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State Energy Roadmap: Energy Innovation (September 2017)

Tuesday, September 19, 2017 8:00 AM | Anonymous

Maine currently spends only about 1% of its total Gross Domestic Product (GDP) on research and development (R&D), which ranks the State 37th nationally (Measures of Growth 2017). How can Maine increase its R&D support and activity through growth and maintenance of its infrastructure, capacities, and resources? How do we ensure a reliable stream of public and private investment into R&D generally, and "energy" R&D specifically? How can Maine develop, attract, and retain a workforce with skills that match the needs of Maine's current and future employers? And, is there a role for the State Government to play in developing policies and programs that support R&D, demonstration/pilot programs, and commercialization? These are some of the questions the Maine Governor's Energy Office (GEO) and E2Tech are grappling with as they develop a Maine Energy Planning Roadmap.

The GEO is engaging private, public, and non-profit stakeholders to develop a Roadmap and has convened four Task Forces to help identify technology limitations, market barriers, and political and policy issues; develop action items and strategies to address these issues; and prioritize the most important actions to achieve the State of Maine's energy goals. 

  1. Energy Innovation
  2. Heating
  3. Policy Evaluation
  4. Transportation
This is the first of a series of articles in Fall 2017 on these issues and potential ways to address challenges and drive solutions. 

Research, Development, Investment, & Workforce

In 2017 the Maine Innovation Economy Action Plan (Maine Technology Institute/ Maine Innovation Economy Advisory Board) recommended a "three-legged" approach to strengthen its innovation-based economy:
  1. Growing R&D Capacity: Increasing it's R&D activity through growth and maintenance of the State's R&D infrastructure, capacities, and resources;
  2. Increasing Human Capital: Developing, attracting, and retaining a workforce with skills that match the needs of Maine's current and future employers; and
  3. Cultivating a Culture of Entrepreneurship: Continuing to develop and cultivate the education, mentoring, financial, and cultural supports for the successful emergence and growth of entrepreneurial and innovation enterprises. 
Under the Action Plan, the State will "encourage innovation based on technology, market, and/or business model, as well as encouraging enterprises to build on Maine's unique competitive assets."

Should the Maine Energy Roadmap incorporate this approach as it pertains to energy policy? Maine's energy market faces challenges. Although relatively large in area, Maine has a small population and lacks large-scale energy customers and investors. As a result, Maine energy and technology companies often individually lack the ability to scale up to meet market needs. Neighboring New Hampshire and Vermont face similar situations. Some companies report that they have poor access to investors. Venture capital investment per capita in Maine is only $5.08 in all sectors - significantly lower that regional peers Vermont ($22.06), New Hampshire ($105.90) and Massachusetts ($430.00).

Fortunately, for a relatively small, rural state, we have significant energy support organizations that can help implement the recommendations in the final Roadmap:

 Support Area  Resources
Business Development, Accelerators, and Incubators Maine Accelerates Growth, Maine Center for Entrepreneurial Development, Maine Small Business Development Centers
Economic Development Maine and Company, Maine Economic Growth Council, Maine International Trade Center, Maine Rural Development Authority, Midcoast Regional Redevelopment Authority
Educational Institutions Maine Community College System; University of Maine System; and private colleges such as Bates, Bowdoin, Colby, and Unity
Energy Efficiency, Environmental, and Renewable Energy Groups Alliance to Save Energy, American Council for an Energy-Efficient Economy
Government Agencies Efficiency Maine Trust, Maine Department of Economic & Community Development, Maine Department of Environmental Protection, Maine PUC, U.S. DOE
Information & Outreach Resources E2Tech,, Maine Energy Education Program
Investment Community Coastal Enterprises, Inc., Finance Authority of Maine, Maine Angels, Maine banks and credit unions, Small Enterprise Growth Fund
Manufacturers, Natural Gas, Construction  Bath Iron Works, Cianbro, Fairchild Semiconductor, LL Bean, Maine Manufacturing Extension Partnership, Reed & Reed, Maine Manufacturers Association, Summit Natural Gas
Regional Partners InterACTION, Environmental Business Council of New England, Northeast Clean Energy Council
Renewable Energy & Energy Efficiency Companies  Energy efficiency contractors, Maine Energy Systems, Ocean Renewable Power Company, Pika Energy, ReVision Energy
Trade Associations Maine State Chamber of Commerce, Maine Renewable Energy Association, Maine Energy Marketers Association
Utilities  Emera Maine, Central Maine Power, Maine Natural Gas, Bangor Natural Gas, Unitil, Summit

Innovation & Market Competitiveness

The general public in Maine is typically unaware of the economic, environmental, and job creation benefits of energy and technology innovation and of the policies that govern the energy sector. It is often challenging to build political support for the sector (and/or public sector investment). How do we develop a Roadmap that encourages support for energy technology innovation and communicates the benefits of a strong energy production, manufacturing, and service sector, and strategies for policy and public/private partnerships, support, and investment to improve public awareness?

Maine's forest products industry is often held up as an example of where energy policy can help drive innovation. Maine's competitive advantages in this sector are evident: ample wood resources, a strong forestry sector, patented technologies, a university research center, established manufacturing capacity for biomass and biofuels, and potential ports for export to Europe. As the most forested state in the nation and one with a deep forestry industry, Maine has a natural resource-based competitive advantage in wood-based products for heating and power generation. Maine's well-established forest products industry is ideally prepared for further expansion of biomass and biofuels energy with unmatched infrastructure, equipment, knowledge, management practices, and a trained labor force. The Roadmap may be an opportunity to engage pulp and paper mills, loggers, wood pellet manufacturers, boiler distributors and installers, regional, economic, and development officials, investors, and policymakers to use the Roadmap to develop a policy and promotion strategy for this industry and the companies that serve it. As one of the first tests of the Roadmap and its application to Maine's energy sector, the Roadmap could be applied to the electric and thermal biomass industry to promote Maine and New Englnad as a regional hub for clean energy businesses and technologies, including their development and commercialization, manufacturing facilities and other partner businesses and/or organizations with experience in designing, financing, developing, and constructing biomass energy infrastructure and customer bases that are consistent with the assets in Maine and throughout New England. 

Maine is perceived to have a regulatory and business environment that is slow to embrace innovation or new approaches. From a policy perspective, regulatory actions move slowly and energy incentives are inconsistent. In addition, an analysis of "2017's Most & Least Energy-Expensive States" by personal finance website WalletHub ranked Maine as the seventh most expensive energy state, including price of electricity, natural gas, motor fuel, and heating oil. The study found that in the United States, energy costs account for between 5% and 22% of families' total after-tax income, with the poorest Americans, or 25 million households, paying the highest of that range (Maine is a relatively poor and rural state).

A 2014 MTI report finds that the alternative energy sector grew nearly 12% since 2007 and is growing faster than the other technology sectors in Maine. Maine's traditional economy is based on forestry, fishing, and agriculture. Manufacturing industries like paper production and textiles thrived until recently. Alternative energy, on the other hand, is an emerging sector of the Maine economy, made up of firms and organizations engaged in activities ranging from renewable energy production and generation to technology system distribution and installation to weatherization and efficient building construction and retrofits. Maine is well positioned to play a key role in developing expertise in the sector. The University of Maine launched the nation's first offshore floating wind turbine. Ocean Renewable Power Company in Eastport is operating the first grid-connected tidal power system in the Northern Hemisphere. Maine has 17 wind farms that can generate 901 MW of power, enough to supply 145,000 homes. These wind farms generated 1,614 thousand MWh in 2016. The State has extensive hydropower capacity that can generate 750 MW of clean energy. In 2016, Maine generated 2,968 thousand MWh of hydroelectric power. Thermal biomass systems take advantage of Maine's significant forestry industry and the use of wood pellet systems can reduce heating bills by an average of 40% while creating jobs and keeping investment dollars in the State. Even Maine's oil industry is increasingly engaged by designing and maintaining boilers with higher energy efficiencies and using less oil to produce more heat!

The growing demand for energy resource, technologies, products, and services, as well as global efforts to combat climate change, provide opportunities for Maine's knowledge, skills, and capabilities. Understanding how the Maine labor market is changing is an important component of effective public policy decisions and workforce training initiatives. Also, capturing innovation and attracting investments through a coordinated entrepreneurial ecosystem is critical for startups and mature companies alike.

The case for a new "Energy Innovation Policy" rests not just with the entrepreneurial and startup community. The case for a reliable electricity generation and transmission and distribution system may rest on growth in the innovation sector, specifically incorporating distributed and grid-scale energy storage markets and solutions to the intermittency of wind and solar - what happens when the sun doesn't shine and the wind doesn't blow? On-site batteries and power control systems, emerging technologies, cost trends, and the rise of a robust electric vehicle and infrastructure market will impact how Maine developers, utilities, and customers develop and operate storage systems for variable generation and microgrids, smart grids, and other innovations. And, electric utilities like CMP and Emera Maine are working to improve reliability of the grid and implementing pilot programs (e.g., heat pumps, voltage optimization). 

Energy Innovation Task Force

On Thursday, July 20, the GEO and E2Tech hosted an Energy Innovation Task Force meeting; below is a brief outline of some key take-aways:

  • Role of State Government: The State’s role should be long-term planning and eliminating barriers to commercialization by minimizing policy uncertainty, which can create business uncertainty and investment risk. 
  • Energy Policy: Existing state policies do not touch on innovation; it is more focused on integrating renewables. We need a new way to engage in innovation and bring products and services to market that help Maine’s economy. Maine should be technology agnostic in funding and regulations.
  • Electrification: How do we fund the infrastructure needed to increase the electrical load from transportation and heating electrification?  A durable and predictable funding source needs to be identified to realistically address this issue.
  • Competitive Advantages: New England has high energy costs but Maine‘s renewable sources can be a competitive market advantage.
  • Incorporating New Technology: Innovation and energy storage can play a market role and provide other services to the grid at a consistent value.
  • Workforce: Training and education gaps in Maine’s workforce need to be addressed.
  • Maine Technology Institute (MTI): MTI is an excellent example of productive State funding for research and development (R&D) and has undergone significant improvements recently through internal planning and restructuring. 
E2Tech: Environmental & Energy Technology Council of Maine

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P.O. Box 8517  Portland, ME 04104

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