Governments are bad at picking winners, losers are great at picking government

This is a great saying doing the rounds about some clean energy technologies – and unfortunately there is more than a grain of truth in it.

The fact is that for every success story in technology commercialisation there are hundreds of good ideas that have failed to make it to market. The two main reasons for failure are lack of good leadership and lack of cash.

We all know that we need to do something to clean up our energy supply and energy usage. Even if you don’t believe in climate change I’ll bet you want to do things more efficiently in you work and your daily life. We are all heading to the same destination.

Government realises that in the case of market failure that they need to step in and provide support to private sector efforts to produce the new technology we need. This seems sensible. However, in reality it mostly supports the incumbents (e.g. wind) and the celebrity technologies (i.e. solar PV – the Paris Hilton of the renewable world – looks good in any article).

What it doesn’t do is provide support for genuine breakthroughs or genuine innovation.

Where Government does actually provide major funding it is for commercial scale implementation of technologies which are basically uneconomic or technologically redundant at the time of construction. Even worse, a lot of taxpayer funding is used to replicate technology and research already completed in other countries.

I have a lot of respect for any entrepreneur that gets a new technology up. During the early stages, at least, the intent is about the new technology.  Later on organisations seem to reorganise themselves around getting money from government. And hey, a confession here, I am in the top 5 on the honour roll for people to get big dollars out of government and the private sector for new energy technologies.

What I am talking about here is a difference of intent. Sooner or later an organisation comes to exist solely to support itself and not the technology.

The private sector can’t provide all the answers, in a time of change such as this we need a genuine and sustained national effort. Carbon taxes and tokenistic clean energy funds won’t achieve much and policymakers know it.

There is an out.  I believe in providing solutions as well as pointing out the problems.

Yes, there is market failure and a carbon price will not support commercialisation for a long time to come. Yes, we need to do something sooner rather than later.

So how about really leveraging taxpayer’s funds instead of throwing it away. I am not talking about matching funding on a dollar for dollar basis. How about 5 cents for every dollar spent by the private sector?

For example, how about setting up prizes for technologies that meet certain criteria. You could have prizes for low temperature high output LED lights, cheap to install and easy to maintain tidal generation, more efficient batteries, more efficient electric motors, etc.

That way, you can get many people working on the same problem, all with private backing with an eye on a prize big enough to pay off initial investors and also provide enough cash to fund the next stage of commercialisation.

Another example would be to mandate that government owned power facilities be used to test new technologies such as carbon capture. Sure there are a lot of issues about operations, but if you provide permanent test facilities set up to allow technology vendors and universities to test their technology then you may advance the cause.

I meet with a lot of blank looks when I talk about these kind of things, and I think it comes down to the lack of business and commercial experience of people in government. Too many of them think that money to back ventures somehow magically appears.

Ancient farmers grew a whole field of grain and picked the best to continue the next year. In the same way Government needs to set up to maximise the amount of effort put into innovation and stop throwing money at large scale demonstrations, stop using the word commercial projects and put a limit on the funds that go into Solar PV and its variants.

Note: I work as a project and energy economist with companies and governments on geosequestration,wind, geothermal, hydro, wave, transmission networks, coal seam gas, coal,and more. The views expressed in this blog are solely my own and do not represent the views of any organisation that I do work for.