Investing in Clean Energy Innovation

This article by Tom Williams, NREL's technology transfer office director, discusses the commercialization programs and clean tech investment opportunities at the lab.

According to New Energy Finance, Ltd., the global investment in clean energy grew 41% in 2007, reaching $117.2 billion. New Energy Finance Chairman and CEO Michael Liebrich says we need to keep this momentum going during the next five years, which will be a crucial period for the clean energy sector and its investors. He says this will involve continued progress in lowering the cost of renewable energy and developing a "healthy pipeline of next generation technology." Coincidentally, this is what we do at the National Renewable Energy Laboratory (NREL).

Growth rates like this can cause investors to wonder if an investment bubble is on the way in clean energy, but there are fundamental factors that suggest this trend may continue for many years—and even decades—to come. Decreasing proven reserves of fossil fuels, rapidly increasing global demand for those fuels, energy and economic security, and global climate change combine to make the quest for inexhaustible clean energy the key global challenge for this century. At NREL, we believe that our commercialization activities must be up to this challenge, and we're developing a number of new thrusts that build on private sector experiences and expertise.

Technology Commercialization Development Fund

Through the Department of Energy's (DOE) Technology Commercialization Development Fund (TCDF), NREL has received $4 million this fiscal year to facilitate collaborative R&D projects between researchers and companies to develop commercial products based on NREL innovations. Commercial partners share 50% or more of the project development costs, which will typically range from $150,000 to $1 million. Projects are selected based on their fit with the TCDF program, the value of NREL's intellectual property position, and the potential for near-term commercial impacts. Both NREL researchers and outside industry can submit project proposals to the NREL Technology Transfer Office.

The TCDF program gives NREL some wonderful tools to address the commercialization "valley of death" between technologies in the laboratories and products in the private sector. We expect the program to increase the market impact of NREL's technologies. In addition, the program has shown the ability to support faster, more nimble partnering to make it happen. For our first TCDF project, we moved from first contact with a startup company through executing a license option and initiating work on a cooperative project to commercializing the product in only 17 days. Moving at the "speed of business" is difficult at a national laboratory, but absolutely critical to us in meeting the opportunities and challenges presented in the market.

Entrepreneur-in-Residence

Innovative funding like the TCDF program is important, but equally important is the talent to properly identify opportunities, evaluate them, and pursue them. We're addressing this through two innovative programs to quickly leverage the business creation skills of the private sector. The first is the DOE Entrepreneur-in-Residence Program, which is being piloted at NREL, Sandia National Laboratories, and Oak Ridge National Laboratory. The program involves placing a venture capital-sponsored entrepreneur at the laboratory to identify opportunities for spin-off companies based on NREL-developed technologies. The entrepreneur will then help develop a business plan and license the technology using a "venture friendly" license agreement. DOE has selected the venture capital firm Kleiner, Perkins, Caufield & Byers, which is providing NREL with an entrepreneur. While NREL has great networks within the venture capital community, the entrepreneur will bring different experience and skills directly into the laboratory.

Industry Growth Forum

Outreach to the investment community and entrepreneurial organizations remains an emphasis with our annual Industry Growth Forum. The Forum provides an opportunity for clean energy entrepreneurs to sharpen their business plans with detailed feedback from investors and energy experts. The process has a proven track record of results. For example, presenting companies from our past 15th through 19th forums have altogether raised more than $1.2 billion in private sector funding. More than 430 participants—including startup companies, venture capitalists, investment bankers, energy executives and government executives—attended the 20th Forum last year. With the continued growth of the clean energy industry, we expect an even larger attendance at the 21st Industry Growth Forum on October 28-30, 2008, in Denver, Colorado.

Licensing Opportunities

The booming market for clean energy technologies also has greatly increased our opportunities to license intellectual property to established companies, ranging from early-stage to Fortune 500 firms. Currently, we have around 300 patented NREL technologies available to license. They include technologies in the R&D areas of advanced vehicles and fuels, basic sciences, biomass, buildings, geothermal, solar, and wind.

Our Commitment to Commercialization

During NREL's 30-year history, our lab has made significant contributions to the commercialization of energy sources such as wind, solar, and biomass that are now the most rapidly growing resources around the world. But we also recognize the magnitude of the opportunity and challenges ahead, and will continue to look for creative ways to dramatically increase the commercial outcomes from DOE's R&D investments at our laboratory. With a mission and market opportunity as exciting as ours, nothing else is acceptable.