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Precourt Institute for Energy Advisory Council
April 21, 2011
Dan Reicher Executive Director Steyer-Taylor Center for Energy Policy & Finance Stanford University
“The future is not what it used to be.”
Paul Valery French Writer (1871-1944)
Gulf Oil Spill
Fukushima Reactors
“The best way to predict the future
is to invent it.”
Alan Kay Computer Scientist
“Biggest Economic Opportunity of the 21st Century”
The International Energy Agency estimates that the world will have to invest more than $26 trillion in energy infrastructure to meet currently projected demand between now and 2030….
The Elements of Success
Efficiency First!
“All people want is cold beer and hot showers.” - Amory Lovins
We are interested in the services energy provides, not the energy itself. How much energy we use to cool the beer and heat the water is a choice we make.
McKinsey & Co., A Cost Curve for GHG Emissions
Building A Fridge to the 21st Century
Source: U.S. DOE
“If you cannot measure it, you cannot improve it."
-- Lord Kelvin
12
How many kW-h do you use each day?
What appliances use the most energy?
What time of day do you use the most energy?
How much have you spent today? this week? this month?
How informed are energy consumers?
You expect more in the grocery store….
14
ET Meets IT
Photos: NREL; blueacorn.com
Knowledge Is Less Power
Messaging and Co-Branding
4
8
6
2
10
Levelized Cost C
ents/kWh
Coal IGCC
Geothermal Natural Gas
US Pulverized Coal
Wind Solar Thermal
14
16
18
20
Nuclear
22
12
Coal IGCC/CCS
Chinese Pulverized Coal (and U.S. efficiency)
PV
Renewables Can’t Yet Compete with Coal
Generation Type
Enhanced Geothermal Systems (EGS)
• Vast and ubiquitous resource • Base-load, like coal • Cost trajectory < 4 cents/kWh • Scalable projects – 5-500 MW • No scientific show-stoppers • Potential for CO2 Sequestration
-- BUT -- • Commercialization risks
o High cost of innovation o High cost of site viability o High cost of drilling o Not yet commercially proven o Inadequate government support o Induced seismicity question
Geothermal Resource (3-10 km): Texas
21 21
DOE’s 20% Wind Energy by 2030 scenario includes a significant amount of offshore wind (54 GW), much of it in the Mid-Atlantic region
21
Off-Shore Wind Resource: Maine to Florida
The Dog Finally Caught the Car!
24
Chevy Volt
26
Distributed Generation Meets Smart Vehicles
Smart Charging Demo
• Prototype aggregation system and vehicle dispatch algorithms
• Real time dispatch of 8 plug-in Priuses commanded from grid operator data
• Smart charging could help integrate plug-ins and intermittent wind and solar into the grid on a large scale
28
Renewable Source Advanced T&D Smart Home Plug-in Vehicle
Tomorrow’s Smart Grid
Technology, Policy and…..Finance: A Critical Role
Risk and Capital: The “Valley of Death”
Capital Required
Risk
VC Capacity
Venture Capital
Low
High
Low High
Project Finance Growth-stage investing
Risk tolerance level: Project finance
VC Investments
Project Finance Investments
Graph Source: Tana Energy Capital LLC
Commercialization Investments
The “Valley of Death”
Meanwhile China is Gearing Up in Manufacturing…
XI’AN, China — For years, many of China’s best and brightest left for the United States, where high-tech industry was more cutting-edge. But Mark R. Pinto is moving in the opposite direction……
And China is Drawing High-Tech R&D From U.S.
Technology, Finance and Policy: Washington’s Critical Role
“We need both a significant price on carbon and complementary energy policies.”
The Stimulus: A Helpful Start
• Unprecedented investment in clean energy: > $50B
• Many mechanisms: e.g. R&D, loan guarantees, tax
credits, block grants
• Many focus areas: e.g. smart grid, energy efficiency,
renewables, hybrid vehicles, weatherization, nuclear
• Many agencies: DOE, Treasury, Ag, GSA, DOD, DOT
• Tight timeline: ~2 years
34
Beyond Stimulus: Three Critical Energy Policy Needs
• Increase federal energy R&D funding from $4-5B today
to $15-30B annually as President Obama has called for
• Adopt federal legislation establishing a national Clean Energy Standard (CES)
• Create the Clean Energy Deployment Administration (CEDA) to help finance commercial-scale “Valley of Death” energy projects
Steyer-Taylor Center for Energy Policy and Finance A joint center of the Stanford Law School and Graduate School of Business funded by Tom Steyer and Kat Taylor and launched in January 2011 • Mission: To explore and advance innovative approaches to policy and finance that can accelerate the development and deployment of clean energy
• Policy to set the stage for fundamental change in our energy system • Finance to make things happen – from early stage R&D to the broad-scale deployment of clean energy technologies
• Focus: From renewable energy to energy effciency to advanced fossil and nuclear technologies
• Including new generating technologies, advanced manufacturing facilities, green buildings, and fuel-efficient vehicles
Research and develop public and private finance mechanisms to help raise capital to move clean energy technologies from pilot-scale to fully commercialized projects and products
• Research “Valley of Death” problem and solutions • Support creation of new public and private finance mechanisms • Explore areas of cooperation and competition with China
Help shape and advance new laws and policies to advance clean generating technologies and dramatically expand energy efficiency in homes, office buildings, factories and cars
• Federal R&D funding • Clean Energy Deployment Administration • National Clean Energy Standard • Access to energy information • Carbon price
Initial Projects: Some Examples
Fall 2011: New Course
“Cleantech: Business Fundamentals and Public Policy
Prof. Stefan Reichelstein Prof. Dan Reicher
“Where oil fields are really found, in the final analysis, is in the minds of men…”
W.E. Pratt, 1952
After all….