Chemistry

Assessing Value Chains and Venture Opportunities for Alternative Energy Technologies
Peter Adriaens, University of Michigan

At the 2008 ECO:nomics conference, the CEO of General Electric proclaimed that “most technologies required to address alternative energy solutions have been developed already”. The intended meaning was that the available pipeline of enabling technologies has not been incorporated in products that capture value in the market. To be sure, 1,500 start-ups operate worldwide; over 4,000 U.S. patents were issued; and IPO value was up 156%, driven by solar and biofuels technology companies.

Mr. Immelt’s challenge to the research community is one of effectively communicating the value of research innovations to the business and venture community, to accelerate technology conversion into scalable products and market adoption. Data indicate that the high research-to-venture failures are driven by the overemphasis on technology, in the absence of understanding market needs, unawareness of strategic principles that help to position the technology in the context of existing markets and industries, and absence of a sound value proposition for investors to enable the venture. Hence, the research frontier in alternative energy is one informed by simultaneous solutions to technological, market and business uncertainties.

The development of technologies that can create value in the alternative energy market is a challenge for entrepreneurs and investors. The opportunity, as argued by the legendary investor Vinod Khosla, is fuelled by an economic growth potential 60 times that of the internet. To address this opportunity, our group is focused on (i) positioning technology-based ventures in energy value chains, (ii) assessment of value capture (business) models, and (iii) identification of enabling research needs for value creation. Over the last few years, this strategy has been effectively applied to bioenergy, solar, wind and building efficiency technologies and companies in the US, and increasingly in China.

References:
personal.umich.edu/~adriaens/

cleantech.com/

The Power and the Glory: A Special Report on Energy, The Economist June 21, 2008,
Buckley, M., and J. Wall. 2006. Microbial Energy Conversion. American Academy of Microbiology, Washington DC.

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Chemistry

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