Alternative Energy/Competitive advantages in AE

Answer the question

Define the competitive advantages in the field and the barriers of entry

Geographic Variations

• States with better renewable resources (solar resource in sunny southwest states, wind resource in windy mid-west and west Texas, tidal/wave resource in coastal states, geothermal resources in western states) can take advantage of better payback metrics for development of an AE plant because they will produce more electricity and therefore make higher profits.
• AE plants that are located closer to transmission wires can take advantage of a cheaper interconnection cost.
• State policies for AE plant development vary and can b more generous in some states than in others. The technologies that are supported can also vary.
• R&D for new technologies will depend on access to university researchers and professionals, which are typically clustered in particular areas of the country.
  • the US Department of Energy laboratories are often clustered near these research centers.

Financial Variations

• R&D funds for AE have been dropping since the 1980's and the focus has been on "back-side" policies, which fund the deployment of the technologies, but not the development.
• Universities are investing more in R&D due to the interest in new technology developments.
• The government labs need to invest more in R&D, and the Obama Administration is starting to build support to raise R&D spending as a fraction of GDP to over 3%, higher than the spending levels during the space race. [1]
• The US has had ineffective policy support for back-side subsidies and tax incentives which create the market for AE in the US.
  • The result has been boom and bust periods of AE plant development as the economic factors get better or worse for the investors.

The more stable and low-risk the policies for AE plant development are, the more investment there is in the technology, which in turn brings higher profits to the companies and fuels economies of scale and dropping technology prices.

• R&D funds and "front-side" policies to incentivize development of new innovations in the technology, are dependent on the governments interest in fueling new growth in the energy sector.
  • existing subsidies in the oil, gas and coal sector, along with significant lobbying power in these industries has stifled R&D funding to new AE technologies that will compete with the fossil fuel incumbents.
  • The US Department of Energy funds more R&D for weapons than for AE in the energy labs.

Intellectual Variations

• patent portfolios

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