1. The document discusses the risks of technology lock-in and innovation mercantilism for grid-scale energy storage and electric vehicles. 2. It notes the risk that lithium-ion batteries could become locked-in for grid applications despite possibly being sub-optimal, due to scale and familiarity. 3. It also discusses the risk that countries may use trade-distorting policies to advantage domestic firms in strategic emerging technologies like batteries and electric vehicles, as has occurred in solar panels.

1. Grid-Scale Energy Storage and Electric Vehicles:
The Risks of Technology Lock-In
and Innovation Mercantilism
David M. Hart
Professor, Schar School of Policy and Government, George Mason University
Senior Fellow, Information Technology and Innovation
HKUST IEMS
October 12, 2018

2. About George Mason & the Schar School
• Mason:
• Founded 1957
• Largest public university in Virginia: 34,000 students fr. 150 countries
• Approx. $100 million in external R&D funding
• Schar:
• 2000 students, incl. 200 Ph.D
• 13 degree programs
• Nationally and internationally ranked in public administration & others
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3. About ITIF
• The world’s leading science and technology policy think tank.
• Supports policies driving global, innovation-based economic growth.
• Focuses on a host of issues at the intersection of technology
innovation and public policy across several sectors:
• Innovation and competitiveness
• IT and data
• Telecommunications
• Trade and globalization
• Life sciences, agricultural biotech, and energy
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4. Now on Twitter!
@ProfDavidHart
More!
https://itif.org/issues
/energy-climate
About Me

5. Seminar Outline
1. The Big Picture in Climate and Energy
2. The Low-Carbon Energy Innovation Imperative
3. The Manufacturing/Innovation Interface
4. The Risk of Technology Lock-In
5. The Risk of Innovation Mercantilism
6. Conversation!
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6. Climate Change: It’s Real and Human-Caused
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7. We Know (In General) What We Need To Do
• Improve energy efficiency
• Electrify end uses, where feasible
• Decarbonize electricity
• Find solutions for hard-to-electrify or –decarbonize activities
• Do it fairly!
• Do it quickly!
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8. Seminar Outline
1. The Big Picture in Climate and Energy
2. The Low-Carbon Energy Innovation Imperative
3. The Manufacturing/Innovation Interface
4. The Risk of Technology Lock-In
5. The Risk of Innovation Mercantilism
6. Conversation!
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9. Deployment and Innovation:
Complements, Not Substitutes
“We already know everything we need
to know to effectively address this
problem. ... We have everything we
need, save perhaps political will.
Feedback effects in the innovation process

10. Deployment and Innovation:
Complements, Not Substitutes
“We already know everything we need
to know to effectively address this
problem. ... We have everything we
need, save perhaps political will.
Feedback effects in the innovation process

11. US Carbon Emissions: Transportation > Power
11
California
emissions
inventory

12. Innovation Priorities for Light-Duty EVs
• Cost reduction
• Consumer familiarity
• Infrastructure
development/upgrading
• Business model
creation/expansion
• Systems integration (AV, V2G etc.)
• System transformation?
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13. Energy Storage for Highly Reliable Electricity
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California solar “duck curve”
Iowa wind pattern

14. Innovation Priorities for Long-Duration Grid Storage
• Sustain basic research on scientific fundamentals
• Do R&D across diverse technologies (batteries, thermal, hydro, etc.)
• Build pathways to demonstration
• Incentivize adoption
• Explore new valuation and business models
• Simplify licensing
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15. Seminar Outline
1. The Big Picture in Climate and Energy
2. The Low-Carbon Energy Innovation Imperative
3. The Manufacturing/Innovation Interface
4. The Risk of Technology Lock-In
5. The Risk of Innovation Mercantilism
6. Conversation!
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16. Why Manufacturing Matters
 Economic
 Workforce
 National Security
 Environmental
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17. Innovation for Manufacturing
• Enables competitive manufacturing in higher-cost economies.
• Enables localized manufacturing, in part by reducing efficient
production lot sizes.
• Boosts justification for co-location of idea generation, design, systems
development, production, and supply chain management.
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18. Seminar Outline
1. The Big Picture in Climate and Energy
2. The Low-Carbon Energy Innovation Imperative
3. The Manufacturing/Innovation Interface
4. The Risk of Technology Lock-In
5. The Risk of Innovation Mercantilism
6. Conversation!
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19. Lock-In: The QWERTY Question

20. Lithium-ion Batteries: From Electronics to EVs
• Lightweight, high-power
• 1st market (1990s):
electronics
• 2nd market (2010s):
electric vehicles
• Virtuous cycle of scale
and innovation
• Rapid cost decline
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Cost per kWh installed

21.  Li-ion batteries =~90% of global
grid-scale storage market…and
rising!
3rd Market: Grid
21
Global annual grid-scale energy storage deployed
capacity (excluding pumped hydroelectric storage)
Source: International Energy Agency

22. Li-ion on the Grid: Good Enough?
• Sub-optimal features
• Duration
• Cycle-life
• Economies of scale
• Adoption drivers
• Familiarity/low enough cost
• Subsidies/overcapacity?
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Tesla South Australia project (Source: Electrek 1/14/18)

23. Li-ion Battery Production Capacity in 2020
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24. Overcapacity Coming Soon?
• 2018 Nissan Leaf battery capacity = 40 kWh
• 2020 projected production capacity > 300 GWh = 300,000,000 kWh
= >7.5 million 2018 Nissan Leaf equivalents
• IEA “New Policies Scenario” global EV sales = 4 million vehicles
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25. Non-Li-ion Battery Companies in Distress
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26. Seminar Outline
1. The Big Picture in Climate and Energy
2. The Low-Carbon Energy Innovation Imperative
3. The Manufacturing/Innovation Interface
4. The Risk of Technology Lock-In
5. The Risk of Innovation Mercantilism
6. Conversation!
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27. Innovation Mercantilism, Defined
• “A strategy that uses trade-distorting policies to advantage local
technology firms and production activities” – Nigel Cory, ITIF
• Forced technology transfer/Intellectual property theft
• Favoritism toward local firms
• Subsidized exports
• Sectors impacted:
• IT hardware, software, and services
• Pharmaceuticals
• Electric vehicles
• Not only China…Brazil, Russia, Indonesia, Vietnam, etc.
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“Innovation mercantilist
policies also harm the nations
that use them.”

28. The Solar Precedent
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29. From Solar Panels to Batteries and EVs
• Indigenous production and innovation as national strategic objective
• Market access conditional on tech transfer (but Tesla-Shanghai?)
• Regulatory favoritism toward domestic producers
• Export aspirations, but also large domestic market
• Tension between central government and regions
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30. Auto Manufacturing Really Matters to the US!
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31. Will ICE Become
the New Coal?
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32. Seminar Outline
1. The Big Picture in Climate and Energy
2. The Low-Carbon Energy Innovation Imperative
3. The Manufacturing/Innovation Interface
4. The Risk of Technology Lock-In
5. The Risk of Innovation Mercantilism
6. Conversation!
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