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Ellen Lutz
CEO, Clean Markets LLC

September 28-October 1, 2010
• NASEO and ASERTTI jointly sponsored study
• Purpose:
   – To provide State Energy Offices with best practices & key
     success factors in energy technology innovation
   – To minimize risk in funding innovative R&D
   – Develop recommendations for State Energy Officials when
     evaluating higher risk technology innovation projects
• Status: study undergoing participant review
• Literature review of technology innovation
• Twenty-one in-depth interviews with organizations
  who have created clean energy technology
  breakthroughs
• Data analyzed by stage of development

      Stage of       Number of                Sectors
    Development     Interviewees
    R&D             6 projects     Universities, National Labs
    Demonstration   5 projects     Research
                                   institutions, Innovation
    Deployment      10 projects    Centers,
                                   State Energy Offices, Non-
                                   profits, Private
                                   companies, other State
INNOVATION MODELS                TRADITIONAL RDD&D MODELS
“Ideation” stage precedes start of    R&D direction generally based
R&D activity                          upon research to date
Intention: to discover completely     Intention: to achieve incremental
new ways of addressing problems       progress in technology
                                      performance
Requires multidisciplinary teams      Clean lines of separation exist
to act as one                         between organizations and their
                                      responsibilities
Market “pull” – integrates market     Market “push” – research
analysis early in research planning   “pushed” into development with
                                      minimal market input
Significant overlap between           Uses “phase gated” approach –
phases – faster prototype and         stages of RDD&D treated as
testing                               sequenced efforts
R&D               DEMONSTRATION                 DEPLOYMENT

Conduct basic and          Develop & deploy           Assemble project &
applied research           working prototypes         transfer to end user site
Investigate existing       Monitor & evaluate         Activate project at end
materials                  performance                user site
Synthesize new materials   Solicit peer/end user      Solicit end user feedback
                           feedback
Model devices &
                           Make adaptations           Install O&M processes &
approaches
                                                      procedures
Analyze technologies,
                           Connect/simulate           Execute manufacturing
market, policies,
                           prototype with             plans to create economy
environmental issues
                           networked infrastructure   of scale


Develop partnerships       Develop & work with        Work with partnerships
                           partnerships
IDEATION                    INCUBATION                COMMERCIALIZATION

Create new ideas               Transform ideas into         Execute: ramp up for commercial
                               business opportunities       success
Review ideas methodically                                   Understand end user behavior and
                               Mitigate technical &
                               operational risk             competitive set

Evaluate market trends                                      Determine competitive advantage
                               Transfer & integrate
and technologies               technology

                               Rapid prototyping: Create    Create long range forecasts
Assess internal capabilities   real world pilots
                                                            Execute business, marketing &
                               Evaluate past failures and
                                                            operations plans
Identify opportunities &       develop lessons learned
focus RD&D
                                                            Continuously assess gaps &
                               Develop business plan        evaluate resources & partnerships
Find the right partnerships    based upon end user
                               feedback
Technology              GOALS      Environment
            Advancement              AND       Economy
                                   STRATEGY

                                                   Project Management
Partnerships Capabilities
                                                   Intellectual Property
Funding


               RESOURCES          INNOVATION    PROCESSES
                                    SUCCESS




            Champion                           Diversity
                                     TEAM
            Market-Facing                      Experience
            Innovation Culture   ENVIRONMENT   Commitment
R&D         Broad reaching goals:
                   – Solve environmental or economic
                     problems
                   – Improve existing technology performance

DEMONSTRATION   Focused on:
                   – technology performance
                   – bottlenecks to achieve larger R&D goal


 DEPLOYMENT     Incorporate market performance
                   indicators:
                   – Expedite market adoption
                   – Deploy commercial application
• Team Qualities: Experienced, passionate, committed,
   talented leader and team
• Diversity: Multidisciplinary; involve R&D, commercialization,
   end users early
• Project Champion: Provides long term vision, networking,
   belief in project’s success
• Market Expertise: Understanding of market and ability to
   position in marketplace
• Culture: Allow time for creativity and innovation
PROJECT MANAGEMENT                INTELLECTUAL PROPERTY

• Provides clear direction &      • Majority had IP process
  touchstone for evaluation       • Major concern, especially R&D
• Needs flexibility to adapt to   • Private sector funders often
  changing conditions               require first right of refusal
• Many R&D organizations had      • Manufacturers often want
  rigorous metrics                  exclusive rights at
• Routine meetings & regular        demonstration stage
  reporting                       • IP rights well defined by
• Majority had exit strategy in     private commercialization
  place                             partners
PARTNERSHIPS                      FUNDING
• One of most critical success   • R&D: Multiyear budgets 1-10
  factors                          years; consistency reduces
• Most effective & expeditious     waste & keeps momentum
  way to fill gaps               • Demonstration: 1 ½-3 years;
• Eliminates need to develop       $400k- $10.3M
  from scratch                   • Deployment: $3M-$130M
• Goal to round out experience     over multiple years
  & skills of team: often R&D    • Some exceptions:
  partnered with business
                                    – smaller budgets create greater
  acumen or vice versa                sense urgency
                                    – Early success with small
                                      budget attracts more
                                      resources
• Traditional RDD&D process can be adjusted to accommodate faster
  pace, flexibility & simultaneous development of innovation
• Best Practice areas involve: Goals, Team Environment, Processes
  and Resources
• State Energy Offices are in unique position to be an innovation
  catalyst within their states & create new categories of
  manufacturing jobs
• State Energy Offices can minimize risk of funding innovation by
  designing selection criteria for projects around best practices
  identified in this study
• Strive for game changers: Identify gaps in the state’s clean
   energy supply chain and challenge universities and industry to fill
   those gaps with innovative solutions.
• Reward good behavior: Develop project selection criteria
   that rewards innovation best practices and methodologies
• Require structure: States should require project management
   plans for high- risk projects, and have protocols in place for
   managing intellectual property arising from R&D projects.
• Look for an innovative environment: Look beyond the
   project to the culture within the project team itself.
• Encourage external funding. There is still value in soliciting
   projects that states cannot fund alone, and requiring external
   partners to contribute the needed cost share.
Ellen Lutz
                                      President and CEO
                                     Clean Markets, LLC
                             www.cleanmarketswork.com




        Ellen Lutz

       215-242-1424
elutz@cleanmarketswork.com

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Models of Energy Innovation

  • 1. Ellen Lutz CEO, Clean Markets LLC September 28-October 1, 2010
  • 2. • NASEO and ASERTTI jointly sponsored study • Purpose: – To provide State Energy Offices with best practices & key success factors in energy technology innovation – To minimize risk in funding innovative R&D – Develop recommendations for State Energy Officials when evaluating higher risk technology innovation projects • Status: study undergoing participant review
  • 3. • Literature review of technology innovation • Twenty-one in-depth interviews with organizations who have created clean energy technology breakthroughs • Data analyzed by stage of development Stage of Number of Sectors Development Interviewees R&D 6 projects Universities, National Labs Demonstration 5 projects Research institutions, Innovation Deployment 10 projects Centers, State Energy Offices, Non- profits, Private companies, other State
  • 4. INNOVATION MODELS TRADITIONAL RDD&D MODELS “Ideation” stage precedes start of R&D direction generally based R&D activity upon research to date Intention: to discover completely Intention: to achieve incremental new ways of addressing problems progress in technology performance Requires multidisciplinary teams Clean lines of separation exist to act as one between organizations and their responsibilities Market “pull” – integrates market Market “push” – research analysis early in research planning “pushed” into development with minimal market input Significant overlap between Uses “phase gated” approach – phases – faster prototype and stages of RDD&D treated as testing sequenced efforts
  • 5. R&D DEMONSTRATION DEPLOYMENT Conduct basic and Develop & deploy Assemble project & applied research working prototypes transfer to end user site Investigate existing Monitor & evaluate Activate project at end materials performance user site Synthesize new materials Solicit peer/end user Solicit end user feedback feedback Model devices & Make adaptations Install O&M processes & approaches procedures Analyze technologies, Connect/simulate Execute manufacturing market, policies, prototype with plans to create economy environmental issues networked infrastructure of scale Develop partnerships Develop & work with Work with partnerships partnerships
  • 6. IDEATION INCUBATION COMMERCIALIZATION Create new ideas Transform ideas into Execute: ramp up for commercial business opportunities success Review ideas methodically Understand end user behavior and Mitigate technical & operational risk competitive set Evaluate market trends Determine competitive advantage Transfer & integrate and technologies technology Rapid prototyping: Create Create long range forecasts Assess internal capabilities real world pilots Execute business, marketing & Evaluate past failures and operations plans Identify opportunities & develop lessons learned focus RD&D Continuously assess gaps & Develop business plan evaluate resources & partnerships Find the right partnerships based upon end user feedback
  • 7.
  • 8. Technology GOALS Environment Advancement AND Economy STRATEGY Project Management Partnerships Capabilities Intellectual Property Funding RESOURCES INNOVATION PROCESSES SUCCESS Champion Diversity TEAM Market-Facing Experience Innovation Culture ENVIRONMENT Commitment
  • 9. R&D Broad reaching goals: – Solve environmental or economic problems – Improve existing technology performance DEMONSTRATION Focused on: – technology performance – bottlenecks to achieve larger R&D goal DEPLOYMENT Incorporate market performance indicators: – Expedite market adoption – Deploy commercial application
  • 10. • Team Qualities: Experienced, passionate, committed, talented leader and team • Diversity: Multidisciplinary; involve R&D, commercialization, end users early • Project Champion: Provides long term vision, networking, belief in project’s success • Market Expertise: Understanding of market and ability to position in marketplace • Culture: Allow time for creativity and innovation
  • 11. PROJECT MANAGEMENT INTELLECTUAL PROPERTY • Provides clear direction & • Majority had IP process touchstone for evaluation • Major concern, especially R&D • Needs flexibility to adapt to • Private sector funders often changing conditions require first right of refusal • Many R&D organizations had • Manufacturers often want rigorous metrics exclusive rights at • Routine meetings & regular demonstration stage reporting • IP rights well defined by • Majority had exit strategy in private commercialization place partners
  • 12. PARTNERSHIPS FUNDING • One of most critical success • R&D: Multiyear budgets 1-10 factors years; consistency reduces • Most effective & expeditious waste & keeps momentum way to fill gaps • Demonstration: 1 ½-3 years; • Eliminates need to develop $400k- $10.3M from scratch • Deployment: $3M-$130M • Goal to round out experience over multiple years & skills of team: often R&D • Some exceptions: partnered with business – smaller budgets create greater acumen or vice versa sense urgency – Early success with small budget attracts more resources
  • 13. • Traditional RDD&D process can be adjusted to accommodate faster pace, flexibility & simultaneous development of innovation • Best Practice areas involve: Goals, Team Environment, Processes and Resources • State Energy Offices are in unique position to be an innovation catalyst within their states & create new categories of manufacturing jobs • State Energy Offices can minimize risk of funding innovation by designing selection criteria for projects around best practices identified in this study
  • 14. • Strive for game changers: Identify gaps in the state’s clean energy supply chain and challenge universities and industry to fill those gaps with innovative solutions. • Reward good behavior: Develop project selection criteria that rewards innovation best practices and methodologies • Require structure: States should require project management plans for high- risk projects, and have protocols in place for managing intellectual property arising from R&D projects. • Look for an innovative environment: Look beyond the project to the culture within the project team itself. • Encourage external funding. There is still value in soliciting projects that states cannot fund alone, and requiring external partners to contribute the needed cost share.
  • 15. Ellen Lutz President and CEO Clean Markets, LLC www.cleanmarketswork.com Ellen Lutz 215-242-1424 elutz@cleanmarketswork.com