Cleantech Market Intelligence
Bill Gates: How to Fund Energy Miracles
Through the Gates Foundation, Bill Gates has taken a stand on improving global public health, investing in programs focused on basic advances such as developing a next-generation condom to prevent the spread of sexually transmitted diseases, creating a standalone vaccine cooler for communities that are stranded without electricity, and inventing a toilet that can solve sanitation issues by pyrolizing human refuse into something more usable (using solar power, no less). Meanwhile, Gates is also challenging U.S. energy policymakers and their funding practices for energy R&D.
In a June blog post titled “We Need Energy Miracles,” Gates called for the United States to look hard at R&D allocations, potentially redirecting funding from the military and healthcare sectors toward energy research and pilot projects (presumably renewable ones). Given the imperfections (intermittency, inefficiency) of existing renewable resources, Gates argued, this research is necessary to establish an equitable energy mix, both in the United States and abroad – especially in developing nations that must increase energy use to grow their economies. He stressed the need to invest in projects that are “high risk/high reward” in order to achieve the sort of miracle needed to support growing demand and limit climate change.
Memo to Bill: DIY
Responding to Gates, Solar Wakeup (republished by Clean Technica) noted that Gates has been active in investing in energy storage with Aquion and LightSail but challenged him to be the major financer of the next energy miracle. Why? Simply put, it’s unreasonable to expect increased investments (private and public) in risk-agnostic energy R&D, and if one of the world’s richest men wants it to get done, he should do it himself. Payoffs are slow for energy projects, the uncertainties many: macroeconomic conditions, volatile energy and resource markets, policy reversals, infrastructure needs, and high operating and maintenance costs. Solar Wakeup’s challenge is based in reality.
But the cleantech and renewable energy sectors are already substantial in countries all over the world, and growth is accelerating. China has recognized this. In recent years, China’s public and private investments in cleantech, both at home and abroad, have exploded. Reports by Azure International explore the drivers for increasing investment in cleantech in China. Risk is inherent in investors’ strategies for expanding their energy-related portfolios, and intangible values, such as technological and innovative prestige, sometimes compete with return on investment (ROI). Encouraged by the government, Chinese investors have become increasingly willing to fund energy efficiency and conservation projects such as smart grids and smart buildings.
The topic of investment in renewables and smart grids is thorny, with many caveats and nuances that tend to shape the potential for ROI – but it’s safe to say that with China’s example, maybe Gates has a point in his stance against being risk-averse toward investing in potential energy miracles.