Advanced energy CEOs see opportunities, obstacles in California policies

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Advanced energy CEOs believe California's energy policies have put the state on the cutting edge of advanced energy development and innovation, but obstacles are preventing the state from fully reaping the economic and environmental benefits of advanced energy, according to a new report by Advanced Energy Economy (AEE).

Based on a series of interviews with 30 CEOs and other senior executives of advanced energy companies in California or doing significant business in the state, the report presents corporate leaders' perceptions of the state's energy policies and recommendations for actions to accelerate the growth of an advanced energy economy in California. AEE estimates there are more than 1,800 advanced energy companies in California.

"California is widely recognized as a global leader in encouraging advanced energy growth," said Graham Richard, CEO of Advanced Energy Economy. "But the sheer number of policies, agencies and programs designed to support advanced energy development make it difficult for companies to navigate. This report offers a series of recommendations from California's business leaders that can accelerate advanced energy success. This will unleash great economic and environmental benefits for California."

The business leaders interviewed in the report commend the state for its willingness to adopt nation-leading policies in vehicle fuel standards, alternative vehicles and the infrastructure to support them; creating markets for renewable energy resources; promoting energy efficiency, through advanced building codes, appliance efficiency standards and utility programs; supporting investment in smart grid, transmission and on-site generation technologies; and funding advanced energy research and development. Adoption of a multisector cap on greenhouse gas emissions has in particular put California on the cutting edge of policies whose objectives can be achieved by advanced energy development, investment and deployment. The CEOs also acknowledge the state's many assets for unleashing private investment, including the investment community of Silicon Valley, a highly trained labor force, and a culture of innovation.

These strengths are offset by a complexity of agencies, policies and programs that make it challenging for companies to navigate their way to business opportunities. In addition, these companies run into obstacles that make it difficult to establish manufacturing operations in the state and to develop large advanced energy projects. These CEOs say it is essential that California's policies and the programs that flow from them be managed in a way that avoids waste and inefficiency that could result in a backlash against California's advanced energy leadership.

Advanced energy executives recommend several measures that would improve the business climate for advanced energy in California:

·         California should articulate an integrated vision and action plan in support of an advanced energy economy to help guide, coordinate and prioritize agencies' actions and to provide greater accountability for successful implementation of the state's policies.

·         California should strive to establish the stability and predictability businesses and investors need to pursue innovation. Programs that change year to year and incentives that expire after a short time or get renewed on a short-term basis are not conducive to investment and business development. California should maintain a commitment to energy policy solutions with longer-term, stable trajectories.

·         California should foster innovation and competition by avoiding programs that pick technology winners. Competition spurs innovation and drives down cost in meeting policy goals. California should structure programs to encourage the private sector to bring innovative technologies to the market that meet desired energy and/or environmental performance standards rather than prescribe specific technologies.

·         The governor should appoint and empower an advanced energy business ombudsman to assist advanced energy companies in navigating the policies, programs and requirements intended to promote advanced energy growth and adoption.

·         California should use funding from the AB 32 revenues to fill gaps in private sector funding of advanced energy technologies and companies, especially for smaller early-stage companies, and for developers of pre-commercial technologies that need assistance in demonstration and scale-up.

·         California should reform the California Environmental Quality Act (CEQA) to streamline the state's environmental review process and prevent abuse. Advanced energy projects could be completed faster and at lower cost if compliance were more straightforward and if the law were less easily used by opponents to obstruct worthy projects.

"California has always been at the vanguard of smart energy and environmental policies," said Lauren Casentini, president of Resource Solutions Group. "We were honored to participate in this important examination of how the state's policies are affecting businesses across California.  We believe that advanced energy businesses across California are crucial to keep the state's economy moving forward and look forward to working with policymakers to ensure that progress."

Matt Horton, CEO of Propel Fuels, said that Californians, when given the chance, will choose sustainable, domestic fuel sources that align with their values.

"To this end, we support efforts to provide funding for infrastructure that expand access to all types of advanced energy across California, especially in development stages where private investment hasn't been active in recent years," Horton said.

Advanced energy was a $1.1 trillion global market in 2011, larger than pharmaceutical manufacturing worldwide, according to a January 2013 report released by AEE and produced by Pike Research. This first analysis of the advanced energy sector also shows that the market in the U.S. represents a significant part of the nation's economy, with $132 billion in revenue in 2011, and a 19 percent growth rate estimated for 2012, with U.S. revenue rising to $157 billion.

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