Commentary: Understanding Innovation in the Energy Sector

by Sumesh Arora, Director, Strategic Biomass Solutions & SAFER Advisory Council Member

Overall, our nation still produces only about seven percent of its energy from renewable resources. Developing new processes to harness solar energy, by imitating photosynthesis for example, are typically very expensive ventures and take years to develop. In other words, the proverbial “valley of death” for innovation and technology development in the energy sector is very deep and long. Unlike a typical information technology venture, significant investments and rigorous testing are required at various production scales. In many ways, this valley of death resembles the medical biotechnology development process. Here it takes a billion dollars and 10 to 15 years to bring a drug on the market. A clinical trial failure results in major financial losses, adds time to the development cycle and extends the period before the company is cash flow positive. While block-buster drugs have brought multi-billion dollar profits for drug makers in some cases, it remains to be seen how the energy markets will react to a radically different technology for producing energy outside of existing business models.

Read the full article here.

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