Business models may be biggest breakthrough for clean tech

By Umair Irfan | 05/16/2016 08:17 AM EDT

BONN, Germany — A way to make money with intermittent renewable power in a shaky energy market may be the most important invention to fight climate change, experts say.

BONN, Germany — A way to make money with intermittent renewable power in a shaky energy market may be the most important invention to fight climate change, experts say.

Cheaper batteries, taller wind turbines and more efficient photovoltaics are important advances for cutting greenhouse gas emission, but they won’t be enough if companies go bankrupt trying to bring them to market or can’t fund them in the first place.

"Innovation includes, of course, technology," said Dolf Gielen, director of the Innovation and Technology Centre at the International Renewable Energy Agency (IRENA). "Technology alone is not enough; we also need innovation in policy frameworks, in business models."


He spoke at the closing session of IRENA’s first innovation conference last week.

To coordinate the technology fight against climate change at the international level, some initiatives have formed with the goal of making investments in clean energy a profitable endeavor, even as fossil fuel prices drop and some energy stalwarts shudder.

Among them is Mission Innovation. The program emerged during the Paris climate change negotiations last year as a commitment from 20 countries to double their funding for clean energy research and development over the next five years (ClimateWire, Feb. 8).

"It’s all about strengthening international clean energy research, development and demonstration, with the goal of making clean energy widely affordable," said Paul Durrant, who leads innovation policy at the United Kingdom’s Department of Energy and Climate Change. "It’s pretty much about cost reduction at its heart."

A parallel initiative called the Breakthrough Energy Coalition secured private commitments from 28 of the wealthiest investors in the world to finance these technologies.

Mission Innovation will be part of the agenda as energy ministers from around the world gather in San Francisco next month for the Clean Energy Ministerial. Durrant said the meeting will be an important checkpoint as nations present more details about their funding commitments.

"Each country will be spending its money according to its own national decisionmaking processes," he said. "There’s no pooling that funding into some massive pot. What we are trying to do is to make sure we work better together to ensure that money is wisely spent."

That money should go not just to laboratories and pilot projects, but to support experiments with business models to support energy research and deployment, whether it’s renewable energy leasing, energy performance contracts or public-private partnerships.

"We also are putting innovation processes in business models and system integration," Durrant said.

Other groups are working with developing countries to get them to invest in clean energy innovation and deployment.

Matthew Kennedy, vice chairman of the advisory board of the Climate Technology Centre and Network (CTCN), an arm of the U.N. Framework Convention on Climate Change, explained that his group is working to develop business models and technical expertise in developing countries so they can secure funding for energy projects, but is not a financing agency itself.

"The most important thing here is that the ideas that CTCN will assist countries with emanate from those countries themselves," he said. "This is a bottom-up, country-driven process."

Requests from nations for this kind of assistance is growing.

"We are on an upward trajectory," Kennedy said, pointing out that the group has 106 applications for projects and growing. "The requests are predominantly coming from Africa."

In Gambia, CTCN is working to make renewable energy effective at local levels. In Algeria, the group is helping set up quality control and accreditation for photovoltaics. They are also helping Uganda develop geothermal projects and working with Benin to conduct feasibility studies to manufacture wind turbine components in the country.

"It’s about overcoming barriers. It’s about developing those national systems of innovation in those countries," Kennedy said. "Business models seem to feature predominantly in a lot of these areas."

This week, IRENA will present some of its innovation conference findings to the UNFCCC’s technology group meeting in Bonn.