What Is The Cost Of Innovation In Energy?

DOE loan goes bust

If you ain’t trying bold ideas then there is damn well sure no way we are going to make progress towards transitioning our electrical grid to clean and renewable infrastructure.

The DOE or Department of Energy is known to take risks on bold ideas. We as taxpayers provide that capital to help support frontier ideas to make it into market.

In this case the DOE loaned Tonopah Solar Energy LLC $737 Million to fund its solar thermal plant in Nevada. Sadly, Tonopah filed for bankruptcy while still owing the government $425 M on its loans…Based on the bankruptcy proceedings the government will still recover $200 M of this loan.

Now in the large scheme of things – $700 M ain’t nothing for the government to worry about – but what it does set is a bad precedent for the DOE’s loan guarantee program built under the Bush administration.

The goal was to fund risky projects that typical financiers stay away from – which is a good thing at a high level – but it doesn’t necessarily drive innovation in the way we should be focusing. More capital doesn’t allow companies to brute force into a market.

If just having unlimited piles of cash would make a company or technology profitable, the art of building business wouldn’t be what it is. In fact – what I believe this has done is set a bad taste in investors mouths for continuing to fund risky, frontier and thought provoking technologies that may have an impact.

What I believe can be done to continue to drive innovation – with support from the DOE and/or private companies is take an approach similar to what Creative Destruction Lab or CDL does with “high-tech” founders who want to bring their technology to market.

Invest in resources to monitor go-to-market potential.

Before building a plant of massive scale – build the smallest possible one to start discovering key flaws in the technology. NSF grants and certain SBIR grants do this really well. The loan program should follow those processes to the T.

While the loans may have been given to more mature risky technologies – making large scale loans to single companies ristricts the amount of innovation you can fund.

Capital is out there at every single stage of growth – clean tech especially…This space isn’t like growing a software company in the bay area but what it does bring is the opportunity to test 100s of different innovations at a relatively low cost.

New reporting suggests that this bankruptcy proceeding operates as protection and Tonopah is working on finding ways to get back into the market…even though their semi operational plant is selling power at nearly $110/MWh more than a traditional solar farm…

About The Author

Swarnav S Pujari

Swarnav S Pujari

Founder of The Impact

Swarnav has over 10 years of experience in the energy & climate tech space, holds 2 patents and is active in the tech, climate and media industries. He specializes in Product/Product Innovation as well as Go-To-Market and Growth Strategy.

By training he’s a Materials Engineer with a background in research from his time at Georgia Tech and University of Illinois (UIUC).

He founded TouchLight a utility backed energy company focused on developing IP for utilities and startups pushing electrification forward. He also serves as the appointed Chairman for the Town of Yorktown’s Climate Smart Communities Task Force, where he helps with drafting legislation and enabling sustainability efforts within the town.

Concurrently, Swarnav founded The Impact to help investors, emerging founders and driven climate enthusiasts discover and identify new climate-tech startups, technologies and opportunities before they hit the traditional media sources.

Share this post →

DISCOVER CLIMATE STARTUPS & OPPORTUNITIES BEFORE IT HITS THE FRONT PAGE

A weekly newsletter helping climate founders and investors discover undercover climate startups, technologies and opportunities before everyone else. Written by founders, executives and investors with years across the climate-tech space. Subscribe for free today to grow your climate positive impact.

Related posts...

Biomass-Based Carbon Removal

Here, we’ll focus on biomass-based carbon removal. On a basic level, this means that biomass, typically waste biomass, is converted through some process into a more stable form.

Read now ➜

Discover Pre Series-A Climate Startups Weekly

Develop your market map of up-and-coming climate startups and market opportunities by subscribing to our weekly newsletter for free.