Myths and realities of clean technologies

Don’t be fooled by high-profile setbacks. The cleantech sector is gaining steam with less and less regulatory assistance. In a recent article, McKinsey & Company presents a strong case for why the world is on the cusp of a resource revolution that will enable strong economic growth at a much lower environmental cost than in the past. They posit that this resource revolution will come about because of the broad deployment of better, cleaner technologies and the development of more appropriate business models that will enable the rapid adoption of those technologies all over the world.

In making their case, McKinsey busts three myths that have undermined confidence in cleantech’s future: 1) Deployment and influence will be marginal, 2) Technologies have under delivered, and 3) The sector depends on regulatory support.

In dismissing the myth that cleantech will be marginal, they show how the rapid growth of technologies such as wind and solar PV (photovoltaic) over the past few years has been driven by the fact that they are economically attractive options in a resource constrained world and the economics of these technologies are only getting better.  In fact, the technologies have actually over-delivered on both performance and costs, thus busting the second myth.  Finally, it is clear that regulatory support will become less relevant over time, especially as the costs of these technologies drop, the access to capital improves, and innovations in the go-to-market approaches enables the rapid adoption of these technologies, thus creating a virtuous cycle of continued improvements.

This line of thinking is consistent with what CFR is seeing in the marketplace for large-scale renewable solutions.  We see 1) real and compelling opportunities for large customers to get direct access to solutions that meet up to 100% of their needs; 2) end-users getting very comfortable with being able to count on a mix of green and brown power supply that delivers everything they’re receiving today along with a major reduction in their current greenhouse gas footprint; and 3) economics that are rapidly approaching grid parity or better.

In short, the virtuous cycle that the McKinsey authors describe is already occurring around large-scale renewables.  Given the way the markets work today, successfully capturing this opportunity requires a lot more know-how and effort than running a simple RFP.

However it can be done: CFR was designed from the ground up to help ensure it happens by helping customers move from pipe dream to reality.  As the McKinsey experts assert, cleantech is not going away, either on the ground or as an investment opportunity and CFR is committed to doing its share to help large end-users bust the myths and enable the virtuous cycle of rapid growth.