What Can the Northwest Do Best in Clean Energy?

6/23/14Follow @bromano

The Pacific Northwest has a burgeoning clean energy industry, underpinned by strong public research institutions, active angel investors, and an environmental ethos that’s part of the culture. But leaders in the field argue that the region could do more if it united behind a few key areas where it could be the best in the country.

“What do we want to be known for?” asked Jud Virden, associate director of Pacific Northwest National Laboratory, during the Washington Clean Technology Alliance showcase event in Seattle Monday.

Washington and the broader Pacific Northwest already have leading positions in energy efficiency, smart grid, and biofuels development, particularly for the aviation industry. Now, the state is emerging as a key technology development and testing hub for large-scale energy storage systems, with some big steps forward on that front expected later this summer.

“There really is an ecosystem evolving here in the state of Washington,” says Daniel Malarkey, vice president of 1Energy Systems, which makes software to help utilities control batteries, and a former top official in the state Department of Commerce.

At first glance, the region appears to have little economic incentive to develop clean, inexpensive power sources. That’s because we’ve already done it with hydropower.

Here in the Northwest, electricity is a bargain: The average retail price of power in Washington and Idaho was just under seven cents per kilowatt hour in 2012, less than in every other state except Louisiana, according to the latest Energy Information Administration statistics. Our power also has the distinction of being remarkably clean, with Washington, Oregon, and Idaho, having among the least carbon-intensive energy supplies in the country. It’s thanks, on both counts, to the federal hydroelectric dams on the Columbia River system that were built generations ago.

Even though we don’t feel the pain of paying 34 cents a kilowatt hour, as they do in Hawaii, or suffer the dirty air and climate guilt (if they do) of states where coal is a primary energy source, Washington is home to a great deal of innovation in energy, but also in adjacent fields lumped together as cleantech. (That term, by the way, is now so broad and nebulous as to be nearly useless.)

So what are the key ingredients?

It starts with the state’s research universities, which in recent years have significantly ramped up their focus on clean technology, and with Pacific Northwest National Laboratory (PNNL), the sometimes overlooked Department of Energy research center in Richland, WA, that attracts nearly a billion dollars in annual research funding.

“There’s just no substitute for the support of the universities and PNNL, either as verifiers of technology or as incubators of the technology—things that are spinning out of their own research labs,” says Bill Lemon, co-chairman of the cleantech-focused angel investing group Element 8. “It’s one of the things that makes a foundation for both the development of, and the initial stages of commercializing, the clean technologies of the Pacific Northwest.”

Lemon’s group plays an important role, too, providing the earliest, highest-risk capital to help bring innovations out of labs and into nascent companies. (Lemon says Element 8 is on track to double its investment level this year. “We are seeing more deals, more higher quality deals, we’re seeing deals from further away,” he says.)

Another impetus is the environment itself. The Northwest’s well-deserved reputation as an environmental wonderland motivates people and companies based here to work on technologies and business practices that reduce pollution. Alaska Airlines, for one, wants to be the aviation leader in environmental stewardship, says Carol Sim, the airline’s director of environmental affairs and sustainability.

“Why do we care?” Sim nods to the Puget Sound out the conference center’s windows and the Olympic Mountains beyond. The airline is based in and regularly flies to “some of the most pristine environments on the planet. We think it is our responsibility to help protect those environments,” she says.

Alaska recycles enough aluminum cans to build three Boeing 737s each year, it works with partners on aviation biofuels, and it buys beverage cups for in-flight service from MicroGREEN Polymers, an Arlington, WA-based company that makes them using recycled plastic and a technology developed at the University of Washington.

That’s one of several local examples of the interplay between research universities, small companies, and large corporations.

Two dozen companies are presenting their technologies and business approaches here today, and several of them have similar stories, including large-scale battery maker UniEnergy Technologies, a large-scale battery maker that is effectively a spinout from PNNL, and EnerG2, a company commercializing research done at the UW to improve the performance of batteries and other energy storage devices.

So, it’s all going well, but of course, it could be better. Clean energy proponents see opportunities for the state’s institutions to collectively plant a flag in a few specific areas, and become the best in the world. That takes leadership from the top, industry and political participation, and better collaboration among the research institutions, says PNNL’s Virden, who heads up the lab’s energy and environment directorate.

Geography is often cited as a barrier. While other innovation clusters benefit from having national laboratories and research universities in the same cities, or even walking distance from each other, Richland, where PNNL is based, is hours by car from UW and Washington State University.

“The distance isn’t the issue,” Virden says. “It’s the clarity of what we’re going to do together that really drives things beyond” the status quo of one-to-one faculty interactions.

To compete for federal research funding against the best institutions in the country requires a critical mass of the best people, as well as industry partners that are ready to move innovations to market.

“When I look at [the Northwest] compared to other parts of the country, I think we have pieces of that, but I don’t think we’ve put it all together, especially in the cleantech space,” Virden says.

Benjamin Romano is editor of Xconomy Seattle. Email him at bromano [at] xconomy.com. Follow @bromano

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