I recently attended a bio-energy seminar at the 20th Annual PNWER Summit in Calgary. The seminar was informative showcasing innovative companies, new technologies and covering topics such as growth strategies and market demand for biomass energy.
What I found most interesting was a common problem faced by all emerging alternative energy companies. There is a large gap in commercializing unproven technologies, which is raising sufficient capital for demo plants. It doesn’t matter how good your idea is, without adequate funding for a demo plant, you will never be able to prove your technology at a large enough scale to successfully commercialize your technology.
A presenter from the State of Alaska, Devany Plentovich, revealed potential opportunities for alternative energy companies to test new and innovative technologies in areas all over Alaska. Deveany spoke about Alaska’s low population density and related energy issues. 50% of Alaska’s population is located in three 3 cities. The remaining 50% is dispersed all over Alaska and is made up of small towns populated from only a few hundred to thousands of people. The low population density makes it more difficult to deliver cost-effective energy to all areas and as a result some towns have paid up to $9.50 per gallon for oil during shortages. These costs reveal that there is great incentive to lower energy costs and stakeholders in Alaska may be more willing to fund demo plants for innovative technologies.
So why aren’t there more companies trying to locate in places like Alaska. Simply put, from a company’s perspective, it’s riskier. In addition to the common barriers faced by unproven technologies there are more logistical issues to overcome, poor weather conditions and to make matters worse, different areas in Alaska require different strategies to solve its energy issues. But this is where the opportunity lies. It will truly take an innovative company to solve these energy issues and it will be interesting to see who makes their mark in Alaska.
There are places all over the world, like Alaska, that have unique issues and are unattractive for emerging companies to test its technologies. But with the large number of companies who never end up raising capital for demo plants, I think it’s worth taking a closer look at these undesirable locations. Places like Alaska are often overlooked because of its unique issues but companies that are able to “think outside of the box” and develop strategies that are specific to these locations may have a better chance to actually raise funding for demo plants. Many companies come up with good strategies that would theoretically allow them to scale-up worldwide, but without funding for a demo plant these strategies don’t mean anything. Why not target smaller markets for the purpose of raising funding for demo plants and be able to test your technology at a larger scale? Niche markets, like Alaska, are not seen as lucrative in the energy industry. But I believe these smaller markets could serve as a gateway for emerging companies to test their technologies and be one step closer to commercialization.