The concept of “energy innovation” inevitably conjures up images of cutting-edge conservationism and new energy sources such as biomass, wind power, and hydrogen fuel.
Much in the way that nanotechnology is making waves, renewable and smart energy are causing a buzz in the marketplace. But what is being done to harness this potential and transition these technologies from bright ideas into real-world applications?
The average timeframe for a new technology to enter the market is seven years. Most alternative energies won’t experience market penetration until 2020. However, the demand for more efficient energy is reaching epic urgency.
In 2005, the federal government initiated the Energy Policy Act, and 22 states now have renewable energy portfolio standards or mandates in place. The only way to ensure supply meets demand is to speed up the cycle and help companies more rapidly develop and introduce new technologies to market
The Northwest is ripe for emergence as an energy “power block.” It has the highest concentrations of hydroelectric, geothermal, wind, biomass and solar power in the nation. Washington, Oregon and Idaho have more than 70 percent of their electricity provided by renewable energy. The region also has unparalleled reputations in environmental consciousness and entrepreneurial culture making it a model breeding ground for scientific breakthroughs in renewable and smart energy.
The Northwest Energy Technology Collaborative (NWETC), a regional alliance of five U.S. states and two Canadian provinces, is working to leverage this natural aptitude and position the Northwest as a world leader in energy innovation. The vision behind NWETC is that by creating a regional partnership that serves as a central hub for identifying and capitalizing on new energy opportunities, companies stand a greater chance of achieving commercial success.
Building a Regional Brand
A number of U.S. states are making plays for energy markets. A few, such as California, Connecticut and Texas, are investing millions in energy industry development. This rush to capture market share is stirring up state-to-state rivalry, providing even greater appeal to brand the Northwest as a diverse, energy-rich region in order to gain competitive advantage and build awareness around available energy technologies and commercial-ready products.
NWETC has the advantage of being the only regional effort to develop and market an energy industry power block. Each state and province in the Northwest has independent energy assets. Individually, they stand to capture a small market share. Collectively, they become a dominant leader in new energy solutions. One example is the re-direction of the region’s existing strengths in software and semiconductors to the smart energy market, already valued at $15 billion worldwide. Developing new backend solutions and advanced materials for grid efficiency will only increase the Northwest’s already growing share in this market, currently estimated at $2 billion.
Access to Capital
Readily available funding is a critical element in ensuring a new business venture makes the leap from concept to commercial offering. NWETC identifies financial incentives offered by state, federal and private utilities, and connects them to entrepreneurial energy companies. These opportunities represent hundreds of millions of dollars earmarked for energy technology research and development. NWETC’s website lists available private and public grants, making it easier for companies to identify and compete for these financial awards.
Seattle has the highest private investment activity related to energy funding in the U.S., but it isn’t enough to meet the needs of this fast-growing sector. NWETC is working to create new funding sources for energy.
Energy Venture Northwest, a venture capital forum, helps energy start-ups access regional equity capital. Through this forum, investors have an opportunity to support some of the Northwest’s most promising energy offerings. Entrepreneurs get the opportunity to pitch their ideas before venture firms with a reputation for financing energy-related businesses. Now entering its third year, Energy Venture Northwest has helped 15 companies polish their presentations skills and present to venture firms for funding. Many of these companies have progressed to national venture forums such as CleanTech and Clean Energy Venture.
Northwest Energy Angels, a new program for 2006, is an initiative to build a regional network of angel investors who have interest in, and experience with, energy-related technologies and businesses. Creating an energy-focused angel investor network provides a more direct and readily-available source of seed funding for companies entering the market space, as well as identifying a talent pool of industry-savvy mentors and consultants.
Next to funding, market entry is the biggest challenge facing energy technology companies. The Northwest Energy Technology Showcase (NETS) is an annual program that allows a select group of energy innovators to present their products and services to regional energy buyers. To date, 24 companies have participated in the NETS program with great success.
NWETC’s Regional Test Bed connects energy innovators with major utilities as means to test products in the field. One of the largest roadblocks facing a company entering the field testing stage is finding a location and utility willing to work with them in a timely manner. The Regional Test Bed aims to improve this collaboration and turn-around time.
Collaboration is another key principle of NWETC’s regional commercialization strategy. The Bio 49 Degrees Project (Bio49) is a perfect example. Bio49 is a cross-border initiative to reduce diesel emissions from utility trucks by switching to biodiesel fuel. This project involved multiple stakeholders from Washington and British Columbia and received grant support from the U.S. Environmental Protection Agency. What makes Bio49 work is the collective investment of its partners. Without the ability to identify funding and field trial partners through NWETC, this project would not be a reality.
Just as small businesses band together through cooperatives to leverage their buying and selling power, NWETC has created a regional alliance that will operate as an industry trading block. This regional alliance is a testament to the sum equaling more than the parts. Adopting a collaborative approach to branding, funding, and resource management is transforming the Northwest from a geographic area with energy technology potential to a powerful force in the economic landscape of energy innovation.
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