Innovation Blog - UCI Paul Merage School of Business : Renewable Energy, Technology

Little Green Companies Coming to a Planet Near You

Lynda Lawrence — Thu, 30 Jul 2009 22:48:00 GMT

Business Week calls them under-the-radar start-ups in alternative energy, and warns that they may not be the ground floor opportunities that investors are seeking. What’s amazing about this list, however, is the wide range of approaches these companies are taking.

Geothermal energy. Making ice at night. Cylindrical and thin film solar cells. Wind turbines that fit on a house. Ocean and river generators. A truck-top plant to convert industrial waste to biofuel. New ways to conserve, meter, and sell energy. New ways to finance solar panels. Algae for jet fuel, and that elusive clean coal technology.

Maybe none of these will work commercially. Maybe all of them. More likely, some portion of these and others that are not on the radar screen this month will be changing the way we run our homes, offices and vehicles over the next few decades.

If any of these technologies work, we could be on the verge of a new industrial revolution—one that won’t take our depleted natural resources for granted. When everyone is busy looking backwards at how we got ourselves into this financial and environmental mess, it’s exhilarating to see how we just might find out way out.

The Next Energy Innovators, BusinessWeek

The Lost Decade

Lynda Lawrence — Wed, 17 Jun 2009 21:56:00 GMT

Despite our shiny new iPhones and flat screen TV’s, the June 15th cover story in Business Week laments that in the last decade American innovation has failed to live up to its promises. No cure for cancer. Still driving gas guzzlers.

In fact, Mandel suggests that our inability to commercialize the breakthroughs of the late nineties has contributed to our trade deficit and our financial mess. From hydrogen fuel cells to biomedical advances, everything proved more difficult to get to market than they anticipated.

What he doesn’t mention, however, is the role of public policy in those delays. Stem cell advances were waylaid by inserting religion into the scientific realm. Lobbyists for the big car companies fought funding for alternative fuels (and how is that working out for us—or them?). Massive off-the-books expenditures on the Iraq war precluded even modest research spending on new science, health care and technology.

If, as most economists agree, we must innovate to climb out of the recession and fuel a new economy that will put our educated work force to work, we must have public policy that supports innovation. There are some promising baby steps in the stimulus bill, but the recession has forced cuts in programs for fuel cells and other scientific advances. And private industry is not in a position to make up for government shortfalls.

While Mandel cites several areas where new products are about to be launched—like the first new drug for gout in 40 years—if government and private industry don’t invest in education and innovation now, we could spend another decade falling behind.

Design Innovation & Research Conference

Lynda Lawrence — Fri, 02 Jan 2009 22:59:00 GMT

Why on earth is this fellow driving on the highway with a metal helmet blocking his view? Why is mythology important to the launch of the world’s least expensive car? What do consumers mean by “green” behavior? What do different family members want from their computers, and how do neighborhoods use private computer networks? Why does design thinking drive everything from retail store experiences to new products to social networking?

These topics were just a fraction of the insights in the Design Innovation and Research Conference organized November 15 by Alladi Venkatesh, Lynda Lawrence and Raymond Pirouz of the Paul Merage School of Business, co-sponsored by the Design Alliance and CRITO.

Gathering experts from the U.K., India, and all over the U.S., the conference offered the latest research, design publications, ethnography, semiotics, and business case studies to reflect the importance of integrated design from the consumer, designer and business perspectives. In a world where innovation is key to success, design thinking is increasing vital in every aspect of life and business.

For more information and complete presentations: Design Innovation & Research Conference

Does Government Play a Role in Innovation?

Mike Mata — Wed, 03 Sep 2008 00:05:00 GMT

Much of the time our gut reaction is that the best action that government can take to foster innovation is to stay out of the way. But, are there examples for governmental involvement?

One case where the federal government’s involvement helped spur rapid innovation is the origins of the internet. In this blog post I won’t try to retrace the complex history of the internet (see Wikipedia or Internet Society) but, suffice it to say that DARPA’s (Defense Advanced Research Projects Agency) leadership in packet switching (one of the key components of networking), hypertext, and a national level network (ARPANET) among many other related contribution were fundamental keys to the origin of the internet. Also, the first graphical browser (Mosaic) was developed by a team at the National Center for Supercomputing Applications at the University of Illinois at Urbana-Champaign. The financial support for this effort came from the High-Performance Computing and Communications Initiative, a funding program initiated by then-Senator Al Gore's High Performance Computing and Communication Act.

Now there is a growing national consensus about the benefits of gaining energy independence through renewable sources as a long-term solution to high gasoline prices, fossil fuel availability and global warming. In the U.S., one of the catalysts for making the current generation of windmills, solar panels and biofuels cost competitive is federal and state investment and production tax credits. Without these credits current renewable energy manufacturing and large scale installations have the potential to be reduced dramatically. For example, Congress let the federal tax credit expire in 2000, 2002 and 2004. Subsequently, wind capacity installation dropped 93 percent, 73 percent and 77 percent, respectively, from the previous year.

But, today even as the presidential candidates talk about their plans for strategic investments in a clean energy future, the current federal tax credits are scheduled to expire at the end of this year. Without Congress renewing these credits, renewable power firms are planning to cut, not grow, their investments and deployments (Yahoo News). This uncertainty regarding tax policies creates uncertainty for firms and investors in energy projects that take many years to gain a return.

Even if the current federal tax credits are extended, it is interesting to see how the particulars of the tax code impacts energy innovation. Rather than try to outline all the complexities and implications of the current U.S. tax code and energy regulations; I will outline a few highlights of the current situation with solar energy and how they impact investments in accelerating deployments and innovation.

Publically owned utilities are generally ineligible for federal solar tax credits (versus independent power producers and residential customers). And, excess solar energy that is created on the customer side of the meter (e.g., residential or commercial solar power) is often credited back at retail not wholesale prices (net metering) which reduce overall utility revenues. Even if utilities purchase energy from large scale independent solar farms, they are not able to earn a return as regulations allow them to only earn a return on assets - not costs. This results in large scale solar farm produced energy as not being economically viable for investor owned utilities.

Some individual states are trying to counter the financial disincentive for utilities to invest in solar by accelerating the use of Renewable Portfolio Standards. RPS’s require utilities to increase the percentage of their electric sales from renewable resources (often with carve outs for specific technologies such as solar) by specific dates. But, RPS compliance by utilities does not enhance their business prospects so there is no need for them to go beyond what is mandated by the states. And, identifying new business models is not generally a highly regulated industry’s focus or experience. But, there is some light at the end of the tunnel as a few utilities are investigating ways that they can “own” solar assets which will likely require regulator justification to pass costs to general ratepayers or provide programs for rate payers willing to pay a premium. For innovative and patient entrepreneurs that are working in this strategic industry, there is hope that the current presidential candidates are talking about creating comprehensive renewable energy plans. So, are solar and other renewable energy technologies one of those exceptions where early governmental investment or regulation is beneficial to the business of innovation?