Entrepreneurship@Cornell Celebration 2012
Can Renewable Energy Get Any Love?
Sometimes, it’s not easy being green. In the renewable energy market, which relies heavily on government support to make a profit, startups in particular are susceptible to changing regulations and incentives, as well as competition from emerging markets and low-cost, traditional energy supplies.
That was the premise presented by Seth Helfgott ’05, an associate in the law firm Wilson Sonsini Goodrich & Rosati and a member of the firm’s energy and clean technology practice, when he initiated a panel discussion titled “Can Renewable Energy Get Any Love? Regulatory and Market Challenges Facing Energy Startups.” Sponsored by Johnson’s Center for Sustainable Global Enterprise, the panel was held at Sage Hall on April 20 as part of Entrepreneurship@Cornell Celebration 2012. The clean energy specialists who participated in this discussion said meeting these challenges in the U.S. requires identifying private funding sources and lobbying for uniform national energy policies.
“We need to be subsidy-independent and not ride that roller-coaster of permits and incentives such as tax credits. It will require a long-term solution to free ourselves of this cycle,” said David Hurwitt, chief commercial officer for wind energy provider Optiwind Corp. “Dealing with local governments is a cumbersome process — we need federal regulations to ease the permitting process and eliminate the politics associated with credits.”
Robert Petrina, ’00, MBA ’08, managing director at solar power firm Yingli Green Energy Americas, Inc., noted that in the U.S., renewable energy companies must navigate through 50 different sets of subsidies and regulatory issues such as tax credits and favorable rate structures. “Manufacturers also have to deal with booms and busts in the U.S. economy, so energy companies must be flexible,” he said.
Weaning themselves from such public support structures requires that next-generation energy providers consider venture capital funding and other sources of private money, said Kenneth Davies ’02, MEng ’04, director of technology ventures for Constellation Energy, a supplier of power, natural gas, renewable energy, and energy management products and services.
Hurwitt suggested that most investors are not familiar with new clean technology manufacturers. “We have to package ourselves as technology companies rather than energy companies,” he said. “When we started there was the feeling that ‘here comes the cash,’ but that did not quite materialize.” His company seeks strategic investors — companies like GE, Chevron and BP — that are looking for specific technologies to invest in, he added.
International markets represent another opportunity for startups, Petrina said, but it can be difficult to obtain financing for large projects in emerging markets, and to determine the demands for clean energy among customers in those areas. “Companies in international markets are trying to lock up those markets, which can make it difficult for outsiders to build manufacturing plants.”
Despite the obstacles for renewable energy startups, the forum panelists are bullish on opportunities for schools like Cornell and their graduates.
“There are tremendous opportunities in this space for engineers and MBAs,” Hurwitt said. “This is now a manufacturing sector, with clean technologies growing by 50 percent last year. It is now hyper-competitive.”
The investment community is always looking for new technologies developed at research institutions, Davies said. “Cornell should figure out the best ways to do technology transfers, and it should create an entrepreneurial community locally, which would be good for Ithaca and Cornell.”