Grid-Scale Energy Storage and Electric Vehicles: The Risks of Technology Lock-In and Innovation Mercantilism

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Tesla booth
David Hart
11 Oct 2018 (Thursday)
4:00 - 5:00 pm
IAS2042, Lo Ka Chung Building, Lee Shau Kee Campus, Hong Kong University of Science and Technology

Live Broadcast

Event Summary

Low-cost energy storage, particularly batteries, and electric vehicles are key technologies for the transition to a low-carbon energy system. International competition is quickly emerging in these interconnected domains, which could accelerate the vital processes of innovation and diffusion and hasten the energy transition. In North America, Europe, and Asia, governments and companies are jockeying to position themselves for advantage in these emerging industries. David Hart (George Mason) argued that the threat of climate change, and the difficulty of reducing carbon emissions, means that power sector emissions must fall to near zero. Grid-scale energy storage has the potential to make this challenging transformation easier, quicker, and cheaper.

The technology for grid-scale energy storage market around lithium-ion (Li-ion) batteries now accounts for more than 90% of the global and domestic markets and benefits from large-scale use in electronics including electric vehicles (EVs). Hart argues that this industry faces a threat of “lock-in”. “Lock in” is a common phenomenon in industrial history, in which a technology that meets immediate needs boxes out alternatives that have the potential to meet future needs better. “Lock-in” may be beneficial because it accelerates process innovation and drives down costs for the dominant technology, which in turn expands adoption. However, Hart explains that one of the risks is excessive market concentration. East Asian producers, notably Chinese entrants backed by government policies that seek to advantage local industries, are the most likely to dominate the market in this industry. He argues that this can strand innovation by blocking the entry of more optimal alternative technologies that could improve on the dominant design.

To mitigate the risks of technology “lock in” Hart suggests that public policy makers expand funding for research and development (R&D), create tax incentives that focus on emerging technologies, support national and international processes that will lead to open standards, and counter unfair international trade practices. The objectives for these policies should include growing the grid-scale energy storage market overall, creating niches within the market in which a range of technologies have opportunities to establish their cost and value characteristics, and ensuring that R&D continues in order to expand the portfolio of technology options.

Presentation Slides 

About the Speaker 

David M. Hart is Professor at the Schar School of Policy and Government at George Mason University and senior fellow at the Information Technology and Innovation Foundation (ITIF). He co-authored the April 2018 MIT Energy Innovation working paper “Energy Storage for the Grid: Policy Options for Sustaining Innovation” with William B. Bonvillian.

Prof. Hart’s research focuses on clean energy innovation policy. His recent work for ITIF include “ARPA-E:  Versatile Catalyst for U.S. Energy Innovation,” (with Michael Kearney, November 2017) and “Beyond the Pork Barrel: An Assessment of the Obama Administration’s Energy Demonstration Projects (published in Energy Policy, August 2018)  He is the co-author with Richard K. Lester of Unlocking Energy Innovation (MIT Press, 2012).  Prof. Hart served as senior associate dean of the Schar School from 2013 to 2015 and as assistant director for innovation policy at the White House Office of Science and Technology Policy (OSTP) from 2011 to 2012. He co-chairs the Innovation Policy Forum at the National Academies of Science, Engineering and Medicine.

 

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