POWER April 2016 - 100

COMMENTARY
Radical Energy
Breakthroughs-
Without the Risk
Paul Bunje, PhD Alisa Ferguson
A
mong the greatest revolutions of the modern world is one
that most of us take for granted: electrification. When we
flip on the light switch, turn on the TV, or plug in our cell
phones, power is there, 99.99% of the time. But not long ago,
that wasn't the case. As late as the 1930s, nine out of 10 rural
homes in the U.S. did not have electricity.
The way we achieved electrification was through a combination
of new technologies, continual improvements in engineering,
and policy support that maximized reliability while
minimizing cost. The benefits of electrification have been enormous,
but unintended consequences-chiefly, greenhouse gas
emissions-have inspired the need for innovation.
Today we find ourselves in a world where new values are taking
hold, among them: sustainability, customer choice, and expanding
access to energy in the developing world. Developing
an electric grid (and perhaps many smaller distributed grids)
consistent with these values will require new technologies, new
ways of thinking, and new regulatory frameworks.
Prizes De-Risk New Technology
For much of the utility industry, " new " typically means one
thing: risk. But what if we could turn a high-risk challenge into
a low-risk opportunity-and in doing so, offer a future where the
unintended consequences of the energy system are minimized
while the core benefits are maintained? Doing so might be easier
than you think.
One way we're doing this is through the $20 million NRG COSIA
Carbon XPRIZE, a four-year competition that challenges anyone
from anywhere in the world to develop innovative approaches for
converting CO2
emissions into valuable products. The teams that
convert the most CO2 from a working power plant into products
that have the highest value will share in the $20 million prize.
Some people think prizes are a new idea. That's only true if
your idea of new is 300 years old. From the 1714 prize to create
a system for determining a ship's longitude, to Napoleon's 1795
cash prize for a new method to preserve food during battle, and
the 1919 prize for the first nonstop trans-Atlantic flight (won by
Charles Lindbergh), prizes have been de-risking innovation for
centuries. In fact, prizes are an elegant tool with a long history
and a clear record of success.
In traditional R&D, investors provide money up front and, as
we like to say, " pray for success. " Conversely, in a prize model,
teams must demonstrate performance before the prize is awarded,
and hence prizes " pay for success. "
Prizes typically leverage investment totaling 10 times the amount
of the purse, and they incentivize teams to push the boundaries of
performance as they try to win. As a result, a much larger number
of players bear the risk of searching for a breakthrough, and the
chances of identifying a solution increase exponentially.
Prizes also serve as a platform for engaging a broad commu100
nity,
including new players from unexpected places. We regularly
see competitors become collaborators, sharing both ideas and
resources in pursuit of the best solutions. And we see industry
skeptics become champions-and customers-for new technologies
developed through competitions.
These are just a few of the reasons why prizes are increasingly
being offered by a variety of organizations, from innovative
corporations like Google and Netflix, to government and educational
institutions like the Department of Energy, Georgetown
University, and the Swiss nonprofit La Fondation Bundi.
Power Generation Partners
Even with prizes, new energy technologies can fall into the Valley
of Death without innovative partnerships.
In the tech sector, new software or apps can be created, released,
and distributed in a matter of months-and any bugs
fixed later. Conversely, energy innovators typically need access
to existing infrastructure in order to prove their technologies will
be viable in the real world and attract the investment necessary
to achieve commercial scale. However, utilities and other industry
players are often legitimately concerned about connecting
something new and unproven to a power plant or grid system.
As we developed the Carbon XPRIZE, this was a critical barrier
we knew we needed to address. Fortunately, we found leaders
who were willing to think creatively about the problem.
Two of our partners (both of which are in regions better known
for fossil fuels than Silicon Valley-style innovation) have committed
to build testing and commercialization centers at existing
power plants where teams competing for the prize can try
new things, have a safe space to fail, and ultimately demonstrate
successful solutions. In return, the utility hosts are positioned
to get a first-hand look at some of the best emerging technologies,
not to mention a potential market advantage in scaling and
adopting new solutions to address CO2
emissions. Both partners
figured out ways to enable innovation without running afoul of
their business models or existing regulations.
Change is always hard. As humans, we're hard-wired to continue
doing things the way they've always been done. But just
because change is difficult, it doesn't have to be risky.
To successfully transition to a 21st century energy system,
tools that de-risk opportunities and leverage diverse investment
will be absolutely essential. But these tools can also create competitive
advantage for power generators and innovators alike, no
matter what energy revolution is to come. ■
-Dr. Paul Bunje is principal and senior scientist at XPRIZE
Foundation (xprize.org), where he leads Energy & Environment
prizes, including the $20M NRG COSIA Carbon XPRIZE (carbon.
xprize.org) and XPRIZE's Ocean Initiative. Alisa Ferguson
(alisaferguson.com) is a consultant with XPRIZE Foundation and
works with clients to accelerate clean energy deployment.
www.powermag.com
POWER | April 2016
http://www.xprize.org http://www.xprize.org http://www.alisaferguson.com http://www.powermag.com
POWER April 2016

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