a number of ways based on the materials used on the panels
    • The most common panels are made from a lower grade silicon than that which is used for computer chips
    • New thin-film panels are starting to be developed, which can be produced at a lower cost than silicon panels, and are flexible and light, but they have a much lower rate of conversion of sunlight to electricity.
    • Other PV technology developments are being pioneered monthly through research at universities, and government labs.
  • While the solar PV sector grew rapidly in 2007, attracting US$28.6 billion of investment in technology, manufacturing and capacity installation (a record according to New Energy Finance), solar PV generation capacity tends to thrive only where capital subsidies and feed-in-tariffs (FiTs) are there to support it. (Hohler 2008)
  • PV is still not competitive with conventional energy in the majority of markets, and is barely approaching grid parity in areas where it has been promoted and financially supported, such as in California, or in Germany where the generous FiT makes PV economically viable. (Hohler 2008)
Solar Energy Technology Development
CSP
  • CSP and PV technologies differ drastically, especially in their innovation patterns.
  • CSP is a fairly straightforward technology requiring a concentrator (mirrors, for example, that concentrate the suns rays), a receiver (a pipe or other surface that comes in contact with some material that stores the suns heat), a heat transport mechanism (a material capable of storing the suns heat and transferring it through a heat exchanger to the water which will create steam) and a conversion system (a turbine) that drives the electrical generator. (Luzzi & Lovegrove 2004, 672 - 675)
    • The majority of the innovation in CSP technology is the heat transport mechanism material. Materials being used currently are:
      • Synthetic heat transfer oil - effective, but suffers from slow decomposition due to high heat and creates environmental and fire hazard if it leaks
      • Air - reportedly quite effective
      • Molten Salt - very effective, especially for heat storage overnight in insulated tanks (this can allow electricity generation when the sun is down). Can be corrosive and reacts with air or water.
      • Chemical - Thermochemical cycles with fluid reactants can provide very effective heat transport and storage for use when the sun is down.
    • CSP plants are very effective and quite cheap in comparison to PV, while still a bit more expensive than conventional gas and coal electricity plants. At 80MW, the plants in California are generating a great deal of electricity at a levelized electricity cost of $0.12 - $0.16 per kWh, a fairly competitive cost compared to a US "Average Retail Price of Electricity to Ultimate Customers" of ~$0.10 per kWh. [2]
PV
  • PV technologies are much more complicated, varied, and expensive. The promise of a panel that can convert sunlight directly into electricity is monumental, but the technology suffers from the high cost of materials and low efficiency of sunlight energy conversion to electricity.
    • Over 90% of the panels on the market are made with silicon. These typically come in polycrystalline and monocrystalline forms, and have energy conversion efficiencies of 16% - 17%. (Meyer 2004, 43)
    • Thin film panels use flexible materials like copper indium diselenide or cadmium telluride and some thin silicon designs, and can be mass produced at low cost. They have lower efficiencies of around 8% - 11%.
      • Thin film PV only accounted for 7% of the global market in 2006, but in the US it accounted for 30%, led by the thin film world market leader and US company, FirstSolar. (Cappello 2008, 6)
    • Electricity generated from PV panels is on average about $0.30 per kWh, much more expensive than the average retail price of electricity of ~$0.10 per kWh. [3] (Kammen 2004, 401)
Wind
  • Evidence of windmills has been found in India from 2500 years ago (Sorenson 1991, 8)
  • 1887 - James Blythe builds first electricity generating wind turbine in Scotland [4]
  • 1887 - 1888 - Charles Brush builds another electricity generating wind turbine in Cleveland, Ohio. [5]
  • 1930’s - US wind turbines were used to generate electricity on farms that were not tied to the electrical grid. Turbines built and produced by private companies. [6]
  • 1970’s and 1980’s - US Government (NASA) received funding from the National Science Foundation, and later the Department of Energy to work with industry to create commercially viable wind turbines at the Lewis Research Center in Cleveland, Ohio. [7]
  • Late 1970"s - Early 1980's - PURPA led to huge growth in the wind industry, contributing to economies of scale.
  • The majority of the leading large wind turbine manufacturing companies in the market today were, in part, born from the wind power technology research and development that began in the late 1970s, most notably in Denmark, the Netherlands, Germany and the United States. )." (Lewis, Wiser 2007, 1)
  • The Danish wind companies Vestas and NEG Micon were the market leaders in the 1970’s and many studies of innovation in the wind power industry have shown that their dominance stemmed in large part from their first-mover advantage. (Lewis, Wiser 2007, 1)
  • In the US it has been suggested that there is room for improvement in all aspects of wind turbines, which would require a larger R&D program in the new FY 2010 budget. (Anadon et al 2009, 8)
Tidal/Wave

It is believed that the world could cover a significant portion of its electricity demand from tidal and wave energy sources. The potential global energy contribution to the electricity market from wave technology is estimated to be approximately 2000 TWh/year, which is equal to 10% of world electricity consumption. The global tidal range energy potential is estimated at approximately 3000 GW, with around 1000 GW (~3800 TWh/year) available in shallow waters. Tidal energy conversion technologies are predicted to supply up to 48 TWh/year from sites around Europe. While other large tidal current resources are yet to be explored worldwide. While research and development on ocean energy exploitation is being conducted in several countries around the world, the technologies for energy conversion have not yet progressed to the point of large scale electricity generation. This is partially due to the rough and unpredictable ocean conditions where these technologies have to operate. Meanwhile though, advances in ocean engineering have improved the technology for ocean energy conversion. Advances in some areas of the technology could the goal of power production at the commercial level by or even before 2010. (Lemonis 2004, 1)

  • Tidal Energy: This nascent technology frontier relies on the energy in the tides, which are cyclic variations in the levels of the seas and oceans. These variations in sea level create water currents, which can be extreme in some locations. One example is the Pentland Firth to the North of the Scottish mainland. (Lemonis 2004, 385)
    • Unlike solar energy, wind energy, and wave energy, tidal energy provides a completely predictable energy source.
  • Ocean energy sources have a high density, which is highest among renewable energy sources. The density is defined as the amount of energy that exists in a certain renewable resource, i.e. sun, wind, water. (Lemonis 2004, 386)
Tidal Energy history
  • Between 1961 and 1967 a tidal barrage was constructed in France, at La Rance in Brittany, which was the world's first professional attempt to exploit tidal energy. The barrage - with turbines placed inside - was built across a tidal estuary to utilize the rise and fall in sea level. While there were early technology issues, the plant has proven to be highly successful. Currently, many engineers and developers favor developing technologies which will utilize the kinetic energy in flowing tidal currents. (Bryden 2004, 139)
  • Tidal energy has been met with a fair amount of opposition from environmentalists due to the expected ocean ecosystem damage from tidal barrage technology.
Tidal Energy Technology

Tidal energy technology is divided into two main categories: Tidal Barrage Energy and Tidal Current Energy

  • Tidal Barrage Energy (Bryden 2004, 142)
    • A tidal barrage relies on a large estuary or bay with a relatively narrow opening and large tidal variations. These sites are limited. On example is the Bay of Fundy in Newfoundland. Electrical energy is produced by allowing water to flow from one side of the barrage through low head turbines.
    • The barrage turbines can generate electricity during both the incoming and outgoing tides and have four periods a day in areas where there are two high tides and two low tides each day.
    • New technologies that find different ways to capture the energy in the tides are being developed in earnest. One example is offshore tidal conversion, which uses impoundment structures placed offshore on shallow flats with large tidal ranges. Impoundment structures are completely independent of the shoreline, and theoretically solve some or all of the environmental and economic issues attached to the tidal barrage systems. (Lemonis 2004, 392)
  • Tidal Current Energy
    • The energy in tidal currents can be harnessed using technologies similar to those used for wind energy conversion, that is, turbines of horizontal or vertical axes (“cross-flow” turbines). Since the density of water is approximately 850 times higher than air, the power intensity in water currents is significantly higher than that in airflows. Consequently, a water current turbine can be built much smaller than equivalent-powered wind turbines. (Lemonis 2004, 393)
    • A novel technique recently developed in the United Kingdom uses a hydrofoil, which has its attack angle relative to the onset water flow varied by a simple mechanism. This causes the supporting arm to oscillate, which in turn forces hydraulic cylinders to extend and retract. This produces high-pressure oil, which is used to drive a generator. (Lemonis 2004, 393)
    • While there are very few commercial electrical generation facilities from tidal currents around the world, two large prototype systems were installed in European waters in 2002, each capable of producing approximately 300 kW. One is located close to Lynmouth in the Bristol Channel, between England and Wales, and the other is in Yell Sound in Shetland. (Bryden 2004, 147 - 148)
Wave Energy History
  • Wave Energy: Wave energy technologies capture the undulations of the ocean caused by wind or ocean motion and turn them into electricity through various turbine functions.
    • Wind Waves: (Lemonis 2004, 386)
      • Wind-generated waves have a higher energy concentration than ocean motion waves.
      • Wind waves are, predictably, created from winds as they blow across the oceans. The energy transfer from the wind to the wave provides natural storage of wind energy in the water near the surface. Wind waves can travel thousands of miles with very little energy loss provided they do not encounter head winds.
    • Ocean Waves: (Lemonis 2004, 386)
      • Ocean waves contain the kinetic energy of the water particles and the potential energy of elevated water particles. The kinetic energy in water particles generally follow circular paths - the radius of which decreases with depth.


(The information below was acquired from: (Lemonis 2004, 389))

  • Wave energy conversion is being investigated in a number of countries, particularly in the European Union member states, China, India, Japan, Russia, and the United States.
  • Although the first patent certificate on wave energy conversion was issued in 1799, the intensive research and development (R&D) study of wave energy conversion began after the dramatic increase in oil prices in 1973.
  • During the past 5 years or so, there has been a resurgent interest in wave energy, especially in Europe. Nascent wave energy companies have been highly involved in the development of new wave energy schemes.
  • Currently, the world-installed capacity is approximately 2 MW, mainly from pilot and demonstration projects.
  • The electricity generating costs from wave energy converters have shown significant improvement during the past 20 years or so and have reached an average price of approximately $0.11/kWh at a discount rate of 8%. Compared with the average electricity price in the European Union (~$0.05/kWh or ~0.04€/kWh), the electricity price produced from wave energy is still high, but it is forecasted to decrease further with the development of the technologies.
  • Although early programs for R&D on wave energy considered designs of several megawatts output power, more recent designs are rated at power levels ranging from a few kilowatts up to 2 to 4 MW.
  • Massive power production can be achieved by interconnection of large numbers of devices.
  • The amount of ongoing development work on wave energy technologies is very large, so much so that it is hard to quantify.
Wave Energy Technology
  • The number of designs for wave energy conversion technology is very large, even when compared with other alternative energy technologies. More than 1000 wave energy conversion techniques are patented worldwide. These various technologies can be simplified into a few general technology classifications: (Lemonis 2004,387 - 388)
    • The oscillating water column that consists of a partially submerged hollow structure open to the seabed below the water line. The heave motion of the sea surface alternatively pressurizes and depressurizes the air inside the structure, generating a reciprocating flow through a “Wells” turbine installed beneath the roof of the device. This type of turbine is capable of maintaining constant direction of revolution despite the direction of the airflow passing through it.
    • Overtopping devices that collect the water of incident waves to drive one or more low head turbines.
    • Heaving devices (floating or submerged) that provide a heave motion that is converted by mechanical and/or hydraulic systems in linear or rotational motion for driving electrical generators.
    • Pitching devices that consist of a number of floating bodies, hinged together across their beams. The relative motions between the floating bodies are used to pump high-pressure oil through hydraulic motors that drive electrical generators.
    • Surging devices that exploit the horizontal particle velocity in a wave to drive a deflector or to generate a pumping effect of a flexible bag facing the wave front.
  • Wave energy development has been slowed by the difficulties of designing technology that is both durable enough to handle the beating of the oceans waves, and efficient enough to convert the wave energy to electricity at a competitive level, while attaining a price point that competes with conventional energy technologies. Misinformation and lack of understanding of wave energy by the industry, government, and public, have often slowed wave energy development even more. (Lemonis 2004, 389)
Technology development barriers

The transition from fundamental research in energy technology to deployment and diffusion of technology is stifled in the US by the government’s development structure. The Office of Energy Efficiency and Renewable Energy (EERE) is the primary funder and manager for later-stage applied research, development and technology demonstrations for alternative energy technologies. The EERE has had limited success with demonstrations over the years. As a government office, its staff lacks depth in financing and naturally, in the management of commercial project engineering. The Department of Energy (DOE) also has seventeen national laboratories of widely varying size, which employ one of the largest collections of PhD scientists in the world working for a single agency, approximately 12,400. The three largest of these seventeen labs, (Lawrence Livermore, Sandia, and Los Alamos) have historically focused on the design and development of nuclear weapons, and their sole customer is the federal government. The secrecy around nuclear research and weapons research in general at many of the labs combined with the limited market they usually produce technology for (the US government), has resulted in a limited history of successful transfer of commercial products into the private sector. The labs do not perform many of the broad range of both supply-push and demand-pull missions that are now required. Additionally, of the 12,400 PhD scientists, 5000 of them work at the top three weapons labs despite the US's shrinking arsenal, and far fewer PhD scientists work at the energy labs. The Largest alternative energy lab, The National Renewable Energy Laboratory, employs 350 PhD scientists. (Weiss & Bonvillian 2009, 152 - 153) Currently, there is also no system in the Department of Energy that encourages collaboration between the public and private sectors. The private sector has the important knowledge about market deployment, while the government should play the primary role in technology research and development. (Weiss & Bonvillian 2009, 154)
The absence of a comprehensive energy-innovation strategy in the US has led to different parts of the U.S. government supporting different energy technologies at different times, with inadequate coordination and oversight. For many years the DOE has conducted R&D in relative isolation from demonstration and deployment policies, which are usually enacted by the Congress— which has often led to technologies failing to make it over the barriers to widespread commercial deployment. (Anadon et al 2009, 11)

US Energy Policy History

The United States has a deeply politicized energy policy history. While the environmental wing of American politics, now tied to the political left, has urged subsidies to renewable energy — specifically to sun and wind — for decades, they neglected support for geothermal energy. The political right has meanwhile been just as enthusiastic in its support of subsidies to oil, natural gas, and nuclear energy. The coal and oil industries have been protected by the congressional delegations in key states where they provide employment. Due to these pressures, and a long regulatory history, the role of the government in the energy sector has been intense and interventionist. Even with the growing geopolitical and climate change realities, neither political party has attempted a balanced, technology-neutral approach to energy policy. Even today this legislative policy debate is missing in the U.S. Congress; each energy technology, both alternative and incumbent, seeks its own separate legislative deal for federal backing. (Weiss and Bonvillian 2009) This leads to the government picking technology winners, which is a policy destined for failure in the new energy future where a wide array of new technologies will be necessary to address the climate change issue.

Timeline of Events in US Energy Policy History
  • 1970 Oil Embargo raised US interest in alternative energies for energy/economic security and resource and environmental sustainability. (Carlin 2004, 347)
  • Before 1970, hydropower was the predominant alternative energy in the US.
  • After 1995 hydropower production stagnated due to lack of available water.
  • Hydro facilities still account for the majority of alternative energy production in the US, but there has been very little growth in hydropower capacity or production since 1995.
  • Since the 1970's the US has used government run subsidy programs to give these technologies a competitive advantage in the US market.
  • The late 1990’s to the present have represented the most earnest attempts at coherent alternative energy policies, but while the policies have encouraged moderate growth in the market, their inconsistency has led to boom and bust periods of technology development and deployment.
US Renewable Energy Policies
  • The Public Utilities and Regulatory Policy Act of 1978 (PURPA) was the first US policy that gave alternative energy a competitive advantage (Carlin 2004, 351):
    • Required Utilities to buy energy from alternative energy producers
    • Paid premium prices for each kilowatt hour of electricity produced
    • Guaranteed the prices for the entirety of 20 year contracts
    • Act was ultimately unpopular because:
    1. The high prices created windfall profits for alternative energy producers
    2. PURPA contracts were paid for by the electric utility, raising the price of electricity for all consumers
  • After PURPAs initial, but brief, success, there was stagnation in US alternative energy development until 1997 caused by:
    • Electric power sector restructuring
    • Repeal of federal and state incentives
    • Sharply lower natural gas prices - making new natural gas plants more financially appealing
  • In 1997 a new era of alternative energy policies began, which has helped to grow the alternative energy sector in the US.
  • The most important of these policies are:
    1. Sets state goals for renewable energy (RE) generation in a %RE of total state electricity generation by a particular year (2020 for instance)
    2. Requires all state electric utilities to reach same level of RE generation and uses tradable credit market to drive process
    3. Credits are proof that one MWh (megawatt hour) of renewable energy has been produced and fed into the electricity grid.
    4. Utilities will decide to generate RE, buy RE from another retailer or buy the tradable credits to comply with RPS policy.
    5. Compliance measured by a state regulatory office which verifies that each electric utility holds the proper # of tradable credits by the end of the year.
    6. If utility generates 200,000 MWh per year, and the RPS goal is 10%, the utility must present 20,000 credits at the end of the year to show compliance.
    • The Business Energy Investment Tax Credit (ITC) [9]
    1. Provides a 30% tax credit for qualified renewable developments. Most importantly solar developments.
    • The Renewable Energy Production Tax Credit (PTC) [10]
    1. Provides a $0.01 - $0.02 payment per kWh for qualified renewable technologies. Most importantly, for wind energy.
    2. Recent change allows developers to opt instead for the 30% tax credit offered by the ITC.
    • U.S. Department of the Treasury Grant Program
    1. Recent Obama Administration addition which allows ITC or PTC eligible RE developments to opt for a grant equal to the 30% ITC tax credit in year 1 of the RE project.
    • Public Benefits Funds (PBFs) [11]
    1. State renewable energy offices collect a small surcharge on all consumer electricity bills to fund renewable energy programs for the public.
    2. PBFs can be used for public education on RE and energy efficiency, or for programs that help fund RE or energy efficiency projects
  • RPS policies, the main AE policy model used in the US, "have proven effective in encouraging renewable energy generation." (Anadon et al 2009, 18)
    • From 2001 to 2007, roughly 65 percent of total wind additions in the US were motivated at least in part, by state RPS policies.
    • In 2007 alone, 76 percent of non-hydropower renewable capacity additions took place in states with RPS policies. (Anadon et al 2009, 18) (Wiser & Barbose 2008)
Visions on International Collaborations and leadership
  • "The problem of climate change is global, so that the new paradigm will need to be global. Even so, technology advance still largely follows a nation-state model. Although multinational corporations are moving the development stage toward international collaboration, other key features of innovation systems, such as research funding, science and technical education, and publicly funded research institutions, remain rooted in national funding and support. The U.S. innovation system has led world technology waves for many decades, and despite the rapid rise of capabilities in other countries, there is no easy substitute for its technology leadership in this arena. There is a trade-off between the need to share technology in order to work together to meet a common danger and to benefit from the exchange of knowledge, on the one hand, and the need to provide incentives to industry to gain competitive advantage through innovation and capacity building, on the other. The United States should keep in mind, too, that the economic advantages of leadership in technology have been the source of its wealth and well-being." (Weiss and Bonvillian 2009, 6)
  • International collaboration models in energy technology are not new, as has been demonstrated by the International Thermonuclear Experimental Reactor (ITER) and the Carbon Sequestration Leadership Forum (CSLF). The first is an international research collaboration on nuclear fusion, and the second is an international climate change initiative designed to improve carbon capture and sequestration technologies with coordinated R&D funds from international partners and private industry. The barriers to international collaboration include the high transactions costs, and perceived difficulties protecting intellectual property rights. (Gallagher et. al. 2006)
  • IRENA - International Renewable Energy Agency. IRENA is an international alliance of 82 countries that have agreed to collaborate to promote a rapid transition to renewable energy on a global scale. Among the states that have signed the Statute of Agency are 30 African, 27 European, 17 Asian and 8 Latin-American countries. The agency aspires to provide access to relevant information such as reliable data on the potentials for renewable energy, best practices, effective financial mechanisms, and state-of-the-art technological expertise. [12] To date, the US and China have not joined IRENA though Rep. Ed Markey of Massachusetts introduced a resolution in March asking Congress and the President to consider joining. As the world's two largest carbon emitters and countries where a great deal of renewable energy technology innovation is happening, it would be monumental for these countries to agree to join.
Movements toward strengthening IP rights
  • IDEA - Innovation Development Employment Alliance. While IRENA and Rep. Markey are hoping remove the barriers to renewable energy technology development created by intellectual property rights, IDEA is pushing for the opposite. The Alliance believes that ideas must be respected, encouraged and protected, and that strong intellectual property (IP) laws provide the incentive to transform ideas into products and services to improve and enrich our lives. [13] The goal of the Alliance is to encourage Congress and the President to maintain strong IP protections and not to follow the statements of Rep. Markey and the Secretary of Energy, Steven Chu, who stated that the US should strive to share all intellectual property in renewable energy technology collaboration.

*What are the main business models?

coming soon

*What are the innovation dynamics in this field? (inputs/outputs, timing of innovation/ disruptive or incremental innovation?)

Energy-technology innovation does not take place as a linear, sequential process, rather the theory, as offered by Gallagher, Holdren and Sagar 2006, which is an amalgamation from various other experts, is that it is a chain-link model that accounts for two-way learning and includes the various actors and the supply-push and demand-pull public policies that stimulate supply and demand in the industry. The stages of innovation can be regarded as fundamental research, applied research, development, demonstration, pre-commercial and niche deployment, and widespread deployment (diffusion). Technology transfer between countries can also be regarded as part of diffusion. (Gallagher et. al. 2006)

Typically, in industrialized countries, the government tends to provide R&D funding earlier in the technology innovation process, around the fundamental research stage. The funding from private organizations tends to increase at the applied research and development stages as private companies have more interest in funding technology closer to the deployment stage where they are more likely to make a profit from the technology. Governments have also come to realize that private companies do a better job of moving later stage technologies from the development stage to the market, because that is their specialty. (Gallagher et. al. 2006)


Recent patterns of alternative energy technology innovation in OECD countries have shown that the private sector provides the majority of expenditures for energy R&D, though governments provide a large portion as well. Still, it is difficult to pinpoint the level of support for different technologies from different actors in different countries due to the lack of available data. (Gallagher et. al. 2006)

  • International and national government demand-pull policies have been a main driving force behind innovation in the alternative energy field. (Weiss & Bonvillian 2009)
  • Germany, Spain and Denmark are three countries that have been world leaders in alternative energy production both from the production of electricity from these technologies, and the production of the technology itself.
  • The main government subsidy program used in these countries is a feed-in-tariff (FiT), which pays the owners of the technology a premium fixed price for the electricity they produce, which is contractually guaranteed for 20 years.
    • The alternative energy producer is also guaranteed a free interconnection to the electric transmission grid and the transmission grid operators are contractually obligated to buy every kilowatt hour of electricity the alternative energy producer creates.
  • The Feed-in Tariff has created stable long-term markets for alternative energy technologies in the aforementioned countries, and the accelerated development of the technology markets has caused rapid innovation in alternative energies to bring costs down and ensure the highest profits for the energy producers.
  • Similar policies in the US, like the tax credits, PURPA, and RPS policies mentioned above, have been effective but not as powerful as the Feed-in Tariff.
  • Government subsidies in response to climate change, energy security, and environmental damage concerns - raised by coal, natural gas and oil electricity generation - have resulted in increased government R&D funding for alternative energy technologies in the US and abroad.
  • In the US, disruptive patterns around both technology innovation, and market growth in alternative energy, can be observed based on the support of government funding for R&D and for subsidy policies.
    • The Federal tax credits for alternative energy developments, the Investment tax Credit (ITC) and Production Tax Credit (PTC), have been inconsistently approved by Congress for short periods of a few years, making the financing for new AE plants either affordable - when the credits are in force - or unaffordable. AE technology development and deployment has experienced boom and bust periods due to the ineffective application of these policies.
    • Funding for R&D by the US Government reached it's all time high of 2.9% of GDP during the space race and dropped significantly after that period. It has finally started to rise again, but energy is still vastly underfunded.

*How does knowledge flow in this field?

  • In the US a standard simple view of knowledge flow starts at the basic research level with innovation being developed at universities, government and private labs and in some cases in the labs of individual inventors. These innovative ideas are then often shopped out to prospective funders like venture capital firms, private equity groups or the government. The technology winners are picked by either the government or private industry, and the market for the technologies is determined by the demand-push policies that incentivize their use in the US.
  • The technology knowledge that is developed in public and private labs will most likely be patented and the licensing costs vary.
    • More research is necessary to determine the costs of licensing and the barriers created at this stage of knowledge sharing.
  • A more complicated and nuanced look at the knowledge flow shows many barriers and missed opportunities.
    • Despite a great deal of innovation that has taken place in universities and government labs, this knowledge often falls into the "valley of death" - the area between technology innovation and technology deployment. This happens because there is often a lack of funding for demonstration projects which allow the technologies' inventors to show working models of their innovation, or, in the case of government labs, their is a lack of knowledge and experience in the private sector which disallows a successful transfer of technology from the lab to the private sector.
    • When the government is left to choose technology winners there are political factors that trump the practical funding of all needed and marketable alternative energy technologies.
      • Oil, coal and gas lobbyists will fight to have the government suppress technologies that are disruptive to their industry, or technologies - like carbon capture and storage - which make their business more expensive.
    • When the market chooses the winners, economic factors are the more important driver.
      • When government demand-pull policies are sufficient for a wide variety of technologies, the diffusion of the new technologies can be widespread.

*Is this field replicating models from other fields?

The alternative energy sector does not mirror the technology revolutions of the past due to a few differences:

  • Alternative energy is a collection of various technologies unlike past technology developments, and therefore the cost (in public and private R&D) of development is much greater, and the landscape for AE technologies is much larger and much more complicated.
  • AE has to be comprised of various technologies, because any one technology alone cannot ween the US or any other country off of fossil fuels
    • This has to do with the higher cost of the technologies, the intermittency of wind, solar and tidal/wave, the locational constraints of different technologies based on resource quality, and electrical grid transmission constraints due to technology location.
  • There is significant investment and lobbying for the oil, gas and coal industries, and many AE technologies are trying to provide direct competition to their market share.
    • The oil, gas and coal lobby is exerting heavy pressure against the market entry of new technologies.

The result of all of these factors is a market landscape that is unmatched in our existing technology histories. (Weiss & Bonvillian 2009)

*How many companies?

  • Due to the fact that the alternative energy sector is very young and just starting to grow, the number of companies that are competing for the global market in wind, solar and tidal technologies is quite small.
    • In solar PV technologies, 10 companies produce 64% of the global share of technology. Top Ten PV Companies

*How much money do they make or how much money do they “move” in the American economy?

coming soon

*How important is research from universities in this specific field?

Research from universities is very important. Much of the new innovation in the field takes place at these institutions though there is a disconnect between initial research & development (R&D) and the step to market deployment. Venture capitalists are wary of making initial bets on early innovation at the university level, and therefore many promising technology innovations are lost in the "valley of death," the area between initial R&D and the step to market deployment. The US government exacerbates this issue by developing policies that pick technology winners rather than adopting a technology-neutral approach to help all alternative energy technologies make it to market. The other major hurdle for all AE technologies is the powerful oil and gas lobby and the US subsidies for these types of energy production, which make it very hard for new innovations to supplant the incumbent technologies, and also very expensive to do so. (Weiss & Bonvillian 2009)

*How important is public funding in this field?

Investment history

Compared to other major federal R&D efforts that met historic technology challenges like the Manhattan Project, the Apollo Project, the Carter-Reagan defense buildup, and the doubling of the budget of the National Institutes of Health, the current levels of expenditure on energy technology pale in comparison. Since its high point in 1980, federal support for energy R&D has fallen by more than half, and indications are that private-sector energy R&D has similarly fallen. (Weiss and Bonvillian 2009, 9)
The Obama Administration has made promising changes that could rectify the funding shortfalls. On April 27, 2009 the President announced that he hopes to raise the level of R&D funding in the US to over 3% of GDP, a higher level than was reached during the space race. One of the main research areas for this funding would be alternative energy. [14]

Public Funding and Technology Policy

Public funding, inside an appropriate technology policy, is crucial to drive the market for alternative energy. Proper technology policy can only encourage the development of various different and crucial alternative energy technologies if it combines various factors such as more applied scientific research, important regulatory changes, appropriate infrastructure, public acceptance and early high-cost investments. A failure on one or more of these points could kill the technologies. (Weiss and Bonvillian 2009, 8, citing Jeffrey Sachs)

  • Research in Europe has shown that innovations in the wind industry are induced by deployment policies like the feed-in tariff used in Germany, Spain and Denmark, but that public R&D, while reduced, still plays a role in this innovation. The unfortunate side affect of the successful growth of the wind industry in Germany, Spain and Denmark has been a high degree of "protectionism" of the technology, which could hurt the long-term technological development. (Soderholm & Klaassen 2006, 184)
The Importance of Public Funding to Face Sectorial Barriers

Due to the barriers created by the oil, gas and coal lobby and these incumbent's dominant stature in the energy field, alternative energy faces a significant challenge to gain a foothold in the market. This makes public funding crucial. Other factors that make public funding indispensable for AE are:

  • Technologies like wind, solar and tidal/wave are more expensive than coal or natural gas plants, and produce less energy for the land area of the AE plant.
  • The intermittency of the electricity produced by wind, solar and tidal/wave makes it difficult to predict when there will be usable electricity being fed into the transmission grid.
    • The transmission grid requires a constant steady flow of base-load electricity to remain stable, wind, solar and tidal/wave compromise this stability.
  • Wind, solar and tidal/wave plants require a great deal of land/coastline, and the logistics of running transmissions lines from these plants can be very expensive and legally difficult.
Main government policies

*How important is private funding / venture capital in this field?

  • According to a 2006 report on Energy Technology Innovation by Kelly Gallagher and John Holdren of Harvard’s Kennedy School of Government, the private sector contributes more R&D funding to alternative energies than the public sector. The specific amounts and the technologies that they are devoted to can be difficult to track down though because the R&D investment numbers are considered proprietary information. (Gallagher et. al. 2006)
  • Since 2007, Cleantech companies have begun negotiating strategic alliances with Fortune 100 companies like Chevron Texaco Technology Ventures, which invested in BrightSource Energy Inc., a developer of utility-scale solar plants, Konarka Technologies, Inc., a developer of photovoltaic materials, and Southwest Windpower, a producer of small wind turbines. The alternative energy sector is experiencing a more competitive commercial environment due to non-financial drivers such as regulation, political will, and fears over energy supplies, which present unique challenges for technologies susch as wind energy, solar energy, and biofuels. (Ward et al. 2008, 243)
  • Private investment in research for alternative energy technologies to replace the incumbent fossil fuel technology has been discouraged by the history of wild oscillations in the price of energy. Oil has been particularly volatile over the past two years when we saw it rise to over $140 a barrel, then drop precipitously, and now begin to rise again. These peaks and valleys make private investors ambivalent about investing in alternative energy technologies because only sustained high prices for oil will provide the appropriate economic climate in which alternative energies can be profitable. Research has shown though that the rising prices for oil are tied to increased demand from developed and emerging economies, which, if sustained, could change the private investment climate for new technologies in the future. (Weiss & Bonvillian 2009, 7)
  • The global financial meltdown has not spared the alternative energy sector. In the first quarter of 2009, venture capital (VC) investment in alternative energy technologies, which drives a disproportionate amount of financing in new technologies, retracted drastically. There was only $154 million of VC investment in 33 young companies, a drop of 84 percent from the last quarter of 2008 when, according to PricewaterhouseCoopers and the National Venture Capital Association, they invested $971 million in 67 start-ups. This was the lowest level of VC investment in alternative energy since 2005, before these technologies became a popular new trend in the Silicon Valley. [15]
    • Venture capital professionals note that the credit crunch has been a major factor in this precipitous drop-off.
  • private funding for R&D is most important for the less mature developing technologies like solar photovoltaic cells and tidal energy technology, but typically, VC firms will only invest in more mature and promising technologies, preferring to limit their risk of losing money on unsuccessful technology bets.
  • private funding in onshore wind technology has been focused more recently on marketing and growth as opposed to technology development. This is due to wind technology’s maturity and the fact that it has become the least-cost renewable technology, spurring increased development of new wind farms. Offshore wind technology still presents a developing technology sector that requires significant private and public R&D investment.
  • Market analysts have expressed their opinion that most of the private sector investment in alternative energies is coming from VC firms followed by private equity firms, banks, brokers and finally insitutional funds. In 2007 there were at least 100 VC firms investing in alternative energies. (Capello 2007)

*Are there any specific public policies (from agencies, federal or state policies) that give incentives for openness or enclosure?

  • R&D funding is provided by Department of Energy through the national energy laboratories listed under public funding.
    • These labs offer technology transfer programs that license their patents to interested private-sector companies.
    • There is also a Cooperative Research and Development Agreement (CRADA) for collaboration between a lab such as The National Renewable Energy Laboratory, and a partner company. "It (CRADA) protects a company's and NREL's existing intellectual property, and allows the company to negotiate for an exclusive field-of-use license to subject inventions that arise during the CRADA's execution." [16]
    • These CRADA agreements can be:
      • "Shared-resources" which means the research is funded by the government and is part of ongoing research at NREL. In this case no funds change hands.
      • "Funds-in" which means the partner will pay for all or part of the research, but NREL does not provide the partner with any funds.
  • Further research is required to determine how the above policies may incentivize openness or enclosure.

*What is the cost structure of the field?

  • The main issue for alternative energy generation is that it generally costs more than conventional sources of energy like coal, natural gas and nuclear generation.
  • The cost of electricity is typically measured by an average price per kilowatt hour ($/kWh) of electricity generation, or the "generation cost."
  • The generation cost of coal, natural gas and nuclear electricity is lower than alternative energies because the energy plant infrastructure and technology has been developed over a long period of time and the costs have come down due to the large economies of scale.
  • The captial expenditures and labor cost of new conventional energy plants are lower due to vast information diffusion and streamlined building processes.
  • Among the alternative energies we're studying, wind energy is the cheapest to develop because it is the most mature and most prevalent alternative energy worldwide (outside of hydropower).
  • Solar and tidal technologies are less mature and cost more than wind to develop.
  • Tidal energy is a new and very immature technology, which has high costs and very little diffusion in the world market.
    • It is not targeted in government subsidy policies as much as wind and solar due to its high cost and relative immaturity in the market.

*Who are the producers, the buyers, and the users?

Alternative Energy Technology

  • The producers of alternative energy technologies are universities, the government, for-profit companies, and non-profit companies.
  • The buyers of the technology are alternative energy plant developers, individuals, communities interested in co-op electricity production, and sometimes large electric utilities.
  • The users of the technology are the utilities, the developers, the communities, and the individuals who purchase the technology.

Electricity produced by Alternative Energy Technologies

  • The producers of alternative energy are the alternative energy plants
  • The buyers of alternative energy are the utilities and the consumers
  • the users of alternative energy are the residential and commercial consumers

*What is the structure of power from the production side and what is the structure of power in the demand side? E.g., who has the power to control production and demand? How is the control distributed?

  • The production of alternative energy technologies is controlled by private companies and the government.
    • While private companies control a lot of the solar, wind, and tidal technologies and bring them to the market, the government has a lot of control on the market demand through subsidy policies.
    • When there are generous government policies encouraging the adoption of alternative energies in the US, the demand for the technologies increases pushing the production side.
    • When the government subsidy policies lag or are allowed to expire, historically, the alternative energy markets have stagnated, limiting demand and production.

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