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Energy Innovation at Scale

09/22/2010 2:00 PM 32"123
Steven E. Koonin, PhD '75, Undersecretary for Science, U.S. Department of Energy

Description: The United States urgently needs a transformation of its energy supply both to address climate change and for reasons of energy security. To meet this immense challenge, the nation requires not just technological breakthroughs, but heavy lifting from big industry as well as government guidance, says Steven E. Koonin.

In a mini"seminar covering the history and economics of energy supply and demand in the U.S., Koonin notes that the pace of change in information technology has set expectations around energy: "We get fooled about technological evolution because information technology evolved at a stunning rate over the last few decadesBut IT moves much faster than energy." Koonin notes that while the demand side of the energy equation is subject to swift change -- imposing tight energy standards on appliances and autos, for instance, can force rapid shifts in consumer behavior -- the supply side is another matter altogether.

Barriers exist to the swift evolution of our energy supply: the large and complex scale of power sources; the ubiquity of energy, and competing interests of producers; the power of incumbents, which slows the market entry of new technologies; and the longevity of big energy facilities, which must be built to last decades. Cost emerges as a key factor: Nuclear power plants take billions to build. Generation costs alone for the nation's 600 coal power plants and 1,653 natural gas plants come to $25 billion per year. Currently, only the for"profit sector can take on projects demanding such massive capital, says Koonin, and "the U.S. energy system is almost entirely in the(ir) hands." He points out that the Department of Energy's annual budget is $25 billion.

Industry players pursue a single goal, under the watchful eye of government regulators. The mission is "not to deploy the most innovative technologies nor the greenest technologies, but to make money" in a predictable way. Koonin believes that "energy supply innovation will scale only when profitable or mandated through regulation." He cites the swift growth in wind capacity when the U.S. offered a production tax credit. Since "risk return is the heart of business," big energy projects must be bolstered by consistent government policy, with "longtime horizons". Beyond mitigating industry risk, government can also encourage "early movers" in new technologies -- leveraging the R&D capabilities of national laboratories to help with simulations, and offering "full"scale testbeds." Government should also establish renewable power standards, and make loan guarantees for risky projects. Koonin concludes that the "energy supply business is not simple," and the "people in it are not troglodytes, but in there to optimize things _ that's their job."

About the Speaker(s): Steven E. Koonin was nominated to his current post in March 2009. Previously, Koonin served as chief scientist at BP, after three decades serving on the Faculty and as Provost at the California Institute of Technology. Among Koonin's responsibilities at BP was formulating the company's long"term technology strategy.

Koonin received his B.S. in Physics in 1972 at Caltech and his Ph.D. in Theoretical Physics in 1975 at MIT, after which he joined the Caltech faculty. His research interests have included global environmental science, nuclear astrophysics and theoretical nuclear, many"body, and computational physics. In 1998, he received the E.O. Lawrence Award in Physics from the Department of Energy (DOE).

Host(s): School of Engineering, Department of Chemical Engineering

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