Closing Thoughts: Warren Leon, director of the state's Renewable Energy Trust.
Renewable energy can renew the state’s economy
Warren Leon is director of the Renewable Energy Trust, a state agency which seeks to maximize environmental and economic benefits by pioneering and promoting clean energy technologies and fostering the emergence of sustainable markets for renewable energy. RET, part of the Massachusetts Technology Collaborative, has helped install photovoltaic and wind turbine systems throughout the state by reducing installation costs, supporting job creation, improving public and environmental health, and lowering energy costs. Here, he describes how what’s good for the environment is also good for the pocketbook.
WBJ: The incoming governor and lieutenant governor voiced strong support for the renewable energy industry during their campaign. How can the industry hold them accountable once in office?
Leon: The state can and should nurture and build the industry. It should be a pretty simple measure. How many increased jobs are there? How many new companies get started or expand? How much renewable energy is being used? Is the trajectory up or down?
WBJ:It sounds like the more information you can get on how quickly renewable energy pays you back, the more motivated the marketplace will be to convert.
Leon: Yes, although I think from the standpoint of Patrick and Murray – and from the Renewable Energy Trust as well, they should have three goals. One is to increase the amount of renewable electricity. A second is making sure that consumers benefit financially from its use. The third is to increase the amount of businesses and jobs created by renewable energy.
Some of that isn’t related to consumer activity. Companies like Evergreen Solar, for example, make products that will primarily be sold outside Massachusetts. We want consumers to be using the stuff more here, but we also want to be producing things that we’re selling elsewhere.
WBJ: Yes, because that’s a value-added, dollar-one industry. In other words, a it’s dollar that wasn’t first created by someone else, as in the case of a reseller.
Leon:Certain things in Massachusetts should allow us to be a leader in that area: Research institutions, our skilled technical workforce, and a strong venture capital base, with experience at commercializing things from the labs into the business world. And fourth, in certain segments of the clean energy industry we already have a very strong base of startup companies and institutions.
WBJ: You brought up venture capitalists. I’ve heard that VCs tend to invest in fashion cycles.
Leon: That is very true and this stuff is currently in fashion.
WBJ: How long has it been in fashion?
Leon: Within the last year. There were investments in companies that were good investments three and four years ago, that VCs were not making because energy was out of fashion. Now, those same investments are being made, and in fact, there are probably cases where investors are overly enthusiastic.
WBJ: Overly enthusiastic in relation to the rate of return they can get?
Leon: I certainly don’t want VC money to dry up or to say there’s way too much coming in, but there are probably cases where the investors may be a little more enthusiastic than they objectively should be.
WBJ: What is the time to market cycle of energy, versus software or biotech? Is it somewhere in the middle ground between those two?
The Leon File: |
Born: Astoria, New York 1950
Education: BA from Oberlin College; PhD from Harvard University
Started career at: College of the Holy Cross, teaching history
Biggest career challenge: Overcoming the many hidden, poorly understood but important, obstacles to renewable energy use
Biggest career achievement: Writing a book, The Consumer’s Guide to Effective Environmental Choices, that influenced the environmental action priorities of federal agencies and national environmental organizations
Just for fun: Hiking
Leon: That’s probably true. And it probably varies. The fuel cell industry, is closer to your biotech example both in long-term horizon, great promise, and some initial niche markets in which investors need to be patient because we can’t expect immediate widespread use of things. Other technologies in photovoltaics and in wind are pretty mature. Innovations are improvements to technologies that have already proven themselves in the marketplace.WBJ: How much of the recent interest in renewable energy comes from an increased dependence on an uninterrupted power source?
Leon:When energy prices are low, people tend not to think much about them. When energy prices are going up, they focus on the subject more. We’ve had tremendously increased interest in our rebate program for businesses that install photovoltaic systems, sometimes because it is a better financial deal now, and in some cases, because of favorable federal tax credits. Some of these projects would have made sense two years ago, but people weren’t looking at it because they just weren’t focused on energy. And now they are.
Also, when energy prices go up, businesses start to regard it as a big, unpredictable, variable cost. If energy efficiency helps them use less energy, not only do they save money, but they reduce the uncertainty, because if their energy bill falls from $300k to $200k and the cost goes up 10 percent, it doesn’t matter as much. And that is something I think is appealing and important to business.
This interview was conducted and edited for length by Christina P. O’Neill.
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