MIT’s New Perspectives on Energy Innovation

When MIT spends three years studying something, it’s probably worthwhile to pay close attention to the results. In this case the university is calling for a new framework for spurring innovation in how energy is produced, delivered and used.

Basically put, think regionally for solutions because the federal government is “structurally unable” to be the horn of plenty and innovation in this arena.

MIT found that while the world really needs innovation in energy technologies, it should to be kick-started through fundamental changes in energy research and delivery. A new system of policy and investment strategies will accelerate innovation in the U.S. to achieve the trifecta of meeting energy needs; reducing carbon emissions and easing insecurity over energy supply. The solution will not necessarily rest on big ticket government-funded Manhattan Project-type programs, but rather on smaller, more local and regional projects and investments.

The conclusions of the MIT study are described in a new book — Unlocking Energy Innovation (MIT Press, 2012) — by Richard Lester, the Japan Steel Industry Professor of Nuclear Science and Engineering at MIT, and David Hart, a professor of public policy at George Mason University.

Lester says that without systematic, transformative changes, the US is unlikely to succeed either in averting the worst economic and environmental consequences of climate change or in achieving a secure, affordable and reliable energy supply.

“Innovation doesn’t just emerge out of thin air,” Lester continues. It requires a “productive ecosystem” that includes public and private research laboratories; small and large firms; financial intermediaries ranging from huge banks to individual “angel” investors; schools, community colleges and universities; and local, state and federal agencies.
“We face a very big innovation challenge over the next few decades,” Lester says, “bigger than most people recognize. And the system as a whole isn’t close to being up to the task.”

In the book, Lester and Hart identify four stages in which an innovative technology becomes an established part of the energy infrastructure. Of those, the first stage — the discovery of new technological options — and the final stage — fine-tuning of technologies already in commercial use — are relatively well-managed, though both will need more investment.

The two middle stages are less well managed, they continue. “These stages, spanning what is often referred to as ‘the valley of death,’ include the development of prototypes to demonstrate viability in the marketplace and the initial implementation of the first full-scale systems by early adopters in the marketplace.” These intermediate stages are costly and pose high investment risks, and even “a modest carbon price will do little to accelerate them.”

Several steps are needed to encourage energy innovation, according to the book: competition (while leaving space for new market entrants), making rigorous and timely selections of promising concepts, and matching the scale of the system to the scale of the need. “The current system satisfies none of these,” Lester says.

Since coal and natural gas represent about 70 percent of all electricity generation in the US, finding cost-effective ways of replacing those fuels and mitigating their emissions are critical, the book says.

One specific idea the team advocates is a regional approach to managing and financing those two intermediate stages of innovation.

While the rest of the world watches the gridlock in Washington, innovation and the new energy grid suffers, so the case for regionalization on energy becomes more compelling—and necessary.

[Image credit: Power Grid by martcatnoc via Flickr Creative Commons]