energy, as well as supply-side policies that promote manufacture of the technologies
with ‘patient’ capital.
R&D contributing to clean technologies like wind and solar power has occurred
on a global scale for decades, as a result of significant public investments and learning,
and the leveraging of a broad community that has been inclusive of educational
and business knowledge networks. The technology works as a result, and improve -
ments in cost and efficiency have proceeded despite the unequal commit ments of
governments and businesses over time. The cost of energy they produce has also
fallen over the long term, while fossil fuel prices continue to be volatile and rise
over time.
Some firms may conduct important R&D for decades and remain money losers
without a clear commercial prospect in the pipeline. As shown by the history of
First Solar, the government’s role in pushing innovations out of the lab and into
markets does not end with R&D, but can include a role in overcoming com -
mercialization barriers, such as a lack of production capabilities. Likewise, First Solar’s
VCs needed to endure challenges and an investment horizon that stretched their
commitment.
How can firms of different scales interact in generating green transformations?
We should not underestimate the role of small firms nor assume that only big firms
have the right resources at their disposal. Small firms that grow into big firms are
active promoters of their own business models, often to the frustration of ‘legacy’
industries that one could argue would never have taken the same technologies so
far, so fast. The willingness to disrupt existing market models is needed in order
to manifest a real green industrial revolution, and it is possible that start-ups, lacking
the disadvantage of sunk costs, are the right actors for the job. Many large firms
involved in clean technologies look to smaller start-ups and have themselves in the
past relied on the State.
For example, General Electric (GE) ‘inherited’ the prior investments of the State
and innovative firms in its rise as a major wind-turbine manufacturer. GE’s own
resources are vastly superior to those of small start-ups, which include billion dollar
R&D budgets, billions in annual profit available to reinvest in core technologies,
complementary assets such as a vast global network, and, as with the wind industry,
significant rapport and reputation that reduce its ‘risk’ to investors. For renewable
energy, scale matters and larger firms can more easily supply enormous energy grids
spanning the continents. Perhaps most importantly, large firms like GE more easily
win the confidence of investors and utilities, given their extensive operating
history, financial resources, debt rating, experience with electricity infrastructure
and vast social networks. It is not so coincidental that wind projects picked up to
a feverish pace following GE’s entry into the wind-energy business.
The political challenges of green transformations
The challenges faced by clean technologies are therefore seldom just technical; they
are political (and social) and include a need for greater commitments of patient
The green entrepreneurial state 149
with ‘patient’ capital.
R&D contributing to clean technologies like wind and solar power has occurred
on a global scale for decades, as a result of significant public investments and learning,
and the leveraging of a broad community that has been inclusive of educational
and business knowledge networks. The technology works as a result, and improve -
ments in cost and efficiency have proceeded despite the unequal commit ments of
governments and businesses over time. The cost of energy they produce has also
fallen over the long term, while fossil fuel prices continue to be volatile and rise
over time.
Some firms may conduct important R&D for decades and remain money losers
without a clear commercial prospect in the pipeline. As shown by the history of
First Solar, the government’s role in pushing innovations out of the lab and into
markets does not end with R&D, but can include a role in overcoming com -
mercialization barriers, such as a lack of production capabilities. Likewise, First Solar’s
VCs needed to endure challenges and an investment horizon that stretched their
commitment.
How can firms of different scales interact in generating green transformations?
We should not underestimate the role of small firms nor assume that only big firms
have the right resources at their disposal. Small firms that grow into big firms are
active promoters of their own business models, often to the frustration of ‘legacy’
industries that one could argue would never have taken the same technologies so
far, so fast. The willingness to disrupt existing market models is needed in order
to manifest a real green industrial revolution, and it is possible that start-ups, lacking
the disadvantage of sunk costs, are the right actors for the job. Many large firms
involved in clean technologies look to smaller start-ups and have themselves in the
past relied on the State.
For example, General Electric (GE) ‘inherited’ the prior investments of the State
and innovative firms in its rise as a major wind-turbine manufacturer. GE’s own
resources are vastly superior to those of small start-ups, which include billion dollar
R&D budgets, billions in annual profit available to reinvest in core technologies,
complementary assets such as a vast global network, and, as with the wind industry,
significant rapport and reputation that reduce its ‘risk’ to investors. For renewable
energy, scale matters and larger firms can more easily supply enormous energy grids
spanning the continents. Perhaps most importantly, large firms like GE more easily
win the confidence of investors and utilities, given their extensive operating
history, financial resources, debt rating, experience with electricity infrastructure
and vast social networks. It is not so coincidental that wind projects picked up to
a feverish pace following GE’s entry into the wind-energy business.
The political challenges of green transformations
The challenges faced by clean technologies are therefore seldom just technical; they
are political (and social) and include a need for greater commitments of patient
The green entrepreneurial state 149