Competition Can Help Meet Federal Call for Gains in Energy Technology Innovation

The federal government has the capability to transform America’s energy system within two decades through policies that stimulate energy technology innovation, according to a recent report by the President’s Council of Advisors on Science and Technology (PCAST).
 
PCAST was tasked with recommending policy to move the United States to the forefront of energy technology innovation in order to remain economically competitive, environmentally sound and secure as a country. Several sections of the report examine how markets can spur innovations and investment – a trend borne out in multiple competitive electricity markets over the past decade.
 
Competitive energy markets are already helping move our nation toward a more innovative future, and can help address two of the major recommendations made by PCAST.
 
To start, the commission calls for the U.S. Department of Energy (DOE) to implement a regular national energy review to assess policy outcomes and guide future action. A major component of this review is analysis of energy markets to determine where policy intervention can best drive progress to meet national goals. The success of competition should not be overlooked in this regard – clean energy performs well in competitive markets, especially when compared to monopoly regulation.
 
In addition, the commission urges DOE to initiate a social science research program to determine what factors drive energy innovation. Two specific questions posed by PCAST – what market conditions are needed for technology to compete, and how can public policy efficiently push advanced technologies to market—can be answered by examining the successful track record of competitive markets. 
 
Specifically, when power suppliers compete against each other to provide the best possible service at the lowest costs to attract and retain customers, innovation is a requisite. Smart grid and energy management technologies are growing rapidly through competition – seven of the top 10 states leading smart grid implementation participate in competitive markets. Customer choice toward innovative technologies has also risen dramatically over the past decade, evidence that consumers (and markets) support innovation when freed from monopoly restrictions.
 
Competitive markets encourage the innovation solutions required to meet America’s electricity needs and environmental objectives. As federal policymakers consider the options available to meet their goals, competition and markets offer an obvious path forward.

Joel Malina | December 10, 2010