EDGE Chats: The Outlook for Clean Tech
Chris Vlahoplus, Partner and Clean Tech & Sustainability Practice Leader at ScottMadden, discusses the outlook for clean tech in 2017, changes on the horizon, and career opportunities in the energy sector. The EDGE Chats series, hosted by EDGE at Duke University’s Fuqua School of Business, examines leading issues and trends at the intersection of energy, environment, and business.
For more information about this segment, please see the new EDGE blog post.
Clean Tech Outlook
As we enter 2017, we’re very optimistic about clean tech and sustainability, in particular for the electric sector. We’re making a big transition from a policy-driven environment to a more market-driven environment. The price and cost effectiveness of these technologies are creating their own momentum.
We’re also seeing a lot of technology innovations coming out of sectors that have not normally played in this environment. Customers and regulators are driving and pulling through a lot of these innovations, policies, and programs. We do not see any slowdown in the push toward clean tech and sustainability in the electric sector.
If you look at the new administration and what may change in terms of direction in clean tech and sustainability, there are a number of things which are in place and will have a difficult time changing. Again, the market forces are going to continue. We are fortunate in that the investment tax credit and production tax credit have a longer runtime than they have in the past, rather than year-to-year. Also, state policies, which continue to drive a lot of this, are not going to be as affected by the federal government. Where we would see a big change would be in the EPA and the Clean Power Plan as it is currently constructed. That will likely be a slowdown or a stop to the Clean Power Plan. On the positive side, if what you hear is true about infrastructure spending, we may see more transmission that will allow us to bring in wind from parts of the country with a lot of wind resources, as well as some pipeline infrastructure to help bolster renewables with the gas needed to integrate them into the stack.
If you look at the technologies that have a real potential to change the game, you have to start with storage. There is a lot of effort being placed on coming up with cost-effective storage. And, if we see that, we will see some fundamental changes in the way the grid is managed. Another technology with real potential to change the game is microgrids. There is a lot of effort focused on creating microgrids and micromarkets to better integrate a lot of the smarter uses of energy. Finally, the real technologies where we have a need, and we’re keeping our eye on, are the information communications networks that are going to enable the market place. The platform on top of the network that will allow us to plug and play all of these technologies and get more out of the grid.
Utilities should be thinking about how to invest in clean energy assets. If you look at solar and wind, they’ve become pretty commonplace asset classes. I think you’ll see utilities more and more comfortable with investing in them. They’re just another generation source. Where I think utilities can really lead the way is investment in the grid to enable the values to be created by all of the distributed resources. We just have to be careful that we don’t invest in a way that creates an expense that can’t be borne by everyone who takes energy off of the grid. So, we have to be very focused in investing in those things that create better uses of our resources and lower cost to the customers.
With these big changes happening in the electric sector, it opens up a lot of opportunities that, 10 to15 years ago, you’d might never see. There are opportunities within utilities that are trying to fundamentally rethink how they go to market with their customers. There are opportunities with the new entrants, who are coming up with new ideas and trying to enter the markets (i.e., storage companies or big data companies). There are also opportunities with the regulatory and government agencies that are trying to navigate through these new rules for how to set up a new market. How can you help define an entire market in how it is structured and how it works?View More